Jim Mitchell keeps 10 beers on tap at his Downtown restaurant, and dozens of other domestic and imported brands for sale by the bottle.
Most cost more to stock than they did a year ago. Beer-makers are raising prices to cover their own higher costs for hops and brewing operations, while continuing to push the wholesalers who deliver beer to Mitchell's and other businesses to combine into fewer "master" distributors that cover bigger areas more efficiently.
About 32 beer wholesalers operate now in Allegheny, Beaver, Butler, Washington and Westmoreland counties, compared to 46 a decade ago.
Recent deals between major beer producers likely will lead to more consolidation of what once were small family businesses. Still, local wholesalers say Pennsylvania's tight restrictions on liquor sales are slowing the process compared to other states, including Ohio — where two wholesalers are suing MillerCoors in a fight to survive.
"It all trickles down. When there are global mergers and acquisitions, it eventually goes down to the local level," said Frank Fuhrer III, who with his father built a beer business that now ranks 20th in size nationwide, according to Beverage World.
Frank B. Fuhrer Wholesale Co. sold 13.4 million cases of Anheuser-Busch, Coors and other beers last year, generating $165 million in revenue. And it should move up a notch or two on the magazine's list next year with its December acquisition of Alfred M. Lutheran Distributors Inc., of West Mifflin, which sold 1.7 million cases annually.
The deal adds Sam Adams, Penn Pilsner, Sierra Nevada and other popular specialty and imported beers to Fuhrer's offerings, all trucked from the company's South Side warehouse across a 10 1/2-county area.
Beer drinkers opt for those brands far less often than they do Miller Lite and Coors Light, the two most popular labels in the Pittsburgh market.
But craft and European beers are growing in sales nationwide — unlike domestic brands, which fell about 3.5 percent last year. They're priced higher, and bring bigger profits, Fuhrer said.
"As far as domestic brands go, it is a fairly stagnant business around the country," Fuhrer said, "and locally, we have more of an uphill battle" because of the area's declining and aging population.
Wholesalers in Pennsylvania sell beers to restaurants, sports and entertainment venues and local retail distributors within territories defined by their agreements with brewers, as well as the licenses they obtain from the state Liquor Control Board. Under the state's unusual, and often criticized "three-tier" malt beverage sales system, retail distributors only can sell 24-bottle cases to consumers, and most grocery and convenience stores can't sell beer.
Bills that would allow small distributors to sell 12-packs, for example, probably will be debated again in the new legislative session, after failing to reach a vote last year, said Jay Weiderhold, president of the Pennsylvania Beer Wholesalers Association, which supports the moves known as "package reform."
Still, the changes likely to have the biggest impact on the local beer market are linked to bigger national developments.
Belgian InBev SA's $52 billion acquisition last year of Anheuser-Busch created the world's largest brewer. And SABMiller of London and Molson Coors of Denver combined their Miller and Coors operations in the United States through a joint venture last summer, to better compete with Anheuser-Busch.
Both have consolidated their distribution systems, in some cases dropping agreements with wholesalers for territories. Two Ohio companies, AFP Distributors Inc. of Glouster, and Beverage Distributors Inc. of Cleveland, sued MillerCoors LLC in August in federal court, challenging the brewer's move to drop their franchise deals.
Pennsylvania's license system and laws that govern wholesalers help to insulate them against aggressive cost-cutting moves by brewers, said Cris Hoel, a Pittsburgh attorney who focuses on alcohol and beverage issues. Still, determined suppliers can pressure middlemen to merge, and some third- or fourth-generation owners decided on their own to sell out their territories.
Many of the region's wholesalers, licensed as importing distributors, were founded in the tough days after Prohibition ended in 1933.
"Alcohol went from an illegal product to a legal product, and many people still looked down on that product," Hoel said. "It was hard, unattractive work carrying ice and bottles up and down tenement steps."
They persevered, and gradually earned respect. "Whenever the community needed 5,000 cups or a Little League outfield wall, they called the beer distributor," Hoel said. "Now, this wave of consolidation is causing these businesses to turn out the lights."
Fuhrer Wholesale started with one small Anheuser-Busch territory in 1982, acquiring other companies over the years.
Vecenie Distributing Co. of Millvale recently arranged with Fuhrer, in a move related to the Lutheran distributorship acquisition, to take over distribution of St. Mary's-based Straub Brewery beers for all of Allegheny County.
While Iron City and Straub are Vecenie's two main brands, "We've gotten involved in the craft business a lot, and that has increased our customer base and sales," owner Ken Vecenie said, citing some of the dozens of beers he distributes in a 15-county area that are made by companies such as Dogfish Head Craft Brewery in Delaware and Victory Brewing Co. of Downingtown.
Richard Booker of McKees Rocks-based Tony Savatt Inc., a major wholesaler of Iron City's beers in Allegheny, Beaver and Washington counties, agreed consolidation will continue.
"We have consolidated six or eight wholesalers since 1998," he said, because bigger businesses can better control costs. "We can deliver more efficiently in a bigger area, from a fixed warehouse."
Additional Information:Master distributors
Here are some of the large beer wholesalers, or importing distributors, in the region, and a sampling of the brands they handle:
Frank B. Fuhrer Wholesale Co., South Side: Anheuser-Busch, Coors, Yuengling, Corona Extra, craft beers and imports.
Tony Savatt Inc, McKees Rocks: Iron City products, Stoney's, Genny Beer, plus craft beers and imports.
Vecenie's Distributing Co., Millvale: Iron City products, Straub, craft beers and imports.
Galli Beer Distributing Co., New Kensington: Pabst Brewing products.
Wilson-McGinley Inc., Lawrenceville: Miller products.
