In a couple of weeks I will be speaking on this very same topic to on-premises owners and employees at the Nightclub and Bar Convention and Trade Show in Las Vegas, in a session called Rotation Nation: Maximizing Your Craft Beer Selection, it is going to be lots of fun and very educational for many members of the industry that are branching out into the ever growing category of craft beer. However, the twist to this blog and that topic, is that while both on tap handle management, they are very much covering different topics.
Rather than discussing how to improve the drinks per customer, increased seat time, and up selling, I want to discuss something that has been bugging me for a while now.
The actual flippin’ tap handle.
Yes, you heard me correctly, the tap handle itself.
You see, there is this misnomer with many members of the industry on the on-premises sales side about tap handles, which drivers the distributors, sales reps, and breweries absolutely insane about tap handles and that is this:
- They aren’t yours
- They are expensive
- There is a finite amount of them
This is not me bashing on the on-premises bars and restaurants, without them, the industry would flounder. The on-premises plays a critical role in the beer category and the economy in general. This is more coming from several years, from all three-tiers perspectives, of seeing a growing change in the industry, and witnessing the negative impacts of that change. This is a problem that distributors and on-premises retailers alike need to work together on to solve.
To explain this problem lets back up to the beginning.
The purpose of the tap handle – This is a dual sided answer, as it has two purposes. One, to serve as the actual mechanism to assist in the pouring of the beer, which is obvious. But by that logic, an apple jammed onto the faucet head would suffice for a short time as well, so why the unique branded tap handle? To display the brand and market it’s presence to the consumer of course. Everyone knows this. However, with the influx of the quickly rotating handles in the craft category, the plethora of handles at some locations, new mechanisms have been utilized to help the consumer see what is on tap. The consumer doesn’t even have to leave their office to see what is on tap anymore at many locations, with smart phone apps like Untappd for Business, and Tap Hunter, as well as the usage of tap cams that show live feeds of the current menu board, and then the digital menu boards from Digital Pour, SteadyServ, Taplister and WhatsonTap, to just name a few, which then link into social media accounts and the apps mentioned earlier. If a group of friends is considering a happy hour, they can now locate the beers that they are in the mood for prior to leaving work if they so choose, rather than deciding on a bar to go to. The culture is changing a bit, part of the new normal that we’ve been seeing sweep across all categories the past few years.
The point here is, the culture has shifted, tap handles aren’t the primary point of sale at the bar any more for what is on draft. They are becoming more ornamental than anything. How can I prove that? Count to yourself how many bars and restaurants you have seen that decorate their walls with unused tap handles. Go ahead, I’ll wait it may take a while. Some retailers I have spoken with say that the walls mounted with handles are their form of storage, and I can see that as a point, it is in essence free point of sale material, which vast majority of the bars and restaurants have become to expect to receive in the form of mirrors, tin tackers, coasters, glassware, umbrellas, and any other sort of point of sale material that the brewery marketing departments come up with to generate a uniqueness for their brand, yet these accounts, they still have case boxes or bins full as well.
The mechanical purpose of the tap handle is still in play, but the marketing purpose of the tap handle has taken a back seat to the modern world in many cases. You may say “Hey, wait, I know plenty of bars that do not have digital menus of any kind!” and to that I agree, there are many locations that have chalkboards up instead of digital, but guess what, that chalkboard is still doing the job of displaying the full array of beers, with the extra information about the beer, IBU, ABV, location, style, and price that the tap handle does not, hence relegating the tap handle to merely a decoration for majority of breweries.
So now I will get into the points I was making to the on-premises accounts.
They are not yours:
This sounds like something confrontational, and I do not intend for it to be, but the reality of it is, who paid for it? Did you as the bar owner purchase the handle when you purchased the keg and paid the keg deposit? 99.99% of you can not honestly say yes to that. Did you pay a deposit on it like the keg to help ensure its return? A percentage I just made up in my head since there is no research on this yet can’t say yes to that either. You were handed a point of sale tool, to match the beer to help sell the beer in good faith with the expectation of the distributor receiving it back when you are done. Each state has it’s own definitions of what is considered point of sale items, and each state has different point of sale rules between suppliers and retail accounts, to avoid tied-house law infractions aka “pay to pay” issues, so to get into those details I’ll have to do a different blog, or you can refer back to a blog I did in 2013 about Tied House law from the alcohol producers perspective HERE. The point of sale tool being discussed here is the tap handle.
Then it ends up in a tub in a back room with 6 other of the same brand of tap handle only to be forgotten the next time that brand of beer is rotated on, and on the next beer order there is a request for another one, because the currently held handle has been forgotten or it isn’t “the retailers job” to make sure that there is a handle to match the beer. This in turn then causes the distributor and the sales rep come up with, because it is their job to make sure that the accounts are happy and the beer keeps flowing, and everyone makes money.
Until you get to the harsh reality that that 6 handles in the back room and the 7th that just made its way onto the bar just happen to have cost the distributor more money to purchase than the keg you just purchased from them. Maybe it didn’t end up in the tub, and it ended up on the wall as a decoration to make the environment more authentically crafty. Same difference, the distributor doesn’t have access to their merchandise to help utilize it as a point of sale tool at other bars, regardless of how much of a back seat the point of sale ability of a tap handle has become, and that is where the quandaries begin for all parties. The distributor bought it from the brewery. If the sales representative gave it to you, it was given to them by the brewery.
They are expensive:
Tap handles are not cheap. They range anywhere from $10.00 – $45.00 each. So a tap takeover with 5 taps, and a tap handle that cost $20.00, you were just handed $100.00 worth of merchandise in good faith to help everyone make money. If you think that these numbers are crap and no tap handle should cost this much, look again, here are some prices that the distributor pays.
