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Wednesday, May 21, 2014

Why can't you buy Yuengling, or all sorts of other beers, in Arkansas?

Posted By on Wed, May 21, 2014 at 3:08 PM

click to enlarge THEY'VE GOT A LOT, BUT NOT EVERYTHING: At Flying Saucer. - BRIAN CHILSON
  • Brian Chilson
  • THEY'VE GOT A LOT, BUT NOT EVERYTHING: At Flying Saucer.

Q. Why can't I get Yuengling, or all sorts of other beer, in Arkansas?

A. Alcohol is one of the most heavily regulated commodities sold in the United States, with each state setting up its own regulatory system. In some states — known as alcoholic beverage control states — the state itself is the only wholesaler. Arkansas instead uses a semi-privatized "three-tier system." The three tiers for beer in Arkansas are: 1) the manufacturer — the brewer, whether a giant company like Anheuser-Busch, a craft microbrewery like Schlafly or something in between, like Yuengling; 2) the wholesaler — companies like Glazer's or Arkansas Craft, which distribute the beer in the state; and 3) the retailer — convenience stores, liquor stores, restaurants and bars. The manufacturer sells to the distributor, the distributor sells to the retailer, and the retailer sells to consumers.

The impetus for a new beer coming into the state could come from any of the tiers. A brewery might decide it wants to enter the market and try to find a wholesaler to distribute the beer, either statewide or in a given area. Or wholesalers that think the market might be strong for a particular beer might try to convince a brewery to come in to the state. Retailers can also push wholesalers on this front — for example, South on Main wanted to offer Abita Light, previously not sold in Arkansas. The restaurant contacted Glazer's, Glazer's contacted Abita, and all of a sudden Abita Light was in town. That can have a ripple effect, too, since the distributor then has to sell it to any other retailer that wants to offer it.

But just because a wholesaler or a retailer (or consumers) want a beer in town doesn't mean that it will make economic sense for a brewery to sell in town. Jumping through all of the regulatory hoops to bring a beer into the state — plus the costs of permitting and registration, taxes and fees, transportation and marketing, and so on — is only going to make sense if they can sell a lot of volume. If there's just niche interest in a beer, you probably won't see that beer sold in the state.

"I get it all the time," said John Crow, owner of 107 Liquor in Sherwood. "Customers come in and they just got back from Alaska or a trip to California or somewhere and they say, 'I had this beer, can you find it?' Nine times out of 10 (probably close to 10 out of 10), no, we can't — because that's just not distributed in Arkansas and it might not ever be distributed."

Often, the bigger issue for craft beers is capacity — microbreweries may not be able to produce enough beer for multiple markets. "There's just so many cans of beer they can create," said Arkansas ABC Director Michael Langley.

That means they'll pick and choose markets, and sometimes a city like Little Rock misses out.

"Arkansas is a relatively small market," Crow said. "So we get passed over a lot. Oftentimes we're one of the last states to get different new products."

That brings us to Yuengling. The regional brewery, with manufacturing facilities in Pennsylvania and Florida, has to keep up with explosive growth in 15 states east of the Mississippi, plus the District of Columbia. Meeting that demand is the company's focus as opposed to expanding (and smaller craft breweries are doing the same, only in even smaller areas). If Yuengling does expand, Arkansas won't necessarily be its first choice.

"Texas sells about 10 times the amount of beer that Arkansas does," Langley noted. "If you're Yuengling, where are you going to send your beer? We're just a small state. But the market [for craft beers] has expanded in the last four or five years because a variety of wholesalers have gotten involved — Arkansas CraftGlidewell Distributing. We have a much larger selection than we had three or four years ago."

ABC's role is not to maximize the number of choices for consumers, Langley said, but he said more products in the market would be positive. "If Yuengling wanted to come in, we would let Yuengling come in. We appreciate the fact that beer is a commodity, and the more options you have, you grow your fan base and establish the longevity of the commodity." And that commodity, Langley pointed out, supports jobs at the various retailers, not to mention bringing in tens of millions of dollars in revenue.

Of course, when it comes to smaller craft brews, part of the appeal is that they're not a mass-produced product, distributed worldwide.

"By definition, craft brewers are never going to be giant," Crow said. "Most of these places don't want to be big — they just want to be as good as they can be."

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