IBA hits milestone – 1 million bbls of buying power

Back at the 2016 Craft Brewers Conference, I remember sitting in a hotel conference room in rainy Philadelphia with a handful of craft brewery leaders as they listened to a pitch on how to team up and leverage their collective buying power via a new co-op. Their stated goal at the time was gathering a mass of quality craft beer members to, combined, achieve “1 million bbls” of buying power.

What came to be known as Independent Brewers Alliance (IBA), got halfway to this 1 million bbl mark only a year later. There were some other incremental updates since 2017, but they kind of dropped off my radar.

“As you know, in 2016 the cooperative was facing a classic Catch-22,” says Matt Hopkins, the IBA’s Executive Director. “We had no member-brewers to use to motivate suppliers to offer us savings programs. We had no savings programs to use to recruit member-brewers. 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 cooperative could become rather than what it was.”

From there, the strategy was simple:

Recruiting more brewers – ones who either believed in the idea or saw real opportunity to save, and ideally both
Finding more suppliers willing to offer co-op members some mix of meaningful savings on raw materials and operational expenses, guaranteed access to supply, year-end volume rebates and lower order quantities. (Note, members do not have change any of their own suppliers).
Encouraging member-brewers to participate in as many savings programs as possible and rewarding them for doing so.

Well, the day has finally come. In the past 12 months the IBA has signed over 150 new member-breweries from across the U.S. and Canada and is on the cusp of that 1 million bbl milestone.

“Our cooperative is on a roll,” Hopkins says. “Going into CBC we had 231 members across the U.S. and Canada with a combined barrel count of over 900,000. At CBC, over 370 interested breweries came to our hospitality suite. We expect to cross the 250-member mark and 1-million barrels in a matter of weeks.”

It is more than just a symbolic, round number. A typical 2,000 or 3,000 bbl brewery can save tens of thousands by participating in just a one or two savings programs. Suppliers are now approaching the IBA, interested in a win-win relationship with the IBA and access to the member base. CBC also marked the first distribution of over $125,000 in profit sharing to Member-Owners, fueled by annual volume rebates.

“The primary recipients were some of the first brewers to join the IBA, the ones who believed in the potential of a cooperative in the craft beer industry,” Hopkins says. “It was great to reward them for their commitment, and just the beginning of what is possible.

Key IBA milestones

Can Savings Programs. Starting in 2017, the introduction of savings programs on printed and sleeved cans, brites and ends – 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 subsequent can shortages and cost increases. This helped, and is helping a number of members get access to needed supply and lower minimum order quantities – while giving them immediate savings and protection against cost increases.

“We’ve done this in other categories facing supply chain challenges – most recently custom tap handles and glassware,” Hopkins says.

Additional Meaningful Savings Programs. The gradual addition of a number of other savings programs across a wide array of materials and other expenses – sometimes from multiple suppliers to address east and west coast freight issues. These include but are not limited to:

Kegs – Sales, Parts and Recyclable Keg
PakTechs
POP – Signage and Displays
Custom Tap Handles
Dry Yeast Strains for Ale, Lager and Cider
Custom Glassware
Sanitation Chemicals
Recycled Wood Barrels
Labels – All Kinds
Certain Hop Varietals and Extracts
Fresh Fruit Purees
Branded Apparel & Merchandise
Brewery Hose
Tap Handles
Engineering Consulting and Brewing Equipment
Water Treatment Programs
Safety Consulting and PPE Equipment
Business and Health Insurance
Lab Testing Services
Payroll Processing, HR Support from ADP
Waste/Recycling Services
Hardware from Ace Hardware
Office Supplies from Staples and Office Depot
Freight and Freight Auditing – Small Parcel, LTL, Truckload

The Affiliate Program. The creation of a second class of membership in 2019. At first, joining the IBA meant becoming a Member-Owner. This requires a one-time stock purchase for $1,000, annual membership dues of $2,500 plus $.05 for every barrel produced the previous year. This gives them ownership in the co-op, voting rights, full access to all savings programs and makes them eligible for profit sharing opportunities.

“For some brewers, particularly those unfamiliar with the power of cooperatives, this was a tough sell,’ Hopkins explains. “So, in 2019 we created the Affiliate program which allows brewers to participate in savings programs dues-free, no stock purchase and no barrel fee, but with lower savings, no ownership, no voting rights and no eligibility for profit sharing. This is often a good fit for the smaller breweries, allowing them to ‘test-drive’ the co-op for free before deciding to become a Member-Owner (which many have).”

This was an instant success:

Access to the IBA’s savings program helped many brewers save money and protect their margins during the supply chain crises and pandemic market disruption.

Hiring a Director of Brewer Recruitment in 2021. Augmenting the IBA’s full-time staff with Laurie Jeffries as the Director of Member Recruitment in 2021 has been a big help. Laurie was the cofounder of the successful Jolly Pumpkin Artisan Ales in Dexter, MI. There she took the startup brand of Jolly Pumpkin Artisan Ales – an unheard style of sour beer – to national and international recognition. At the same time, she helped the brewery gain distribution, open seven restaurants and develop productive relationships with suppliers, distributors and the brewery’s staff. Laurie has significantly increased the pace of brewer signups.

Hiring a Director of Supplier Relations in 2022. Peter Licht – another key addition to the IBA’s full time staff, one who also has street cred and knows the industry inside and out. His role as the IBA’s Director of Supplier Relations is to work hand in hand with brewer-members and use his brewing and purchasing expertise, and extensive supplier relationships to build new and stronger savings programs. Having someone dedicated to this is a big deal for our member-base. Here’s a little more on his background.

What’s next?

Here are some of the group’s future goals or milestones that they hope to hit in the next year or two:

Introducing savings programs on some of the biggest raw materials categories – particularly malt and a broader selection of hops – both of which are in the works
Annual profit-sharing distribution of $1,000,000
500 members – both Member-Owners and Affiliates
Beginning to move beyond savings programs into some of the support programs I first heard about at CBC 2016 – such as offering support and sharing best practices for marketing, HR, distribution growth, quality assurance, legal issues, setting up better brewery tours and more.