Wednesday, 22 May 2013

The Mikkeller Distribution Debacle - an official response



As you probably now know, Brewdog have exclusive UK importation and distribution rights for Mikkeller beers. A few of us on Twitter noticed that a fair few online shops are no longer stocking Mikkeller beers as now that Brewdog are importing the price has been hiked up in comparison to when they were able to buy and import direct from Mikkeller.

Now I was a bit hasty on slagging Brewdog off, as I always am because I like ranting. I really should’ve gotten all of the facts first but I’m bloody useless. Rob from Hopzine was also very hasty in blogging about it so the response is targeted at him too. My buddy Luke now runs Brewdog’s online shop and he told me to contact Martin Dempster to get more of an insight so I thought I’d share my email and his response.

What I said:

“Basically, Brewdog now has exclusive rights to import and distribute Mikkeller beers in the UK and we've noticed that since you've taken control, the prices of Mikkeller beers on your online shop are considerably higher than they were priced elsewhere when other retailers were able to buy direct from Mikkeller. Following on from this, since Brewdog has taken control of Mikkeller beers quite a few retailers I buy from have decided to stop stocking Brewdog beers due to the fact that they'd  have to sell Mikkeller beers are a considerable mark up to what they previously sold them for.

So my question to you is...

What exactly does Brewdog hope to gain by taking total control of Mikkeller importation and distribution in the UK? and What are the benefits to consumers?”

Martin’s response was very concise and proved that there are benefits to retailers and consumers (but not to him!). See below (skip to the bottom for key points if you don’t have time to read all of this):

“Hi guys,

Just wanted to clear up a few things here. Unfortunately your post and the recent exchanges on Twitter are simply not accurate for a number of reasons.

1) Since we took over distribution of Mikkeller in the UK - supply into the UK market in volume terms has increased markedly.

2) When we took on this deal, the cornerstone of the whole thing was an on-trade project we had with Mikkeller in London - unfortunately some misguided licensing decisions have meant that this project has been substantially delayed - this is all in the public domain now. If this had worked out we would have been bringing in even more Mikkeller to the UK already, increasing selection and minimising on logistics costs for everyone.

3) On pricing, we are doing nothing ground breaking or under handed here. We apply a standard industry margin for our wholesale customers. On the retail side (online and bars), we again apply a standard margin. Nothing under handed, just standard industry stuff. Mikkeller is always going to be expensive - it has to travel from where it is brewed (sometimes as far away as Alaska) back to Denmark then to the wholesalers warehouse and then to the customer. It is always going to be expensive.

We are brand new to distributing third party brands - i'm not going to lie, it has been a learning experience and we are always looking to improve what we do, both in terms of customer service and value for money. Even if we do find your feedback overwhelmingly negative, it is valued and listened to.

4) We do not pick and choose who we supply to. We will happily supply anyone who wants the beer. We have two main routes to market - one for pallet customers who buy pallet quantities of BD and Mikkeller direct from our Brewery, and direct delivery customers who we supply direct into via our own vehicles - these services are operating throughout Scotland and within the M25. We are looking to expand this service to other parts of the country.

5) We don’t have an exclusive distribution deal with To Øl - we just buy some of their beer. Mikkeller wholesales To Øl globally and we buy it from them. I'm not spending my days complaining that Mikkeller is taking a cut - this is just how the industry works.

6) Mikkeller is now in loads and loads of new outlets that it wasn’t before - yes there are some previously direct customers that may find it a bit more expensive but they also no don’t have the overheads relating to importation, excise duties and transport - that’s now my headache! They can also buy as little as one case - they don’t need to buy a whole pallet and take the risk on holding that much stock - that again is now my problem!

7) I acknowledge we have had too few Mikkeller beers on the online shop in the last few weeks - thanks for the feedback on this. We have added a lot of new staff to our team recently and we have a massive new brewery to run - every day throws up lots and lots of challenges and this area has been massively under-resourced until very recently. I have taken this on board and I have put in place something today that will make sure our online shop gets a great selection. On pricing - K:rlek 3 was a mis-price - this has now been fixed. Sorry about that.

8) BeerGuru – if your friend is charging has £9.75 for that beer on our pricing he must be making a gross margin of at least 71%.  That’s an amazing margin on anyone’s book. On £6.75 he’d make 58% - again a solid margin.

Thanks ,

Martin”

So there we have it. I was very hasty in bitching about Brewdog but really they’re only trying to make it better for everyone in the long run.

Key Points:

1)      Originally set up to mainly facilitate the Mikkeller/Brewdog Bar that never was

2)      Brewdog is still learning about 3rd party distribution

3)      Yes, beer is now slightly more expensive but as well as import, hauling, warehouse space etc. Brewdog still has to make a profit. It’s up to retailers if they want to pay this mark up

4)      To Øl is not included in the deal (hooray!)

5)      It’s easier for smaller retailers to get their hands on just a small selection of Mikkeller beers as they don’t have to buy an entire pallet

6)      Luke is working on getting more beers onto the online shop

7)      Some retailers will massively overcharge and that’s not the distributors fault

I’m really glad I emailed Martin because, with helping to launch 24Beers, I really need to get a better understanding of how the beer industry works in order to be able to help Ben sell beer to the masses.

I really do need to work on bitching about things before I’ve had all of the facts but it’s just too easy to do.

Many thanks to Martin for replying to me so quickly!

If you have any further questions, let me know and I’ll forward them on and post responses.

Nate

17 comments:

  1. Don't really care about who overprices most. Seems you have been fed and swallowed a load of bollocks though. It was cheaper. [You said) . Now it isn't. Grow a pair.

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    1. After taking a bit of a lashing online from Brewdog I'm going to repost my blog.

