Summer vacationers stream to Rhode Island’s sandy Westerly beaches, soaking up sunshine while sipping beers from Grey Sail Brewing. The local stalwart, founded in 2011, is known for Captain’s Daughter, a hazy double IPA that’s distributed in five states, including New York, Massachusetts, and Connecticut.
But sales sometimes stop after fans leave Westerly; not every tourist lives near a store that sells Grey Sail. This spring, the brewery partnered with ecommerce platform LiquidRails to ship its beer to customers’ distant homes. Rekindling warm memories of cold Captain Daughter’s is now a click away. “We’re able to serve our consumers that live elsewhere and grow [our business],” says Carey Beralderi, the director of sales.
A decade ago, craft breweries could grow sales simply by brewing another batch. Customers and distributors clamored for the latest flavor of the week. “Brands like us could just come up with anything,” says Barry Holmes, the CEO of The Bruery and sibling brand Offshoot Beer in Placentia, California. The Bruery was founded in 2008 and became known for offbeat ales aged in bourbon barrels or seasoned with unusual spices. “Retailers couldn’t wait to take as much as they could.”
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In today’s teeming marketplace, shelf space is tight and open tap lines are rare, forcing craft breweries to fight harder for pieces of the fiscal pie. In 2022, overall beer volume sales declined three percent, according to the Brewers Association, and craft beer sales slid two percent in the first half of 2023.
With challenges compounded by increased costs thanks to inflation, breweries are seeking sales growth by embracing direct-to-consumer (DTC) shipping. Breweries are building out ecommerce shipping infrastructure, creating membership clubs, and partnering with third-party companies to handle logistics and compliance. The consumer demand exists; 88 percent of regular craft beer drinkers support increased access to DTC beer shipping, according to a report by Sovos ShipCompliant and the Brewers Association; and just as many claim to have tried a beer while traveling that they wish they could purchase but it’s not available near their home, which suggests an as-yet untapped potential for revenue.
Third-Party Shipping Opportunities
In the notoriously low-margin industry, eking out even a two or three percent sales increase could “be the difference between a business that’s thriving, a business that’s surviving, or a business that’s looking for a buyer,” says Aaron Gore, the senior director of business development for Bevana Partners in Newton, North Carolina, which produces beverages for brands and distributes them to 42 states.
America’s alcohol laws are a regulatory thicket, no two states alike. Just 13 states plus Washington, D.C., let breweries ship beverage alcohol through private carriers such as FedEx and UPS. Navigating compliance can be onerous for craft breweries stretched thin on time and legal resources. Ecommerce platforms and third-party shippers, however, will plow through that paperwork on behalf of partnered breweries.
Will Hench cofounded LiquidRails last year to connect breweries to a retailer network specializing in ecommerce fulfillment to around 45 states. “It’s like having a one-stop shop for compliance, customer service, and fulfillment,” says Hench, also the CEO.
Breweries like Lord Hobo in Woburn, Massachusetts, install LiquidRails’ platform on their web pages, and customers place orders that retailers, who have received the beer from distributors, then fulfill. (Hench doesn’t disclose retail partners.) The process is lockstep with the three-tier system, leaving all parties pleased.
After a boom in online sales amidst pandemic-related restrictions, American wineries continue to invest in the DTC segment with in-person and virtual initiatives
For U.S. Wineries, Direct-to-Consumer Sales Remain Essential
“Distributors like it because it’s a way to increase volumes to retailers, and retailers because they’re getting more order flow,” Hench says. “Brands are able to build a better customer relationship versus Drizly or another third-party marketplace.”
After a brewery ships beer to a distributor, it can take weeks to reach retail. Breweries are keeping a tight logistical leash to shrink warehouse time and ensure beer is fresh.
Brooklyn-based Other Half Brewing handles online fulfillment for seven states, plus Washington, D.C., then partners with Half Time Beverages in Mamaroneck, New York, on a weekly shipment to reach another half-dozen states. The brewery boxes orders of its in-demand IPAs and then brings them to Half Time for mailing. “We want to make sure that people get beer that’s within a week old,” says Andrew Burman, the COO.
The online sales, which account for less than five percent of the brewery’s business, serve as “another taproom,” Burman says, keeping the brand top of mind until customers’ next brick-and-mortar visit. “Anytime we get to sell directly to consumers, our margins are great.”
Mail-Order Membership Clubs Go Bespoke
Beer-of-the-month clubs proliferated in the 1990s, bringing flavorful microbrews to front doors far and wide. As craft beer has become a supermarket staple, many clubs faded off, but the Microbrewed Beer of the Month Club still perseveres. The company operates five beer clubs, including ones focused on IPAs and international beers. President Kris Calef is now looking to boost the value proposition of the company’s Rare Beer Club. “You’ve got to have something that you can’t get at a Total Wine or BevMo,” he says.
Calef looks to offer exclusives from cult breweries such as California-based The Lost Abbey and Belgium’s Brasserie Fantôme. In the past, his company sought out breweries; now “we’re seeing more inbound calls from breweries” eager to work with his clubs, he says.
Craft breweries are also creating clubs that send limited-edition beers to ardent fans. Firestone Walker in Paso Robles, California, runs the Brewmaster’s Collective club that focuses on wild ales, barrel-aged imperial stouts, and other strong beers.
“These are often eccentric beers and one-off collabs that … aren’t really viable at retail,” says Micaela Yeo, the club and specialty brands manager, adding that DTC lets distributors focus on core products rather than small-batch beers.
Selling premium beer through the mail can minimize the biggest DTC pain point: shipping costs. “If you’re shipping barrel-aged or sour beer with an average bottle cost of $30 to $60, you’re in wine territory,” says the Bruery’s Holmes. “That’s a sustainable business if there’s demand.”
The Bruery recently expanded its shipping capabilities to 47 states and Washington, D.C., through third-party shippers. Its Reserve Society memberships include a dozen 750-milliliter bottles of barrel-aged stouts and sour ales, either delivered monthly or in one fell swoop. The latter costs $325, and “we’ll ship it to you complimentary,” Holmes says, unlocking other benefits like priority access to release and member-only events. More than 70 percent of subscribers re-up each year. “We find success in the relationship.”
Creating a Packaging Experience
Brown boxes delivered to doorsteps are a daily component of modern life. Elevating the packaging and its contents can turn a quotidian unboxing into an unexpected delight. Firestone Walker includes food or merchandise pairings in shipments, along with brewer notes. “We’re leaning into the experience of each box,” Yeo says.
Bevana sends beers in branded boxes that might also include stickers, discount codes, or information about future beers. “We’re using that as an opportunity to communicate with customers,” Gore says.
And there might be more potential customers to come. The United States Postal Service currently does not deliver alcohol. To reverse the Prohibition-era ban, Congress introduced the USPS Shipping Equity Act in May to permit home alcohol delivery in states where it’s legal.
The USPS “was built to ship to everyone,” says Katie Marisic, the senior director of federal affairs for the Brewers Association. This would create additional competition for shipping, opening new DTC opportunities for breweries and drinkers alike. “Getting access to that is important to them,” says Marisic. “And it’s important to the industry.”
Dispatch
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Contributing editor Joshua M. Bernstein is a beer, spirits, food, and travel journalist, as well as an occasional tour guide, event producer, and industry consultant. He writes for the New York Times, Men’s Journal, New York magazine, Wine Enthusiast, and Imbibe, where he’s a contributing editor in charge of beer coverage. Bernstein is also the author of five books: Brewed Awakening, The Complete Beer Course, Complete IPA, Homebrew World, and Drink Better Beer.
