Back at the 2016 Craft Brewers Conference, I remember sitting in a hotel conference room in the Philadelphia rain with a handful of craft brewery executives as they listened to a speech about how to team up and leverage their collective purchasing power through a new cooperative. Their stated goal at the time was to bring together a mass of quality craft beer members to, combined, achieve “1 million barrels” of buying power.
What became known as Alliance of Independent Brewers (IBA), did not reach half of the million barrel mark until a year later. There have been other incremental updates since 2017, but they kind of slipped off my radar.
“As you know, in 2016 the co-op was facing a classic Catch-22,” says IBA Executive Director Matt Hopkins. “We didn’t have member brewers to use to motivate suppliers to offer us savings programs. We had no savings program to use to recruit brewing members. So at CBC 2016, as you saw, we had to rely on brewers and suppliers who had the foresight to see what a craft beer co-op could become rather than what it was.
From there, the strategy was simple:
- Recruit more brewers – those who believed in the idea or saw a real opportunity to save money, and ideally both
- Find more suppliers willing to offer co-op members a combination of significant savings on raw materials and operating expenses, guaranteed access to supply, year-end volume discounts, and quantities of lower orders. (Note that members do not to have change one of their own suppliers).
- Encourage member brewers to participate in as many savings programs as possible and reward them for doing so.
Well, the day has finally come. Over the past 12 months, the IBA has signed over 150 new member breweries from the United States and Canada and is on track to reach the one million barrel milestone.
“Our co-op is on the rise,” says Hopkins. “Entering CBC, we had 231 members across the United States and Canada with a combined barrel count of over 900,000. At CBC, over 370 interested breweries have come to our hospitality suite. We anticipate to cross the bar of 250 members and 1 million barrels in a few weeks.
It is more than just a symbolic round number. A typical 2,000 or 3,000 bbl brewhouse can save tens of thousands by participating in a savings program or two. Suppliers are now approaching the IBA, interested in a win-win relationship with the IBA and access to the membership base. CBC also marked the first distribution of more than $125,000 in profit sharing to member-owners, fueled by annual volume rebates.
“The principal recipients were some of the first brewers to join the IBA, those who believed in the potential of a cooperative in the craft beer industry,” Hopkins said. “It was great to reward them for their commitment, and this is just the start of what is possible.
Can savings programs. Beginning in 2017, the introduction of savings programs on printed and sleeved cans, brite and lids – and the expansion of this program over the years to include multiple suppliers, both international and domestic – just in time for the great bottle-to-can migration, and the ensuing can shortages and cost increases. This has and is helping a number of members access needed supply and lower minimum order quantities, while providing immediate savings and protection against cost increases.
“We’ve done this in other categories facing supply chain challenges — most recently, custom faucet handles and glassware,” Hopkins says.
Additional meaningful savings programs. The gradual addition of a number of other savings programs across a wide range of materials and other expenses – sometimes from multiple vendors to solve east and west coast freight issues. These include, but are not limited to:
- Drums – Sales, Parts and Recyclable Drums
- POP – Signage and displays
- Custom faucet handles
- Dry yeast strains for beer, lager and cider
- Custom glassware
- Sanitation chemicals
- Recycled wood barrels
- Labels – All kinds
- Certain grape varieties and hop extracts
- Fresh fruit purees
- Branded clothing and merchandise
- Brewery pipe
- Press the handles
- Consulting in engineering and brewing equipment
- Water treatment programs
- Safety advice and PPE equipment
- Company and health insurance
- Laboratory testing services
- Payroll processing, ADP HR support
- Waste/recycling services
- Hardware from Ace Hardware
- Office supplies from Staples and Office Depot
- Freight and Freight Audit – Small Package, LTL, Full Truck
The affiliate program. The creation of a second class of members in 2019. Initially, joining the IBA meant becoming a Member-Owner. This requires a one-time purchase of stock for $1,000, an annual fee of $2,500 plus $0.05 for each barrel produced the previous year. This gives them ownership of the cooperative, voting rights, full access to all savings programs and makes them eligible for profit sharing opportunities.
“For some brewers, especially those unfamiliar with the power of co-ops, this has been a tough sell,” says Hopkins. “So in 2019 we created the Affiliate Program which allows brewers to participate in savings programs with no fees, no stock purchases and no barrel fees, but with lower savings, no ownership, no voting rights and no eligibility for profit sharing. This is often a good choice for smaller breweries, allowing them to ‘test out’ the co-op for free before deciding to become a member-owner (which many have).
It was an instant hit:
Access to the IBA savings program has helped many brewers save money and protect their margins during supply chain crises and market disruption due to the pandemic.
Hiring of a brewer recruitment director in 2021. The increase in full-time staff at the IBA with Laurie Jeffries as Director of Membership Recruitment in 2021 has been a big help. Laurie was the co-founder of the successful Jolly Pumpkin Artisan Ales in Dexter, MI. There, she propelled the startup brand of Jolly Pumpkin Artisan Ales – a novel style of sour beer – to national and international recognition. At the same time, she helped the brewery gain distribution, open seven restaurants and develop successful relationships with suppliers, distributors and brewery staff. Laurie has dramatically increased the pace of brewer signups.
Hiring of a Director of Supplier Relations in 2022. Peter Licht – another key addition to the full-time IBA team, someone who also has a solid reputation and knows the industry inside out. His role as the IBA’s Director of Supplier Relations is to work hand-in-hand with member brewers and utilize his brewing and purchasing expertise, as well as his extensive supplier relationships, to create new, stronger savings programs. Having someone dedicated to this is a big deal for our membership base. Here’s a bit more about his journey.
Here are some of the group’s future goals or milestones that they hope to achieve within the next year or two:
- Introduce savings programs on some of the largest raw material categories – in particular malt and a wider selection of hops – both of which are in the works
- Annual profit sharing distribution of $1,000,000
- 500 members – member-owners and affiliates
- Starting to go beyond savings programs to some of the support programs I first heard about at CBC 2016 – like offering support and sharing best practices for marketing, HR, growing distribution, quality assurance, legal issues, setting up better brewery tours and more.