Expert: Ed Westemeier - 4/3/2007

Question
I am a student at the University of Tennessee doing a project for a marketing class on how you might introduce a new microbrew in the city of Knoxville. You looked to be the most knowledgeable of the experts I've found on this website, and I was hoping you could give me a clearer idea of the process. Namely, I'm interested in where the levers are in a small metropolitan area to get a new beer into an already crowded market.

Basically, my questions revolve around demand >>> For an untested brand is it better that there is an expressed customer demand, in the form of average consumers asking their package stores and bars to please carry a certain brand? Is it the package stores and bar owners who actually shape the market by seeking out and trying new brands under the guise of specials and promo events? Or does it really boil down to the local distribution companies who have the muscle to bring a new beer to town? What is the dynamic of these forces that help a new company take hold in anew market. Any help would be greatly appreciated and your help along with a link to this site will be sited in my finished project. Thank you very much in advance for your time.

                                           Regards,
                                               ~Jonathan  

Answer
I can only give you the barest essentials, since it's such a huge topic, but here goes:

-- Is it the package stores and bar owners who actually shape the market?

Not at all; retailers have nearly zero influence. Multiple customers asking for a brand may (sometimes) get them to ask the distributor for it, but that's not the way to go.

-- Or does it really boil down to the local distribution companies who have the muscle to bring a new beer to town?

That's really the key. The big, established brands keep the wheels greased here by ensuring high profit margins for the distributor (and think of all that point-of-sale (POS) material that clutters the retailer's premises). A new brand has to spend such an obscene amount of money to entice a distributor that it can wipe out the little brewer's entire profit and then some. That's why growing craft brands, such as Redhook, are willing to hook up with big guys like A-B to get their national distribution network on their side.

In a small market like Knoxville, the small brewer must work individually with retailers to convince them it's worthwhile to bug the distributor for the brand. That's extremely labor-intensive and expensive, but it's the only proven technique. Moreover, it has to be an ongoing effort, not just in the beginning.

You might consider talking to the folks at Bluegrass Brewing Co. in Louisville, which is probably the best role model I can think of in your area for how this sort of thing is done.