Craft brewing has quickly grown from a cottage industry to a multimillion-dollar commerce segment that seems poised to bring down, or at least challenge, the giants in a well-established market. Brewers spring up all the time, and the Brewers Association notes that most Americans find themselves living within 10 miles of a craft brewer. That’s fairly amazing when you consider that just six years ago, in 2012, two companies produced 90 percent of America’s beer.What’s more, the success rate for new craft breweries is far above that of many small business types. With the Bureau of Labor Statistics reporting that at least 60 percent of businesses fail within the first three years, recent data indicating that nearly the same number of local breweries continue their success after that period of time. All that brewing results in a lot of interstate commerce, as craft brewers turn to less-than-truckload (or LTL) freight for shipping alcohol while working themselves up from small, local organizations to national players that can fill full truckloads with product.
The State of Craft Beer is Strong
Craft beer is highly sought after nationwide, and with good reason. Craft breweries rely on traditional ingredients infused with a local kick. That local focus often results in them giving back to the communities and building relationships long before they ever hit a statewide or national stage. As the company grows, so grows the community around it, providing support to ensure the continued success of everyone involved.The Brewers Association also notes that the Millennial generation has thrown much of its buying power behind the emergence of the craft brewing phenomenon, with 57 percent of craft beer markets belonging to that age group, largely due to this sense of community and sharing the market segment inspires. The state of craft beer is definitely one of growth and expansion, and a craft brewing company quickly learns the ins and outs of interstate commerce for continued success. Of course, moving truckloads of alcoholic beverages across interstate lines can be very tricky, especially as supply and demand for smaller breweries is in constant flux.
Alcohol Shipping Logistics
The history of shipping alcohol in America draws heavily from the first rules established following Prohibition, when a three-tier system was put in place by many states to regulate how alcohol could be distributed. Some states chose to become distributors, middlemen between brewers and importers and the retail businesses that sold alcohol. Others enacted laws that required importers or producers to sell only to licensed distributors, who would then sell to retail outlets. Retailers, such as stores or bars, would then sell to consumers. Each step of this process was usually taxed along the way.
Brewpubs and Microbreweries
The rise of the brewpub in recent years has disrupted this three-tier system, which held sway for over 75 years in the United States. Loopholes in state laws that allowed breweries to sell products produced at that location directly to consumers opened the door to a new way of handling alcohol distribution. Many of these loopholes also apply to wineries and similar producers.Microbreweries and other independent small businesses soon started to blossom. The demand for shipping alcoholic beverages inspired changes to the law in places such as Washington, which did away with the three-tier model entirely. This resulted in the ability of smaller companies to get in on the interstate shipping game and begin to share their products with craft brew lovers across the nation. The relationship between shipper and brewer is a very close one, with profits often depending as much on nationwide sales as on local support. Supply and demand spurred on the growth of this and many similar industries, including other previously niche products such as kombucha and probiotics, and the market began to shift towards smaller, local producers with a national presence. Avant-garde wineries soon jumped on the bandwagon, following the microbreweries and brewpubs in establishing shipping relationships and building their clientele far beyond the borders of their home states.
When it comes to shipping alcohol across state lines, shipping companies have vastly different shipping rules. For instance, shipping beer often requires packaging each case or pallet, if not each can, in spill-proof packaging. Many carriers will only transport palletized beer, and most will only ship business-to-business.
Can you ship alcohol direct to consumers? In most states you can, but you have to follow very strict guidelines. Individual, factory-direct shipments are possible with some shipping providers, but they come with an even more stringent set of rules that requires multiple state permits, adult signatories at each location and many similar considerations.
Shipping wine can be equally challenging. Glass bottles of wine require extra care and much more stable packaging than pallets of cans of beer, and craft breweries that introduce wine must create or purchase packaging that absorbs any spilled alcohol in case of breakage. As with beer, state permits are required and securing the right to direct consumer delivery is exceptionally complicated, if not outright impossible, in some locations.
The Future of Small Business
The future of craft brewing and the growth of related small businesses seems virtually assured. The once-monolithic market control held by the big two brewing companies ( Anheuser-Busch Inbev and MillerCoors) seems a relic of the past. By 2014, there was an uptick of almost 50 percent more craft breweries in the nation as in 2012, moving from 2,420 to 3,743. The year 2016 saw over twice the 2012 totals, at 5,234 according to the Brewers Association. Preliminary numbers for 2017 show no slowdown in the success of microbreweries, brewpubs and avant-garde wineries.As more and more people grow into a generation that prefers to get its alcoholic drinks from small, local producers, it seems that the days of the cottage industry are long past. New companies are regularly being founded, and new ways of honoring past traditions spring up all the time. The number of people employed by breweries in America is now almost twice what it was in 2012, moving from 29,309 to 58,580 in 2016 according to the Bureau of Labor Statistics. There’s no doubt that craft beer is here to stay, and there seems to be plenty of room to grow.Craft brewers now find themselves facing other challenges, like how to go about organic expansion into larger companies while maintaining their ideals. Deciding when and whether you should grow even larger seems like a good problem to have. If you’re still wondering how to ship alcohol, turn to FreightPros for superb service that gets your products to their destination safely, securely and on time.
Chris is the president and founder of FreightPros. Chris has been involved in the transportation industry for over ten years and focuses on strategy and new business initiatives to help drive FreightPros to become the most progressive freight broker in the industry.
See how much time and money you'll save by having our pros help manage your freight.