MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
Table of contents
KEY FINDINGS....................................................................................................................................... 3
ASSUMPTIONS ...................................................................................................................................... 5
Assumptions Regarding Moosehead Production in Quebec ............................................... 5
Additional Assumptions ................................................................................................................. 6
MAIN PROBLEM ................................................................................................................................... 7
TARGET MARKET .................................................................................................................................. 7
SWOT ANALYSIS ................................................................................................................................... 8
SWOT ANALYSIS ................................................................................................................................... 9
FIRST ALTERNATIVE: Multichannel & Selective Distribution ...................................................... 10
SECOND ALTERNATIVE: Indirect & Intensive Distribution ......................................................... 13
THIRD ALTERNATIVE: Indirect & Exclusive Distribution ............................................................... 15
SOLUTION ............................................................................................................................................17
IMPLEMENTATION PLAN ................................................................................................................... 20
Sales Force ..................................................................................................................................... 20
Secondary Warehouses .............................................................................................................. 21
APPENDIX ........................................................................................................................................... 23
COURSE CONCEPTS USED ........................................................................................................... 23
APPENDIX ........................................................................................................................................... 24
WORKS CITED ................................................................................................................................. 24
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
KEY FINDINGS
Moosehead Brewery, Canada’s oldest independent brewery was founded in
Saint John, New Brunswick by Susannah Oland in 1867. To this day the company
is still 100% family-owned making Moosehead the largest purely Canadianowned brewery in the country.
Moosehead is a widely respected brand, and has been enthusiastically
consumed across Canada and the globe. Although the company has
experienced great success with their products throughout Canada expansion to
Quebec has traditionally been a major challenge.
Throughout Canada, each province has its own individual set of regulations
pertaining to beer distribution. While some provinces have negotiated two-way
distribution deals with one another to promote inter-provincial trade Quebec
and New Brunswick, however, maintain regulations that constrict inter-provincial
trade. These regulations include high importation taxes and tariffs on New
Brunswick exports entering Quebec. As Moosehead’s main production facility is
located in New Brunswick this constriction has been a major barrier for a push for
expansion into the Quebec market. Fortunately, Moosehead Breweries has
found ways to circumvent this “Iron Curtain” Quebec has created for brewers
outside the province.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
Moosehead Brewery has become a major shareholder (50% stake) in
McAuslan Brewing, a Montreal-based microbrewery. (Anon., 2000) McAuslan
brews Moosehead under license at their Montreal facilities. Their brewer's license
includes the right to warehouse and distribute beer and to sell directly to
licensed retailers such as bars, restaurants, depanneurs (corner stores) and
grocers. This is in accordance with the Quebec controlling agency, RACJ (Regie
d'Alcool des Courses et des Jeux). This relationship with McAuslan allows
Moosehead to freely distribute their beer to many different retailers, and avoid
the binding regulations attached to imported beers1.
In addition to this brewing agreement, Moosehead also formed a distribution
partnership with Les Brasseurs RJ and McAuslan in 2008. Les Brasseurs RJ has
taken control of sales and marketing for the three companies in Quebec. Les
Brasseurs RJ also has a well-established distribution system in the province as well
as a strong influence in the restaurant industry. This partnership will undoubtedly
benefit Moosehead in their push for higher market share in Quebec.
Beer from out of province is funneled through the Societe des Alcools du Quebec (SAQ)
system. These beers are subject to SAQ distribution rules, which state that individual brands sold
in SAQ stores, cannot be sold in depanneurs or grocery stores (Hughey 2007). Rubin, J. (2008, May 21).
Carlsberg returns to Danish roots. (T. T. Star, Producer) Retrieved November 11, 2009, from thestar.com:
http://www.thestar.com/comment/columnists/article/427947As approximately three quarters of beer
purchased in Quebec is done so at grocery stores, convenience stores and, to a minor extent,
the SAQ stores, having the ability to distribute to the many depanneurs and grocery stores in
Quebec is crucial to the continued growth of Moosehead.
1
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
ASSUMPTIONS
Assumptions Regarding Moosehead Production in Quebec
Due to our research that showed significant improvements in the Quebec
distribution situation for Moosehead (compared with the dated facts of the case
study), IronCorp has made some significant assumptions. We are assuming the
current status of Moosehead Brewery in Quebec is concurrent with the facts of
the case.
As a result of these findings, IronCorp has decided to circumvent the trade
issues with the Quebec/New Brunswick border, as outlined in the case study. The
high tariffs associated with exporting beer into Quebec make it completely
unfeasible to ship beer to Quebec and turn a profit. As our research shows,
Moosehead has already addressed this issue by contracting out the Quebecbased brewery, McAuslan Brewing, to produce Moosehead beer under license.
We will therefore approach this case study with this important fact in mind - that
Moosehead is currently brewed within Quebec.
Given these new developments to the case study, we find that Moosehead's
main challenge is not concerned with how best to break into the Quebec
market, but rather how to create distribution strategies that will cement their
name as a premium beer in Quebec, and strategies that will continue to help
grow and strengthen the Moosehead brand.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
Additional Assumptions
Ironcorp’s additional assumptions for this case study are as follows:

All of the options given to Moosehead will use a contractual vertical
marketing system due to their current contractual relationship with
McAuslan Brewing.

