Inside the St. Louis-based Lohr Distributing Co.’s refrigerated warehouse less than two miles north of the Anheuser-Busch InBev brewery, pallets of Budweiser bottles, Busch cans, Bud Light kegs and other A-B products fill vast rooms from floor to ceiling.
But in recent months, something new has started popping up in corners of Lohr’s warehouse: beer from local and out-of-state craft breweries. Lohr executives are banking that reaching into the lucrative craft beer market for the first time in the family-run company’s 47-year history will reap rewards.
“We see craft beer as the future of how we want to grow this company,” Lohr Vice President Kurt Leinauer said. “We’re investing a significant amount of time, money and people into making sure we provide the same level of service and knowledge on the craft side that we always have with the rest of our brands.”
Lohr’s leap into the craft segment took off in October, when it signed local distribution deals with St. Louis-based Six Row Brewing Co. and Griesedieck Bros., followed by contracts with New York’s Southern Tier Brewing Co. and Kansas’ Tallgrass Brewing Co.
Around the same time, Lohr bought Maryland Heights-based Gateway Wine & Spirits. The move gave Lohr new territory in St. Louis and St. Charles counties and added liquors and wines to its portfolio, which at one time had been all beer.
Last month, Lohr picked up three new craft beer accounts: San Diego’s Green Flash Brewing Co. and local brewpubs Morgan Street Brewery and Ferguson Brewing Co.
It also hired an employee, craft beer representative Cory King, to help lend credibility to its new push. King is leading all Lohr sales reps in becoming certified through the Cicerone program, a Chicago organization that tests beer knowledge.
“We all are learning as much as we can about craft beer, but we’re not experts yet, so we needed a go-to guy who could guide us,” Lohr principal Bob Gassoff said of King, who most recently worked as a manager as Soulard’s International Tap House. “Cory has experience on the wholesale side, experience on the retail side, and he’s a homebrewer. He knows beer.”
Lohr’s salespeople were part of the reason Mike Rami sought out Lohr when his Six Row Brewing Co. in midtown needed a Missouri distributor.
“The fact is, these A-B guys have the biggest and best sales force,” said Rami, who uses another A-B distributor, Donnewald, in Illinois. “They’ve been selling beer for the longest, and they don’t have too many craft accounts, which means they can really focus on the ones they do have.”
Leinauer and Gassoff agreed, saying they don’t want to take on so many craft accounts that Lohr loses the ability to effectively sell those products — or A-B’s. They said it was too early to tell whether their investments in craft would pay off, but they are confident they can tap into the growing segment’s profits without disrupting their relationship with A-B.
Within the network of 600 or so U.S. independent wholesalers that do business with A-B, “hundreds” are mirroring Lohr’s newfound interest in craft beer, according to Harry Schuhmacher, editor of Beer Business Daily.
“Within the industry we call it Anheuser-Busch’s ‘jailbreak,'” Schuhmacher said. “While in the past A-B distributors tended to be exclusive distributors of A-B’s products, today they are heartily taking on competing brands, particularly from craft breweries. A-B distributors are going after independent craft brewers with gusto.”
And “you can’t blame them,” Schuhmacher said.
Craft beer’s high profit margins and proven popularity appear to make the extra expenses of storing, selling and delivering the products worthwhile to distributors.
“That’s where the money and the growth is,” Schuhmacher said.
Budweiser and its sibling brands remain Lohr’s primary focus, despite the company’s foray into craft. As the exclusive A-B distributor in St. Louis city, Lohr moves about 3 million cases of A-B beers each year, a far greater number than the amount of beer it sells for its handful of craft accounts.
Craft breweries — defined by the Colorado-based Brewers Association as independently owned companies that produce fewer than 6 million barrels of beer a year — make only 5 percent of the beer consumed in the United States.
But the industry has seen rapid sales growth in recent years despite a slight decline in overall U.S. beer consumption.
Asked whether the company felt abandoned by Lohr’s moves toward craft beer, A-B’s vice president for business and wholesaler development, Don Johnson, pointed out that his company had a stronghold on Lohr’s sales.
“Nine out of every 10 beer cases sold through the nationwide Anheuser-Busch distribution network continue to be Anheuser-Busch products,” Johnson said in a statement.
“We are focused on providing our wholesalers with a broad portfolio of products to compete.”