Boston Consulting Group Study Highlights Importance of Open and Independent Beer Distribution System

The Boston Consulting Group has produced a white paper noting how the open and independent beer distribution is good for all brewers. In their paper entitled, “For Small and Large Brewers, the U.S. Market Is Open” authors Neil Houghton, Jr. and Marin Gjaja highlighted the tremendous access to market the beer distribution system has provided to brewers of all sizes. Noting the importance of distribution the authors note, “This open distribution system enables small brewers to avoid significant, if not prohibitive, costs to entry, while also gaining deep access to large and small retailers.”

The paper discusses the rapid growth in the number of breweries, the dynamics and costs of beer distribution, the value of open distribution, and ongoing challenges such as the rapidly crowding marketplace with multiple breweries and products trying to grab the attention of the consumer.

The authors noted that the system works very well for new brewers and that additional regulation for them is not necessary, “In fact, thanks to piggybacking on independent distribution networks supported largely by the economics of large domestic and import brewers, small brewers avoid much higher distribution costs. And regulators need not worry about the barriers to entry for market newcomers given their recent success and ability to leverage the industry distribution system.”

It noted how open distribution is directly related to the growth in sales of small brewers. “The ability of small brewers to gain access to the marketplace through independent distributors is a major reason that small brewers are able to exist at all… Without independent distributors, most small brewers would have to cope with far less access to the market and consumers, and far lower growth rates.”

While there are some parts of the study I may have wanted to emphasize differently and would highlight additional areas of importance (such as more focus on the vast numbers of different beer companies available to the American consumer or laws preventing brewers from closing this open and  independent distribution system), it is not my study nor did NBWA pay for this study. I do welcome its good work and conclusions to the celebration of the successes of the vibrant American beer marketplace. I encourage you to review this short study for yourself.