The beer industry is comprised of brewers, wholesalers and retailers (including D-distributors), making up what are known as the three tiers of the beer industry - or three-tier system. Combined, they are a major contributor to not only the National economy, but to the Pennsylvania economy as well. The overall beer industry directly and indirectly employs 80,873 Pennsylvanians and provides wages and benefits of $2.3 billion. The beer industry in Pennsylvania also pays $1.1 billion in direct federal, state and local taxes. These numbers reflect the contribution of all three tiers: brewers and importers, wholesalers and retailers. It is also important to note, that the United States is the world's largest producer of beer. More than 90 million Americans enjoy a glass of beer responsibly and moderately.
PBA (Pennsylvania Beer Alliance) represents the second tier - more than 50 licensed independent beer wholesalers with operations servicing every county and legislative district across the Commonwealth.
Beer Distributing - An Overview
Many people may think beer wholesalers simply deliver beer from the brewers and importers to the local retailers. However, their role within the three-tier system is much more involved than merely delivery. Wholesalers purchase beer from the brewers, reducing the brewers' capital requirements and transferring the risk of retailer non-payment to the wholesalers. The wholesalers then store the beer at their facilities until retailers order it. Because warehousing and delivery are done locally, retailer inventory is kept to a minimum and costs associated with beer storage are significantly lowered. Additionally, same day or next day delivery helps maintain the freshness of the product consumers have come to expect.
The wholesaler also sells the beer to the retailers. Retailers include such outlets as your local beer distributor, local restaurants, pubs and taverns, sports venues and clubs. With the wholesalers responsible for selling the beer to retailers, smaller brewers, those which brew specialty and micro beers, also benefit as they often cannot afford to employ a large sales force. Thanks to your wholesaler, consumers have an enormous variety of beers to choose from.
Your typical Wholesaler
On average (Nationally), a beer wholesaler has annual sales of $11.8 million and employs 36 workers. Nearly all wholesalerships are family-owned and -operated, often by descendants of their original post-Prohibition founders. The typical wholesaler maintains a temperature-controlled warehouse and operates a fleet averaging several delivery trucks.
To run a successful beer distributorship, the wholesaler needs a variety of employees. From warehouse personnel, salespeople and marketing professionals to driver-salespeople, management and logistics personnel, beer wholesaling is rapidly developing into a high-tech industry. However, people with a variety of skills are needed to keep these businesses operating on a daily basis.
It is becoming a common business practice for wholesalers to monitor their delivery trucks via computer. Many wholesalers have onboard tracking devices to know the precise location of each delivery truck and salesperson. Pagers, cell phones, personal data accessories and other handheld devices are also standard operating equipment.
Warehouse personnel are responsible for taking inventory daily - often several times each day! Beer inventory is labeled using bar code technology. When taking inventory, a warehouse employee uses special electronic equipment that reads the bar codes and keeps track of stock. When beer is being prepared for delivery, each order is given its own pallet, and affixed with a purchase order. The beer is then loaded onto the delivery trucks.
Beer wholesaler salespeople utilize three sales systems - pre-sales, delivery/driver sales (pedal) or a hybrid system made up of both pre-sell and pedal-sell. When trucks are loaded with pallets of pre-sold orders, there is also room to include one or two extra pallets of various brands. The driver-salesperson then calls on various accounts to take inventory and restock brands as needed. This is called delivery/driver sales. When trucks return from delivering, inventory is often taken again prior to unloading the beer back into the warehouse.
Since wholesalers operate fleets of trucks and other vehicles, it is necessary, of course, to maintain a truck service center within the operation. This requires a staff of full-time mechanics to handle day-to-day maintenance and upkeep of the trucks and to take care of major maintenance needs.
Similar to their counterparts in the soft drink industry, beer wholesalers are closely aligned with the brands they sell. Their contracts with brewery suppliers mandate that they distribute fresh beer to all licensed retail accounts in their assigned territory.