Still not convinced that these have great value? Open a new tab, go to Ebay and type in beer tap handle – that is a worm hole you could sink into for a while when you see the sheer number available, the “rareness” of common handles and the absurd prices. I made it easier though, here are a few shots of whats going on.
See that last picture? I am sure someone just randomly decided to have 45 different kegs all at home, and the liquor store that they bought them from was kind enough to provide a tap handle…. Or what you are seeing here is most likely a bar employee, or someone connected to them, that has access to that forgotten tub, and sees a virtual goldmine. It even state sin the description “All tap handles have been used in a restaurant”. If each tap handle was merely $10.00, that is $450.00 stolen from the different distributors. I also feel bad for West 6th, a smaller craft brewery in Lexington, that has two of their handles in this mix, I am friends with Ben Self, one of the owners, and as all craft breweries would prefer, they want that merchandise, which they sold to a distributor, to remain in the hands of the three-tier system to help sell their beer. Not end up on Ebay to help someone pad their pockets. The craft brewing community is a passionate community, a very enthusiastic community, but sometimes, it is also like dealing with a drunk, rabid Ewok, it just doesn’t make sense at any level.
There is a finite amount of them:
This point is oh so critical when it comes to the first two that I made. Due to their cost, a distributor doesn’t order 5,000 like they may do coasters. Due to their cost a brewery may not purchase, commission, or create themselves 100. They may spend a day making 30, at $20.00 each. Do the math there. 30 tap handles in one day, at $20.00 each is $600.00 for the distributor. Fast forward a week to a and 7 handles go out with individual keg sales, and 6 to a tap takeover at an account. The following week, 13 more go out with individual keg sales and another account wants to schedule a similar 6 brand tap takeover. We’re now out of handles again. The sales team, sales reps, the delivery drivers, are now out looking to retrieve the handles so this establishment can be offered the same services as the ones prior. If the handle has worked its way into the forgotten tub or closet, or worked it’s way home and onto Ebay, or if as the establishment owner you are scared that you won’t have a handle next time you order, so you decline returning it, who is being hurt? The industry.
You may say, wow Jacob, that is pretty extreme for a random piece of wood/metal/plastic, but it isn’t. It is the underlying tone of what is wrong with the way tap handles are managed. That day that the brewery paid someone to create 30 handles? That employee wasn’t doing what they normally do. For the larger breweries that just work with Taphandles.com it was more of their money re-ordering new handles for their distributors instead of allocating those dollars into innovation, expansion, or community involvement. It was money spent that may end up causing a shift in prices upwards at the price to wholesale, which in turn creates a shift in the price to retail cost, which then puts the bar owner in the same place as the brewery with the question “Do I raise my prices?” I know that it seems extreme, and it is, to say that 30 tap handles would have that epic of a shift for the entire brewery, distributor and bar, but when you multiply that exponentially per market area, the numbers can be daunting. If this one markets hypothetical experience was mirrored nationwide, by a hypothetical 1,000 markets (to keep the math easy) we’re now looking at 30,000 handles, at $20.00 each being $600,000 worth. It’s the small scale that seems non-consequential, but when it is scaled up the actual footprint of the brewery, that is where you see the reality sinking in at how this actually does effect the craft beer economy, but it is something that no one has gotten pissed off enough about to really dive into, until now.
How Do We Fix It?
There are many ways to solve this problem and many have been tried before, but the tradition of the handles being just handed to the bar owners and it being an “acceptable loss” when it was just the larger domestic and national craft players involved has created a stigma that makes several of these solutions seem very faux pa.
Bars and Restaurants can purchase the tap handles, there storing them, decorating with them or reselling them is completely up to them.
- Pro: The bar can do whatever they want and no one is out any money for the merchandise.
- Con: The bar ends up with a large inventory of merchandise that is not being used at all times diminishing the return on investment in the purchase. The stigma that this is just part of the deal because it’s been that way lingers.
Distributors begin charging a deposit on handles to all accounts that receive them, similar to kegs.
- Pro: This creates an incentive to return the handle and if the handle does go missing, helps to mitigate the financial loss to the distributor.
- Con: This is a new inventory system to keep up with at both the distributor and the bar level. If the deposit is paid and there is employee theft, the bar is now out of their deposit. The stigma that this is just part of the deal because it’s been that way lingers.
Forget branded tap handles and shift to the short stubby handles accompanied with a chalkboard or a digital menu board.
- Pro: No more tap handle storage. No more tap handle rotation. No employee or customer theft.
- Con: What some would consider to be a plain or a boring draft line up. Some people prefer the traditional handles to the chalkboard set up, or the more modern digital menus. Digital menus may, depending on the service, have monthly or annual subscription fees. Technology is technology, a glitch in Wi-Fi, a system outage, the menu is unavailable for a while. Not everyone is great at artistic handwriting for the chalkboard, sometimes it is hard to read.
Return taps when you return kegs.
- Pro: Keeps it simple
- Con: Handle storage and empty keg storage are rarely near each other. Still has the possibility of employee theft.
I don’t have all the answers, and I know that many on the on-premises side of the coin may have taken offense to this. Without the on-premises the industry would not exist in the state that it is in. I jokingly out of frustration posted about this issue on my social media and the response from friends in the industry was rather quick and rather divided, my friends in the brewing and distributing tiers on one side and my friends in the retail tier on another, which just helped to illustrate to me that the issue was not something that only I and the few people I have discussed this with over the years had seen, but was widespread and diverse. My goal is only to help bring light to the matters at hand and I hope I opened the door to productive conversations between each distributor and each retailer so that they can reflect on what they are doing, look at their practices and find a common ground that helps everyone achieve the end goal, selling more beer.