That’s why I asked “When?” in reference to your claim of "prior to Prohibition". Yeah, in the years immediately leading up to Prohibition in the 1910’s, the “shipping breweries” barrelage stagnated while total US production increased. Tied houses helped the large locals and regionals in some markets (altho’ the nationals also owned saloons – Schlitz had 1600, Pabst had huge beer halls in NYC, etc). But that was hardly the only reason since there were a number of other industry and economic factors - more brewers bottling and under-selling the nationals (which depended more on bottled sales for distant export markets), rising costs of shipping and ingredients, the increasing strength of the Temperance movement (local option, state Prohibition laws, Sunday closings, anti-growler laws), war in Europe, etc. Still, not sure if “overtaking national breweries in market share” is how I’d put it but I don’t know if that’s the author’s terminology or yours. (I don’t have $30 for the article – well, I have it but will spend it on a case of beer.) Nor is that what the abstract claims- only that the local and regionals were able to offer "a competitive challenge to national firms"- with which, given the approx. 7% of the market the Big 3 (the biggest, but not the only "nationals") had at the time, no one would disagree - seeing as there were over 1700 other breweries in the US at the turn of the century. Certainly, most of the large regionals and other shipping breweries weren’t close to even a million barrels a year in production (Ruppert in NYC was probably the notable exception) - most of the other large US locals/shippers were selling in the 500k bbl. range – not even close to “overtaking” AB's million and half barrels a year. Nor, as I see it, is it what you claimed - that AB's pre-Pro market share was "dramatically declining". I noted AB's rise to 1 million barrels from the late 1870's (when they were #33 )to 1901 above. Barrelage figures are not available for every year in that period but AB’s totals went up every years after hitting 1m bbl., through at least 1906 (when they went over the 1.5m barrel mark). For one example, in 1904, AB claimed their increased production figures were 20% of the total increased total US barrelage of 900k. As US production increased after that, AB sales stagnated at around the 1.5m bbl., resulting in a reduction of market share from 2.7% to 2.3% by 1911, but, much as it probably didn't sit well with Adolphus, that’s hardly a “dramatic decline” nor does it suggest that other brewers were "overtaking" AB. It also appear that Pabst (and possibly Schlitz, for which I have no pre-Pro figures handy) were more affected by the author’s “competitive challenge” than AB was. Pabst, in particular, for the period of 1903-1913, hovered around a barrelage of 900k-1m bbl, while the US total went from 46m to 65m bbl., so their market share dipped from 2% to 1.5%.
I certainly believe that there is some "crowding out" going on, especially with distributors that are owned by big beer, but the fact is that craft beer is very widely distributed in the US. You can find beers from several California breweries up and down the east coast. If a brewery wants to enter a market, they will find a distributor to partner with. They may exist, but I've never heard any stories of a brewery who wanted to enter a specific market but was not able to due to some part of the 3 tier system. The reason why Pliny the Elder isn't in every grocery store is not because RR is being bullied by three tier system, it's because they don't even make enough to supply the demand in their existing markets. Also, smaller breweries don't have the resources or inclination to attain a fleet of trucks and drivers to do their own distribution, especially across state lines.
That's a great point, but I think you are misunderstanding my argument. There has obviously been an explosion in demand for craft beer in the past few years, and the market has adjusted as a result. As far as distribution goes, it obviously varies depending on state laws, demand, and the output capacity of the brewery. Some states, especially the highly populated northeastern states with relatively lenient beer laws, provide an economically viable market for relatively large or expanding craft breweries located outside of that region; but it is nearly impossible for the more sparsely populated states to get a taste of anything new. I believe that if the breweries didn't have to go through distributors, then it could be easier for states like MS to expand their variety. Since there is no Founders sold in Mississippi, Mississippi will have a tough time showing demand for their product. When I drive to AL, TN, LA, or FL to get beer that isn't available here (like so many Mississippians do), those breweries don't see that as an increase in demand from MS, they see it as an increase in demand in the respective state where the beer was purchased. Now if I could order that same beer straight from the brewery (granted it would be at a much higher cost) or find SOME way to show the brewery that that sale is coming from Mississippi, then they could see the demand for their product in new markets. Also, I never said that if the three tier system was abolished, then breweries would magically be able to start making unlimited quantities of high quality beer to stick on the shelves of every grocery store in America. I realize that brewery expansion is an extremely risky and dangerous venture that can affect product quality. In regards to the "fleet of trucks" comment, I obviously don't think that distributing companies should be banned and that all breweries should be responsible for their own shipping. There is a market niche for beer distributors just like there is a niche for distributors of a myriad of other products; the difference is, you usually aren't required by law to purchase that product from a retailer who received said product from a distributor. Perhaps if it was easier, and maybe even cheaper, for breweries to get their product to market, then we would see an even more substantial proliferation of new breweries and could have a better shot at taking down the macros. All I'm asking for is a little collaboration, not litigation... pun intended.
I'm confounded by this fear and hatred of big brewers. Yes, it's true that the biggies have and could force their distributors to only carry their products (pushing out craft breweries) and there's a lot of worry about their moves to buy up or take part ownership in small brewers, but as I see it this could really be a positive and a blessing for craft brewers. AB and Miller obviously recognize that craft beer is where the market is going. So, it isn't really surprising that they want to get into the game. For craft brewers, getting in with one of the big guys suddenly gives them access to a nationwide distribution network--this is awesome for the small brewer and for us drinkers (assuming the big company doesn't force a reduction in quality from the small ones). And we can still keep supporting the "mom and pop" brewers who aren't picked up by a big company. The problem isn't that big beer companies have so much power that they are corrupting the mandatory three tier system: the three tier system is what allowed them to get so big and keep out competition for so long. The system isn't all good or all bad--distributors are definitely necessary for brewers--especially the small ones. But the fact that it's mandatory, means that brewers have this artificial barrier to market and big brewers have been able to abuse that. Because the big guys make up such a huge amount of most distributors' portfolio, they can threaten to raise prices unless they only sell their beer. If they don't pick up the craft beer guys then the small brewers are kind of SOL when it comes to getting their beer to market. They can sometimes self-distribute very limited quantities, but they aren't ever going to become a really big threat to the big brewers. I'm not saying that distributors should be abolished, but I think this fantasy that the three-tier system is what created the craft beer movement is just that: a fantasy supported by distributors. Just look at how many breweries we had in America before prohibition and the three-tier system. This is probably a long-winded rant and not a whole lot of people seem to agree with me on this point, but that doesn't stop me from thinking the absolute best case scenario would be to dump the mandatory three tier system (a state-by-state fight) get rid of franchising and territory laws so that we can have more competition among distributors. Seriously, if distributors were told by AB that they had to carry 100% AB products, but they were watching other distributors make money selling craft beer, they might be less inclined to bow down to AB's demands. I'll shut up now.
