Josh Schlesinger was in a tight spot. On the eighth day of running his own beer distribution business, his bright green delivery van was stuck behind a small bus on a narrow Portland street.
No problem. He rolled the left side of his van up onto a sidewalk and inched forward. His left mirror squeaked past a utility pole. His right mirror made it past the side mirror of the bus by an inch or so. And Sleek Machine Distro was free to bring beer to the people of Portland.
It might not look like much, but Schlesinger’s tiny company represents change in Maine’s craft beer industry. While there has been explosive growth in breweries – the state counts at least 84 – there wasn’t any change in how locally crafted beer was distributed until Schlesinger and the Sleek Machine hit the streets.
Distributors typically have giant warehouses and a fleet of trucks to take products to their retail destinations across the state. Schlesinger has a used van, a used cooler and one client.
“All I am really trying to do is expand the lexicon a little bit,” he said.
His one client, Bissell Brothers, is one of the hottest brewers in the state. The brewery has grown exponentially since opening in late 2013 when it brewed fewer than 100 barrels of its flagship beer, The Substance. Now the brewery is making about 6,000 barrels of a variety of beer.
Josh Schlesinger loads beer from his warehouse space at the Portland Co. complex in Portland last month.
Schlesinger knows all about his client, since he was in charge of distribution for Bissell Brothers from the early days of the company. But the company ran into a problem: In 2015, the volume of beer it was making triggered a state law requiring the brewery to find a distributor by the end of this year. Since many distributors typically take about a 30 percent commission, the brewery’s managers feared they would have to either hike prices or accept lower profits.
But Peter and Noah Bissell, co-founders of the company, had an idea. Somebody could start a very lean distributor. Keep the overhead low and take a smaller cut of the brewer’s revenue. If there was a distribution company like that, the brewery wouldn’t have to raise its prices or operate on a thinner profit margin.
“We came to him and said, ‘Do you think you can do this?’ ” Peter Bissell said. “I’ve really enjoyed watching (Schlesinger’s) transformation to learn how to think like an owner and a starter. It’s really been a pleasure to watch. It requires a real mental shift to start something.”
Though he was a little reluctant at first, Schlesinger put together a business plan, got some seed money from his dad and made pitches to local banks to get a loan.
He was meticulous about coming up with his own money and paying a fair price for everything he bought to make it clear this was his operation, not something associated with Bissell Brothers.
“My lawyer said I was his first client who was more worried about making things transparent than he was,” Schlesinger said.
He bought Bissell Brothers’ old distribution van for $5,000, and its old cooler and had it installed for $7,000. He signed a lease in a worn warehouse in the Portland Co. complex, where the rent is $200 cheaper per month than he initially budgeted.
Schlesinger’s warehouse space is a monument to keeping costs low. He has a couple of old leather couches in his lounge, and that’s about it. He put up the wood paneling outside his used keg room. The old cooler is scratched and dinged, but it keeps the beer cold.
He charges less than established distributors because that’s the whole idea, he said, while declining to reveal what his commission is. Big distributors, Schlesinger says, come with a lot of overhead.
“It’s a fleet of trucks and merchandise and salespeople. It’s all this stuff,” Schlesinger said. “And where does the money for that stuff come from? The markup. It’s sales incentives and uncapped commission structures. That stuff costs a lot of money, and that money comes from somewhere.”
Josh Schlesinger delivers beer in the van he bought from Bissell Brothers.
After he gets a toehold, the plan is for slow growth. He distributes now in York County, Portland and up to Bath. He intends to seek other local brewers as clients. He also would like to solicit out-of-state brewers for pop-up events, such as a tap takeover put on by Sleek Machine Distro.
Peter Bissell says the arrangement with Schlesinger keeps their relationship intact. They all worked together at The Thirsty Pig, an Old Port beer bar, before the brewery started. Schlesinger was one of the first employees that wasn’t named Bissell.
It also helps the brewery maintain control over its distribution and avoid situations where a distributor could use one type of Bissell Brothers beer as leverage to get other products into local bars or stores.
“We didn’t want to put ourselves in a position where our beer would be used as a bartering tool for control of a draft line because, like it or not, that’s how this industry works on some levels,” Peter Bissell said. “At the end of the day, it’s a sales game and it’s about getting draft lines and getting space on shelves. … We didn’t want the beer to be used as a tool for sales of another beer.”
Chris Black, Nappi Distributors’ beer division vice president of sales, says Schlesinger and Bissell are off-base when they say a distributor might force a bar to take a beer it doesn’t want in order to get one it does want.
“I’ve been in the business for 20 years and I’ve never heard of that. That’s not reality. That’s a good way to get kicked off an account,” Black said.
Longtime distributors like Nappi offer some advantages, Schlesinger says. They are one-stop shops for breweries that want somebody to sell and deliver their beer, including out of state.
“What we can offer is reach,” Black said. “If (a brewery’s) business model is they want to stay local to Portland, (Sleek Machine Distro) might make sense. But if you want to reach out, we cover from Kittery to Brunswick, that’s where our scale comes into play. We have trucks out every day delivering products in our territory.”
Schlesinger says for now he’s happy to stay small and to stay connected to Bissell Brothers.
“I’m the one that moved damn near every keg since (Bissell Brothers) opened,” he said. “That beer on the manufacturing end is Noah’s baby. On a marketplace end, it’s my baby. I am deeply devoted to this beer.”
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