Beer Distributors Shaken by Pandemic but Carry On For Sake of the Industry
"With the closing of restaurants and bars we have lost 90% of our business"
Chris Rhodes of High Road Distribution.
"Much of the work we do cannot be done from home, but it is vital to our suppliers, retail partners and the communities we service"
Peter Maletis of Maletis Beverage.
"There is a graveness to it all - a lot of the jovial cross-talk has disappeared. The gloves and 6' rule, plus the long days and impending threat of exposure"
Mary Rose Walker of Western Beverage
"All three tiers of the distribution system are rattled," says Laurelwood Brewing's brand manager Andy Schaefer. The shutdown of Oregon, Washington and California retail and hospitality businesses has left no stone unturned in the beer business. Layoffs include even the related industries like apparel/branding, draft technicians, maltsters, and supply chain representatives. Integral aspects of the industry have slowed to a trickle or completely ground to a halt, though there are still "essential" businesses that go on without integral parts of the equation to support them. Without the middle tier of the three tier post-prohibition system, the entire structure falls apart.
After the repeal of prohibition in 1933, the United States split up the distribution of alcohol into three tiers: importers and producers in one, distribution/wholesale in another, and the retailers like bars, restaurants and bottle shops that sell directly to the public in the last tier. While much has been said about Coronavirus' impact on producers and retailers, the middle tier has suffered in relative silence.
"Although the closing of bars and restaurants has had a dramatic impact on our business we still have retail customers and supplier partners who are relying on us to continue to sell, deliver and service accounts for beer, cider and wine products" says Peter Maletis, who underscores the risks for industry wholesale professionals happy to still have a job.
With draft beer establishments almost completely inaccessible, most of the industry is focusing on bottled and canned product available at grocery stores. Small bottle shops are shut down, which leaves more mainstream choices that major grocery store chains have locked in. Some distributors work more with grocery stores than others; a Columbia Distributing or Maletis Beverage will have far more package to move than a Point Blank or Running Man Distribution. A company like Day One Distribution has plenty of packaged beer to sell, but the business model focuses on small shipments of ever rotating beers, so they are not in many major grocery stores, which require large supplies. Regardless of size, all wholesalers will suffer huge losses.
"The current set of circumstances with COVID-19 is unprecedented and never has something of this nature impacted us in our 85-year history," explained Peter Maletis, director of business development and member of the family run Maletis Beverage wholesale distributor.
Some are suffering more than others, Portland's newest beer wholesaler High Road Distribution is a small company that focuses on draft beer, only 10% of their business is packaged beer. High Road saw the writing on the wall early, though, and stopped purchasing kegs so the beer woudn't be sitting in the warehouses and inevitably ending up as drain pours.
"Like bars and restaurants, we will be almost completely shut down," says Chris Rhodes of High Road Distribution. "Package into grocery stores is our only source of income for now. We have written to our elected leaders to show them that the impact follows a chain of industries that support them."
In some ways, High Road's size will allow them to have some chance of surviving the storm. High Road has two co-owners and no employees, they don't have their own warehouse, and have a rolling overhead so they are not sitting on stock. At this point they sell a small amount of packaged beer to grocery stores and bottle shops while doing delivery and pick-up of crowlers for some of their brands, like Brewery 26. In a best case scenario High Road's two owners will be able to collect stimulus checks to keep going as the business sits in relative stasis until draft accounts hopefully open back up.
"I worry more about the distributors with a larger overhead, employees, etc." says High Road Distribution's Brandon Mikel. "I also worry about breweries and tap rooms. I'm really nervous to see where some of them land, if at all."
"We can survive a few weeks but I cannot speak for the brands we support. Without them there is no us," added Rhodes.
Point Blank Distributing is a mid-size wholesaler with a focus on on-premise (draft beer at restaurants & bars) that is really feeling the pinch. Point Blank has already had to layoff roughly half of its sales force, many of whom were already redirected to helping stock the shelves at chain stores.
Beer sales reps aren't sitting around, either. If they aren't out of work already, they are helping at off-premise accounts, stocking shelves and vehicles. Between packaged deliveries they are assisting on-premise in how to bleed their draft systems, use pressure tapped kegs with CO2 only and make sure they keep the coolers running so they don't have flat beer when they reopen.
Point Blank distributes primarily draft brands like Boneyard Beer and Barley Brown's, but recently getting placements into Plaid Pantry's stores, and carrying strong packaged brands like pFriem Family Brewers and Double Mountain, are helping keep things afloat. Privately, distributor reps have told me that they are worried about a can shortage when businesses open back up. If a producer doesn't have thousands of extra wrapped cans or labels then beer is going to crowlers, that's backed up orders of crowler deliveries from weeks to months late.
Reports of Point Blank reps working ungodly hours, assisting competitors, and stocking shelves are numerous. Though staff is laid off or furloughed, the business keeps chugging along with dock sales and a dedicated crew that wants to keep this industry afloat.
Maletis Beverage, the distributor that carries Breakside, Ecliptic, Fort George and others in the Portland area is dealing with a worst case scenario on the best possible terms.
"Regardless of the impact it is having on our company now and in the weeks ahead, we have made the decision at this time to maintain employment for all employees, both states, all departments," says Peter Maletis.
Like other companies, Maletis has transitioned 80% of its employees to work remotely, with a small staff coming into the office on Swan Island in N. Portland. Extra space in the floor plan with staff out of office allows for plenty of social distancing.
Maletis sales staff and drivers who usually worked servicing bars and restaurants have been deployed to off-premise accounts. Drivers are sharing duties and doing work they never did before in an effort to get in and out of stores before shoppers flood them. Though numbers show an increase in sales of cans and bottles, it's incredibly hard to predict and comes in waves that make it difficult for limited interaction and day-to-day restocking. All that while maintaining distance and cleanliness.
The entire staff at Maletis has been kept busy helping service remaining accounts and donating time to charitable endeavors with the newfound time on their hands.
"I haven't heard the reps complain- not really, at least," says Mary Rose Walker of Western Bevarage. "Most of them that are still working (distributor AND supplier side) are a happy to have jobs they will work 10-12 hour days without blinking an eye. They just want to help."
Mary Rose is one of the founding members of the PDX Book Club, a group of women sales reps in Portland who meet for social occasions and for causes advancing the industry. Walker is also leading a new grassroots initiative to I Love PDX Beer People who's mission is to raise funds in support of industry workers on the wholesale side of the business.
"When they have symptoms or get sick and have to stay home, many of them express the same feeling that leadership is feeling: I should be out there working with my team," says Walker of many of the directors behind Oregon's beer, wine and cider wholesalers. She hopes to have stickers and t-shirts available soon as a vocal way to support those out of work and raise funds to help them through this time.
"It’s frustrating to see a society not take this serious unless it impacts them. I watched several groups of kids and a full field at Grant High School," says Chris Rhodes of High Road Distribution. This is not for some to isolate and others to take a vacation. If we continue this way the shutdowns will all be for naught."
"One of the hardest things for me is knowing that the Oregon beer scene as we know it will be irrevocably changed...Without these people, it will never look the same," adds Rose Walker. An end is not yet in sight but it's important to acknowledge and support those that keep the industry moving by facilitating beer and ciders movement from production to retail. "We are all going to come out of this with stronger relationships with our teams and leadership."
