INSTITUTIONS EVOLVE TO REDUCE TRANSACTION COSTS. Hey, distributing beer isn't cheap. Small brewers discover that wholesalers, well, want to get paid. Yes, it does limit consumer choice, but if a brewer is having trouble working with wholesalers, how many consumers are making that choice?
However, there continues to be strong demand for craft beers, Nolen and Rodman said. And specialty beers sell for higher prices - and provide fatter profit margins - for both brewers and wholesalers, said Martino.

Randy Sprecher, whose Glendale-based Sprecher Brewing Co. will celebrate its 20th anniversary next year, said he long ago accepted that distributors pay the most attention to beers with strong sales - and not necessarily strong margins. Specialty brewers have to deal with that reality, he said. Sprecher has grown his company in part by expanding his line of gourmet sodas, which are now sold in such far-flung areas as San Diego and Boston.

"We simply know what we have to do to stay alive," Sprecher said.
That sums it up, doesn't it? Margin is meaningless without volume.

No comments: