The wholesale market for craft beer in Colorado is not only crowded, it's in a permanent state of flux. As big distributors gobble up the competition, it puts upstart breweries in a difficult position: Self-distribution is fine and dandy in your backyard, but it's impossible to efficiently grow a statewide footprint without outside help.
Dave Thibodeau, co-founder of Ska Brewing in Durango, is in the position of understanding the perspectives of both the brewery and the distributor. "It allows us to understand the challenges of our wholesalers," he says.
While Breakthru Beverage Group distributes Ska in other parts of Colorado, the brewery has had something of a fiefdom in southwestern Colorado. "We've been self-distributing since we opened up in 1995," says Thibodeau. "When Left Hand merged with Tabernash [in 1998], they formed Indian Peaks Distributing Company. They put together a network of distribution companies."
In 2000, Left Hand teamed with Ska, Bristol Brewing, and other Colorado breweries to distribute each other's beers in their respective regions. The collective also brought a few out-of-state brands into the fold.
Thibodeau says Ska was "the southwestern arm" of the statewide network until C.R. Goodman bought Indian Peaks from Left Hand in 2006. "We didn't sell to C.R. Goodman," says Thibodeau. "They didn't really want to buy us. To come over the passes to sell craft beer in the rural southwestern corner of Colorado didn't really make sense to them."
Breakthru in turn bought C.R. Goodman in 2016. "It was a blow," says Thibodeau. "A lot of our brands chose to move to Breakthru down here."
Ska now distributes its own beers in southwestern Colorado, as well as beers from Left Hand, Bristol, Roaring Fork, Stone, Marble, La Cumbre, Snake River, and a few other breweries. "Our biggest one down here is Telluride Brewing," says Thibodeau.
The territory spans seven counties, but consolidation constantly changes the map. "Our territory is basically Pagosa Springs over to Durango and we do a loop up to Telluride through Ouray," says Thibodeau. "We have always just done our own thing. Our territories don't line up with anybody's.”
But it's a good use of existing capacity. "To sell our own brands, we're going to do it regardless," he says. "We have trucks cruising around and our brands complement each other."
Distributing other brands is not as much about profits -- other brands account for about 3 percent of Ska's total wholesale business -- as it is about friendships with other brewers. "We're definitely selective of the brands we take on," says Thibodeau. "We look for brands that complement the existing selection and that we have a good one-on-one relationship with."
Wholesaling is especially difficult for small breweries. Big distributors often don't want to take on a small new brand and, even if they do, it's easy to get lost in the mix. Thibodeau sees the coming changes in the grocery market as yet another hurdle.
"It's really challenging, especially when you look at the ABI network," notes Thibodeau. "Now it's the illusion of choice." He points to AB InBev's takeover of taps at airport bars and other captive markets coast to coast with their own brands like Goose Island and Breckenridge as the craft counterpoints to Bud and Bud Light, noting, "You certainly can't compete on price."
Small breweries that are self-distributing on the Front Range that "don't want to give that up but want to go statewide," says Thibodeau, don't have too many options. "Those breweries have a lot of challenges," he says. They can sign with a big distributor, but those distributors’ portfolios are loaded with bigger fish. "For better or worse, that's where [distributors] have to focus."
"It's like a giant jigsaw puzzle when you look at all the counties and different suppliers," Thibodeau says of the wholesale map. "How does this all fit together?"
"It's going to get more challenging," he adds, calling Ska "the perfectly wrong business model and size" for the current market. "More and more breweries are opening but there are less wholesalers. . . . It's a lot easier for a bar or liquor store to have less wholesalers."
Other Colorado breweries, including Tivoli, TRVE, and Crooked Stave, are also distributing other brands. Thibodeau is interested in putting together a new network like Indian Peaks. "Can we create a statewide wholesaler footprint to offer another option?" he wonders.
TRVE's Nick Nunns "has a cool model," says Thibodeau. "He looks for kindred spirits, people who aren't concerned with volume as much as quality. He's a good example of someone who's uncompromising."
Eric Peterson is editor of BreweryWeek and CompanyWeek. Contact him at firstname.lastname@example.org.