Beer is still being poured at the Griffin Tavern, but owner Debbie Donehey is tapped out when it comes to patience with her Chantilly-based supplier, Premium Distributors.
She said Premium is “threatening” to change her regular beer deliveries from once a week to every two weeks. Donehey said the Griffin doesn’t have the storage space for two weeks of kegged beer to keep on hand to serve customers, leaving her with a dilemma — and in a froth over the situation.
A Premium spokesperson acknowledged deliveries are being handled differently than in the past, but said it’s for the purpose of streamlining ordering and delivering to better serve brewers and retail customers while reducing travel and fuel consumption in making deliveries.
Asked about her use of the word “threaten,” Donehey said she wasn’t personally threatened. But the owner of the Flint Hill tavern does see the large corporation doing harm to her business.
“My guess is it’s because Premium Distributors was bought out one to two years ago by a large corporation, and we’re the small dogs and they are the big cat,” she said. “Their bigger customers probably aren’t hurt — the Friday’s of the world,” adding that the TGI Friday’s chain and other larger establishments with more storage space probably “don’t care” about less frequent deliveries.
Premium is owned by Reyes Holdings, based in Chicago, which includes the Reyes Beverage Group, Reinhart Food Service and Martin-Brower Group. The last is a food distributor for fast-food restaurants, including McDonald’s.
Donehey also said she sees Virginia Department of Alcoholic Beverage Control (ABC) regulations that allow brewers to set up exclusive delivery territories with Premium and other distributors — and what brands those distributors can deliver — as part of the problem she faces.
She has to deal with Premium to get Guinness, Harp and New Castle draft beer delivered in kegs. Premium also supplies her with bottles of Blue Moon, Coors Lite, Corona, Miller Lite, St. Pauli Girl and Yuengling. If she doesn’t do business with Premium, she won’t be able to get those brands for her customers.
“Some customers may be okay not to have certain beers. I’m more interested in . . . how ABC’s rules affect mom-and-pop shops,” she said. The regulations can be a hurdle for smaller restaurants and shops that want to grow.
Another part of Donehey’s frustration is that she said that she now has to phone a call center, whereas before she had a sales representative to contact. She says she’s had trouble getting her phone calls returned to answer her complaints.
Donehey said she thinks Premium has “been getting pushback” from other customers on the delivery issue. “When my manager has called the call center about when the switch to two weeks will be, nobody can say when,” she said. “I don’t think the people at the top [at Premium] have heard from us.”
Donehey said she spends $20,000 a year on beer from Premium, Griffin’s supplier for 11 years. She doesn’t have a contract with Premium but the ABC regulations prevent her from getting the brands of beer Premium supplies from another distributor.
Andy Thompson, owner of the Thornton River Grille, the Corner Store and Rudy’s Pizza in Sperryville, as well as Tula’s off Main in Washington, said his deliveries already have started coming at two-week intervals. “One week the delivery didn’t show for a full week and I was short on beer. I had to call to find out what was going on.”
Thompson said that Reyes, the parent company of Premium Distributors, now has a centralized ordering procedure and that “all orders go through Chicago.” He said he previously ordered through Premium’s distribution site in Chantilly. Now, he said he contacts the call center or goes online to place an order.
“It’s faceless now,” he said of the way the ordering is handled. “I don’t really have contact with anybody. The phone bank has mostly kids” answering calls, he said.
Thompson said the storage issue is less of an issue with him than it is for Donehey because he only has four beer taps; Donehey has seven or eight. “I probably don’t go through as much beer as she does,” he said.
Storage for two weeks is a concern though, Thompson said, as well as figuring out how much to order to get him through two weeks instead of just one.
“Premium delivers on Monday and I have to phone in my order on Friday. I have to guess what I’ll sell over the weekend and order two weeks’ worth,” he said. A holiday that falls on a Monday makes ordering even more problematic. “This past holiday I had to order for three weeks since they don’t deliver on Memorial Day,” Thompson said.
“We are tiny fish in a big pond,” Thompson said, speaking of his likely standing among Premium’s many clients. “If I have to, I’ll make it work.”
Thompson estimates more than half of his beer comes from Premium, though he can still get craft beers from microbreweries and brands such as Budweiser — which Premium doesn’t distribute — from other distributors.
“Premium and Reyes are the big dogs. They have a huge portfolio and a lot of products,” he said.
“We do reroute often to ensure customer service and to sustain our operations,” said Molly Reilly, a spokesperson for Reyes Holdings. Rerouting refers not to how a delivery truck gets from point A to point B, but also to adjustments made in light of sales volume, purchasing patterns and seasonal fluctuations.
Premium aims to ensure “a complete and accurate order so that the customer gets exactly what they want,” she said.
In days gone by “a distributor might drive around with a truck full of beer. Maybe he came more frequently, but the customer didn’t always know when he was coming. How much value is there in that?” Reilly said.
She said Premium has looked at “how can we get there more efficiently and reduce congestion on freeways” while making sure customers “get what they need and when they need it.”
Reilly said “we’ve built up a team of people to service accounts.” There may be three to four people working on a given account, including sales people who let customers know about new brands that are available.
Customers can call in orders on the “beer line” day or night or email the orders. Those who call in typically deal with the same people at the call center who are assigned to a particular region, although if there is a heavy volume of calls someone else may pick up “because we don’t want people to have to wait more than 30 seconds,” Reilly said.
Someone at the phone center will also call a customer to confirm that a delivery is on its way. Reilly said she doesn’t agree that there is less personal contact between Premium and its customers than there was before.
“We’re trying to evolve like other industries,” she said. “It is in the interest of delivering better customer service.”
There will be a meeting next month between the Virginia Beer Wholesale Association — the trade group Premium and other distributors belong to — and representatives of restaurants and taverns to discuss the delivery issue, said Thomas A. Lisk, a Richmond attorney who represents clients on regulatory matters, including the Virginia Hospitality and Travel Association (of which Donehey is a member). If the meeting doesn’t lead to the differences being resolved, legislation could be proposed for the Virginia General Assembly to consider next year.
The present ABC regulations are “not designed for the 21st century,” he said. He’s been meeting with restaurant owners to talk to them about the problems and identify what changes should be pursued. He said one legislative change that could be sought would “allow retailers to obtain their alcoholic beverage product from a competing distributor of the same brand where the incumbent wholesaler who has an exclusive territory is either unwilling or unable to make timely deliveries of the product in question.”
He said there’s been no concerted effort to make changes in ABC rules in recent years.
He explained that the alcohol industry has been working under a three-tier system consisting of manufacturers, wholesalers and retailers since the end of Prohibition in the 1930s. The split system was designed to control aggressive marketing, Lisk explained. “So Anheuser Busch has to go through a distributor and can’t sell directly to a restaurant itself,” he said.
States regulate alcohol sales in different ways but have adhered to the three-tier system. Manufacturers choose a distributor who then has exclusive rights to sell in a given territory, which doesn’t, Lisk pointed out, violate federal antitrust laws. All major brands are sold under this arrangement.
“Distributors are consolidating and merging. They’re trying to control costs by cutting back on deliveries to smaller customers,” he said. “That puts the smaller retailer in a bind, in particular, in regards to draft beer because they don’t have the physical space to store it.” He said some small retailers are getting deliveries just once a month.
“An English pub almost has to have Guinness on tap,” and can’t risk running out before the next delivery, he said of the situation faced by Griffin Tavern and others like it whose customers expect to be able to order certain beers.
Most restaurants and taverns don’t sell a large enough volume of beer to get a discount from their distributor as do “big box” retail stores.
“The bottom line is what it’s all about,” Lisk said.