McAuslan brewery, until recently, was contracted to brew Carlsberg for
the Quebec market (Rubin, 2008). Carlsberg is now importing its own
product, which frees up more production space in the McAuslan
production facility.

As stated in the case study, we are assuming Moosehead maintains its
high brand awareness in Quebec and remains Canada’s third largest
brewer by production volume after Molson Coors Brewing Co. and Labatt
Breweries.

Recently, laws were passed in Quebec that states breweries can sell
directly to customers and maintain a brewery tap (Hughey, 2007)
(Gouvernement du Quebec, 2009); as a result, IronCorp is assuming these
laws are currently in effect.

We are assuming that as the economy strengthens, beer sales nationwide
will continue to grow.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
MAIN PROBLEM
Moosehead needs to identify and initiate distribution channels within Quebec
that will:

Strengthen the Moosehead brand,

Create higher revenues for the company,

And will promote effective market development.
TARGET MARKET
Moosehead beer is perceived as a higher quality premium product; therefore
a significant percentage of their target market is the informed, middle-aged
beer drinker. This target market is appropriate to Quebec where the median
age in is 41 years in an estimated population of 7.7 million people
(Gouvernement du Quebec, 2009). Another growing demographic is the
Generation Y population, young consumers who are developing a palate for
micro-brewed beer, and who are greatly influenced by effective marketing.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
SWOT ANALYSIS
STRENGHTHS
WEAKNESSES
• Widely respected as one of Canada’s
best breweries
• 90% of market-share held by two larger
breweries
• Established as a premium beer with a
full line of quality lagers and ales
• Moosehead is competing in a highly
competitive micro-brewery industry
• Large Global Market: Selling in 60
different countries (citation-wikipedia)
• Popularity traditionally exists in Eastern
Canada
• Symbol of national identity. Canada’s
largest 100% owned and operated
Canadian brewery. Competitors such as
Labatt, Sleeman, and Molson are now
foreign owned
• Production in Quebec is not 100% fully
owned and operated by Moosehead
• Have existing distribution in Quebec via
their contract with McAuslan Brewery
• Moosehead has largest market share of
smaller breweries
• High reliability/dependency on
McAuslan to satisfy production
requirements**
• Status as a premium beer might
discourage purchases from lower
income consumers
• Product is highly consumed by the
Canadian population
• Affordable price
• Retailers in Quebec are very interested
in stocking Moosehead beer
• Moosehead has targeted the correct
demographic of beer purchasers and
consumers
**Due to contractual agreements with McAuslan, Moosehead does not have the ultimate say
over production at this brewery.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
SWOT ANALYSIS
OPPORTUNITIES
THREATS
• Quebec has a larger consumption market in
comparison to other provinces because
legal drinking age is 18
• Strict provincial regulations and
legislation restricting interprovincial
liquor trade
• Increased opportunity to sell beer in corner
stores, grocery stores and gas stations in
Quebec increasing overall provincial
distribution
• Taxes and mark-ups differ from
province to province meaning
inconsistent price point
• University and college segment large
consumer of beer, responds favourably to
beer promotions
• Increased consumption of wine and
wine coolers in favour of beer
consumption **
• Turn around of economy which will lead to
increased beer consumption and sales
• Regulations for out-of-province
products are structured differently
between New Brunswick and Quebec
• Increased production capabilities at
McAuslan Brewery as Carlsberg is now
importing their beer
• Due to importation, taxes have
traditionally restricted distribution in
Quebec and Saskatchewan
** Other alcoholic products having an increasing market share and there has been a shift in a
consumption paradigm
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
FIRST ALTERNATIVE:
Multichannel & Selective Distribution
The first distribution option for Moosehead is to employ a multichannel
distribution system, while adopting a selective distribution approach. According
to this strategy, Moosehead would use more than one marketing channel for
distribution. For example, Moosehead would maintain their contract with
McAuslan who would continue to brew Moosehead beer inside Quebec to
avoid trade barriers. McAuslan would then distribute the product directly to
retailers, as well as to distributors or wholesalers, who would then distribute to
dealers and retailers. In addition, McAuslan brewery would incorporate a small
retail store within the brewery to sell directly to consumers. This mix of both
indirect and direct distribution will provide the basis for the multichannel
strategy.
The selective distribution approach will help Moosehead maintain its brand
identity as a contender in the premium beer market. Supplying Moosehead
beer to selective locations will maintain a high perceived value and encourage
retailers to sell the product. Why? As the case study indicates, preliminary studies
show that many retailers have an interest in supplying Moosehead beer.
Therefore, engaging in a selective distribution should encourage competition
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
amongst retailers2 to gain the rights to resale, which would be advantageous for
Moosehead.
Furthermore, Moosehead and McAuslan would engage in contractual
agreement. Through the use of contractual vertical marketing, Moosehead and
McAuslan would develop a binding contact to dictate the terms of how the
product will be sold. This type of marketing tactic will allow Moosehead to
maintain the Moosehead name, logo, and recipe.
Ideally, Moosehead should attempt to sell to selected retailers, such as SAQ’s,
cold beer and wine stores, and other specialty liquor stores.
2
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES

