June 1, 2011

Bigger, Better, Less, Less

Earlier this month Republic National and Young's Market announced a "merger".
Young’s Market Company and Republic National Distributing Company jointly announced today that they have entered into a definitive agreement to combine their alcohol beverage distribution operations in the State of Arizona. The transaction, which is subject to customary contingencies, is expected to close on August 1. The name of the combined venture will be “Young’s Market Company Southwest, LLC” and the President of the new venture will be Mark Moser. Mr. Moser has 26 years of experience in the beverage alcohol industry, serving most recently as the president of RNDC’s Arizona operation. http://www.winebusiness.com/news/?go=getArticle&dataid=88322
I use that term merger in quotes, because I'm not sure what qualifies as a true merger or if this is a partnership. This seems to apply to the Arizona market and I don't know what it might mean to the parent companies. Regardless this is not the shake-up that had been rumbling over the last few months. There was some speculation that Alliance or even Hensley was involved in these discussion.  What will this mean?

First some background and an apology or two. Information about who carries which brewery is seemingly always in flux and it is sometimes difficult to get information especially on a blogger's budget (time and otherwise). Industry wonks can comment or email any corrections.

For those not up to speed on their distributors, craft beer in the valley is delivered from breweries to bars, restaurants and stores via one of the following:

  • World Class/Crescent Crown was among the original craft beer distributors though its former incarnation as Little Guy Distribution. World Class handles locals SanTan, Sun Up, Papago and others along with region crafts like New Belgium, Oskar Blues and Bells. World Class also has a sizable import catalog. The parent company, Crescent Crown handles Miller Coors brands.
  • Hensley are the distributors of Old World, Sleepy Dog and regional crafts like Sierra Nevada, Odells and Firestone Walker. Hensley is best known for its distribution of AB/Inbev products and is a recent entrant to the craft beer game.
  • Republic National does not currently handle any local crafts but has some older historic imports such as Orval and Samuel Smith, Westvleteren and Chimay. Republic is increasing it's beer profile with large regional Dogfish Head and newer players, Bison, Grand Teton and the soon to be distributed in Arizona-- Maui Brewing. Republic and Youngs are probably more widely know for wine and spirit distribution.
  • Alliance is the distributor of locals Four Peaks and Oak Creek Brewing. It's regional craft is Stone and it formerly carried Sierra Nevada.
  • Pitcher of Nectar is an independent boutique distro carrying Rock Art, Marin, Dale Brothers and Telegraph. 
Not unlike the airline, telecom and auto industries, three-tier beverage distribution seems to be going through a consolidation phase to gain efficiencies of scale. Major regionals like Sierra Nevada and New Belgium have changed distributors in the last few years adding some uncertainty to the industry. From an outsiders perspective Republic and Alliance would stand to gain some ground against the heavily war-chested Miller/Coors and AB/Inbev backed distributors if they combined. 

Is bigger better for the consumer?  Generally speaking, it isn't especially if we look back at the telecom, airline analogs. Fewer and larger distributors probably means that the biggest best selling crafts will get into your hands in more places and you'll probably get that product fresher. Smaller players will get less attention or dropped and perhaps be picked up by someone like Pitcher of Nectar, but I wouldn't count on it. Picking up a new product can be a lengthy process and there are formidable barriers to entry for any new distribution upstarts.

I suspect this is the first shoe to drop in many moves to come over the next year. I anticipate some breweries shifting alliances and some local brands disappearing off shelves and tap towers. It'll be interesting to see if more of AB owned Goose Island's mainstream beers like [312] Urban Wheat hit Phoenix. Don't get me wrong. I love Matilda, Sofie and the iconic Bourbon County but do we need a wheat beer from Chicago?



  1. Interesting. Being from the east coast, I am eager to see more New England brews hitting the shelves here like Long Trail, Magic Hat, and Allagash. We get Shipyard and Harpoon but there is so much more up there that I would love to have access to locally

  2. interesting post

    old world has been dropped by Hensley, btw

  3. We did not hear that from Hensley. Thanks, We'll run that down.

  4. Old World is now with Republic for those following along at home.

  5. And Pitcher of Nectar is no longer an active player in craft beer.

  6. Ahhhh - we actually are. Rock Art, Marin, Sudwerk and Rubicon as well as Dry Fly Distilling. We are back, stonger than ever and will have some huge announcements in the next two weeks regarding just how strong our comeback is. Don't ever count us small guys out - you will soon see why smaller is indeed better.