Pepsi chairman and CEO Ramon Laguarta essentially said as much when he told analysts, “We have an opportunity to create a distribution system in the U.S. ![]() Pepsi will use the wholesale operations to ship the beverage to retailers while Boston Beer, which will produce the hard soda in its facilities, will continue to use its regular distribution network to put the hard soda in package goods stores, bars, and restaurants.Įxisting distributors are likely fearful that Blue Cloud will essentially allow Pepsi to bypass the three-tier distribution system and act as its own wholesaler and sell directly to retailers. When Pepsi and Boston Beer came together to produce the hard soda, they formed a joint venture called Blue Cloud Distribution that will be responsible for selling, delivering, and merchandising Hard Mtn Dew. While distributors play an important role in getting beer moved around the country - they’re the reason many local and regional craft beers are able to become nationally popular - they’re doing so from a government-protected vantage point. Wholesaler and retailer margins account for more than half the cost. A few years ago Huffington Post explained how this archaic system makes a six-pack of craft beer cost $12 or more, or double what a mass-produced beer from a macro brewer goes for. The required use of wholesalers results in less competition and drives up alcohol’s cost. When you hear brewers talking about depletions, this is what they mean: sales to a middleman - the middle tier - that they’re forced to use. ![]() It requires them to first sell their booze to a distributor or retailer who can then turn around and actually sell it to drinkers. A relic of Prohibition’s aftermath, the three-tier system prohibits brewers, distillers, and vintners from selling alcohol directly to the public.
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