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  2. I agree with Tand +

    Volume terms isn't range. That counts for shifting more of one product.
    learning experience = we fucked it up, that costs and it costs you not us.

    It now costs more, you work out whether that's because they are coining more because they reckon craft beer mugs are there to be milked, or they are less cost efficient than the previous distribution. Take your pick.

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  3. Several beer wholesalers in the UK were previously buying beer directly from Mikkeller so when selling on wholesale to shops they'd have to make some money on the price they bought right?

    The reason some places aren't stocking Mikkeller anymore is because they don't want to pay the mark up that they used to sell it for wholesale as they don't want to pass that mark up along to their retail customers.

    So the shops who previously bought from one of the wholesalers will likely be buying at the same price as they previously were and won't have to raise their prices.

    That's how I'm seeing it working anyway.

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  4. We can't win with you guys :(

    Since January we have inported 120 different Mikkeller bottled beers and 35 different Mikkeller keg beers.

    What a terrible range....

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  5. I struggled to get a decent source of Mikkeller until this year, now i have several including one in my home city. The new distribution channel seems to have been a postive step in my eyes.

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  6. Also worth noting the benefits of new system of distribution only really benefit folks in that London. For the rest of the country it's a pallet from brewdog or go without. And price increase may be small but seems to be enough to remove any margin for a local distributer buying a pallet to sell on. Possible things settle down a bit given time. Worth noting though number of other beers have UK exclusive distribution deals and a distributer having strong links to a UK brewer is nothing new. kirkstall/ vertical springs to mind

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    1. Nope... As far as I'm aware, Brewdog can deliver direct to any part of the country that has a Brewdog bar. It's not 24 hours but it's still direct.

      Vertical don't have exclusive deals with any of their breweries as far as I'm aware.

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  7. First comment from me but i own and run a an indie beer shop ... so vested interest in this,

    I was speaking to Mik for a few months before the Brewdog deal happened - my original plan was to import a mixed pallet with as much range as could and take a punt on it. the basis being ive liked Miks beers but never been presented with a range of them.

    I um'ed and ah'ed and then Brewdog did the deal - now on one hand i thought ... there goes that oppertunity but realistically i dont have the resources ..or inclination to be Miks "man" in the UK so i then thought great i can now order smaller quantities of Mik via Brewdog K soo a little less margin but for less risk? i guess fairs fair.

    Thing is ive been reluctant to deal with Brewdog on the basis of the pricing they offer us indies and that grates on me when they ram the whole sticking it to the man line down my throat ... whilst selling to Tescos at a rate that allows them to under cut indies... oh and then stupidly brewing / letting them re label bredog as own label thus cheapening the brand and making a joke of the "craft" thing... but thats another debate.

    Anyhoo me and some other beer guys did a combined brewdog order - i wanst keen but thought hey give them a whirl, tbh i didnt really look at the pricing as i wanted Miks stuff and i knew it wernt cheap - i put my request in then some of the stuff i wanted (Mik) was out of stock so the group buy had to be fleshed out with Brewdog lines...K

    Well we got the beer and from my experience id say the Mik pricing is fair.. ish they havnt cracked the availability but hey early days.

    My concern is as i first feared i think the Brewdog lines are the over priced ones espec when Brewdog will wholesale to me at one price then retail on there own site undercutting me ... thanks for your cash now bend over whilst i insert my big branded cock in your arse!

    Ive not looked at the mik beers via thier website but to be brutal i dont think i will ever stock brewdog again (even though they sell) on principle

    If that means i dont get mik beers so be it there are 100's more out there.

    my two pence worth

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    1. Interesting, you seem to have the same opinion as many other retailers. It's really sad that it's not financially viable for a lot of independent retailers to continue (or to start) stocking their beers. I don't want to just have to rely on Brewdog's online shop to get them. I miss having the choice of about 6 different retailers.

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  8. the point and concern i was making is that if brewers jump on the brewdog brand they may actually alienate themselves from indies like me?

    due mainly to the pricing / delivery politics brewdog impose.

    we should all be on the same team "Team Beer" but unless they help us help them??? what a guy to do.

    i love getting pallets from a brewery and giving them a real push ... as do my customers, im sure im not alone in this i think BD are not getting the scence on the ground floor out there, i fear they are believing thier own hype.

    i think BD have absolutley smashed the on trade with thier bars i think they are slick and superb at what they do but interms of intergrating with retail (where a lot of beer purist can engage with beers) i think they are missing the point.

    no one has cracked distribution in the UK james clay, vertical and now BD all have thier flaws - i dont think any of them actually listen or give a shit about the indie out there whos actually promoting the beers and educating the public at grass roots.

    i fear beers are now only comodities in the eyes of distributors and big retailers the craft label is just another brand for them to milk.

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    1. Interesting insight and well, we're starting an online shop and don't think we're gonna bother selling Brewdog's beers. We like them but don't see the point because 90% of other specialist beer retailers sell their beers.

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  9. if you sell them they will only undercut you direct or on the shelves of tesco!

    i think they have run out of steam .... though sadly not hot air

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  10. Don't forget, supermarkets have amazing buying power. They no doubt demand a certain price but the volumes will be very attractive to the supplier. It's pretty much the same in any retail industry - the more you buy, the cheaper it (typically) gets.

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    1. Indeed, although even with that in mind it's still baffling how supermarkets can sell Punk for cheaper than the people who fucking brew it!

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    2. Could be just the legacy of a marketing campaign. Brewdog could have agreed a distribution period with the supermarkets at a fixed price. As they wanted to get the brand awareness out there, they would have practically given the beer away. Now that they have a reasonable foothold, they don't want to loose the accounts and continue to supply at very low margins.

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    3. Very true. I guess they couldn't do the guerilla marketing thing forever and they needed to make some money!

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