Inside the Warehouse of the Middle Tier

This is the fourth edition in a 5 part series on the distribution of craft beer in Northern Colorado. To read the first article, click here, for a history of distribution, here or to learn how Odell Brewing Co. self distributes, click here

Next time you drive down I-25 take a closer look at the warehouses near Crossroads Blvd. Some of their parking lots will be full of trucks being loaded with pallets of beer and emblazened with the brands of it contents.  Two of Northern Colorado’s biggest distributors HCB Logo_blue0716_simplehave large warehouses there that serve the area, American Eagle Distributing Company and High Country Beverage.

Both companies are family owned and employ dozen’s of local residents. They also both represent major brands; Budweiser for American Eagle and MillerCoors for High Country Beverage. Not to mention, both represent several craft beer brands, both local and national. As their brand portfolios grow with the craft beer boom they are having to adapt the way that they do business. Each product that comes into the warehouse receives a SKU, or Stock Keeping Unit, the enables it to be tracked. As more and more SKUs are being created, better systems are needed to keep things flowing. “We have been forced to get creative”, says Matt Dravet of High Country Beverage.

HCB4Starting in 1996 carrying around 50 Coors brands, High Country Beverage has since grown to have over 250 brands with over 800 different SKU’s and representing craft brands such as New Belgium, Oskar Blues, Lagunitas and Alaskan Brewing. With the growth they are running out of space in their small warehouse. In addition to the main building at 5706 Wright Drive, they have another building that houses all of their point of sales materials such as posters, signage and more. Plus, another building that stores additional pallets of beer that are moved to the main facility for processing almost daily.

High Country Beverage has a well oiled machine of technology and personnel that enable a 3 week turn over of product in their warehouse. Since implementing a Voice Pick system in their warehouse almost a year ago, they now have a 99.98% accuracy rate. After a sales representative places an order, another employee “palletizes” the beer. The orders that will be dropped off first will be put on the top of the pallet, enabling the driver to quickly and easily service accounts. Once the pallet plan is created, it is sent to the warehouse where an employee will physically build the pallet.

The new voice pick systems works off of Apple products and also includes a scanner that fits on the finger tips of whoever is building the pallet. The system will read the product and quantity to the employee, who then finds and scans the proper SKU before he can move on to the next product of the pallet. Luckily, the employees of High Country Beverage are a bit more professional than me, as the first thing I thought of doing if HCB3I had one was to run around the warehouse pretending to shoot lasers out of my finger tips. Phew! Phew! Finally, once the pallet is completed, it is ready to be loaded onto the truck. To double check, the pallet is weighed to ensure that it is the proper weight for the products that should be on the pallet.

American Eagle Distributing also uses a Voice Pick system known as Damatic, but they operate on a larger scale. They just completed a $1 million renovation to their 120,000 warehouse that was built in 2002. In the last 5 years, the company has increased from 250 SKUs to around 1250. This needed renovation included a massive cooler, enabling all products to stay cold during their time with American Eagle and making them more lucrative to craft brands. A new racking system was implemented, that takes advantage of the tall warehouse ceilings by stacking product to the top and utilizing rollers to make sure the freshest product leaves first. In addition, they also have created a new system for tracking the kegs that they sell. With so many new beer bars that focus on a high turn over of specialty brands, it has forced the way they distribute and track them to be changed.

Despite increasing their craft portfolio, large brands of Coors, Miller and their products make up the majority of revenue for High Country. Craft brands still represent only about 20%, or 600,000 cases, of their over all sales, HCB2despite the products taking up over a 1/3 of the warehouse space.  The same is true for American Eagle, whose main seller is Budweiser brands.  However with the increase in craft beer, “it has forced big beer to change and for us to take on a bigger assortment of products”, according to Fred Liske of American Eagle. American Eagle has even created a separate division, known as Gold Seal Brands, that handles all the craft beers and spirits in the companies portfolio.

The changing face of craft beer is causing the entire beverage industry to change. Getting all of the new and exciting brands to your fridge or favorite tap house is a juggling act that is always evolving. Companies like High Country Beverage and American Eagle Distributing are on the forefront of creating and implementing changes in their business practices enabling them to keep up with the growing and changing environment of craft beer.

Up Next in the Series:

May 30: Rosie the Distributor

Bonus: Tracking a case of beer from Oskar Blues Brewery to consumption

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