ADVANTAGES
Brand identity and value remains
high


Avoids trade barriers


Brewing the product in Quebec
means it is not limited to selling
solely in SAQs


Selective distribution affords
more control over product (by
having to monitor limited
retailers)


Moosehead can engage in
contractual agreements so
brand is not diluted

McAuslan and various
distributors will be responsible for
transportation of the product to
the point of purchase

Beer is purchased in the
province in which it is brewed
(labeling, promotions, etc. can
be specific to distinct provincial
market)

Product can be stored in
warehouses or at distributors
rather than at brewery (greater
operational efficiency)
DISADVANTAGES
Potential for channel conflict
(between retailers competing
from resale rights)
Products may not reach entire
market
Orders take longer to fill so there
is the possibility that product
may not be in stock when
consumer wants it
High prices associated with
distribution, warehousing, and
inventory
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
SECOND ALTERNATIVE:
Indirect & Intensive Distribution
A second option for Moosehead is to use an indirect channel of distribution
with an intensive allocation strategy. Again, with this solution, Moosehead would
continue to contract McAuslan Brewery to produce Moosehead beer in
Quebec. McAuslan would also be responsible for the storage, distribution, and
dealing of Moosehead beer to various retailers throughout Quebec.
Ideally, Moosehead and McAuslan would engage in the use of push strategies
to encourage retailers to carry the product. This strategy would likely be
successful since initial studies suggested that there is already a high interest
amongst retailers in carrying Moosehead beer. Through the use of these push
strategies; Moosehead would employ intensive distribution by supplying to a
wide array of retailers including SAQs, depanneurs, and grocery stores.
Furthermore, Moosehead could engage in contractual agreements with
various bars, restaurants, and specialty venues such as arenas or University pubs.
These locations would enter into resale and sponsorship contracts with
Moosehead making Moosehead the venue’s official beer. This intensive strategy
would promote brand awareness of the product and ideally increase sales.
Supplying Moosehead to a wide array of retailers will ensure that the product is
where the consumers want it when they want it.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES

ADVANTAGES
Increases overall sales

DISADVANTAGES
Potential for Channel conflict

Available to consumers where
and when they want the
product

Loss of promotion control over
product by supplying to a
multitude of resellers

Avoids trade barriers

Possibility of brand dilution by
distributing to all types of retailers

Brewing the product in Quebec
means it is not limited to selling
solely in SAQs

High prices associated with
distribution, warehousing, and
inventory

Greater consumer knowledge
and awareness of product
through market saturation

Intensive distribution raises
consumer awareness of brand
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
THIRD ALTERNATIVE:
Indirect & Exclusive Distribution
This option includes an indirect channel of distribution that relies on an
exclusive distribution method. Again, in line with the indirect method, production
will occur at McAuslan brewery. Moosehead products will then be distributed to
retailers who will sell the products directly to consumers. However, in this option
Moosehead will afford the SAQ exclusive selling rights to Moosehead beer in
Quebec. This exclusive distribution method will ensure that Moosehead has
adequate inventory to satisfy the SAQ's demand. As this exclusivity would stop
any and all competition in the province of Quebec between retailers the SAQ
would have protected profit margins and an "incentive to carry more inventory
and use extra advertising, personal selling and sales promotions" (Grewal 371).
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES


ADVANTAGES
Retailers benefit from lack of
competition
Better inventory and
merchandise control

DISADVANTAGES
Sales volume may be lost

Borders an anti-competitive
behavior3

Manufacturers benefit from
greater retailer loyalty (i.e. sales
commitments)

Moosehead would be
producing under capacity - an
inefficient use of resources and
capital. Moosehead would also
be missing opportunities for
economic gain

Gives manufacturer more
control over the way the
product is merchandised

We would lose out on
opportunity to sell to highly
interested retailers, as per case
study

Greater ability for Moosehead to
control inventory, allowing them
to offer a greater selection of
products to SAQ retailers
3
Non-SAQ retailers who are not able to obtain Moosehead for resale would have difficulty accusing Moosehead of
anti-competitive practices. Why? Anti-competitive practices are more problematic with manufacturers who enjoy
strong market positions and offer distinct products that cannot be easily substituted for. Beer is an easilysubstitutable good; Moosehead's exclusive distribution with SAQ would not strongly affect retailers' profit
margins.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
SOLUTION
After a close examination of the advantages and disadvantages of the three
proposed alternatives for Moosehead’s distribution strategy, IronCorp has
elected solution two, Indirect, Intensive Distribution as the appropriate
distribution mechanism for Moosehead Brewery.
Moosehead has already established a strong working relationship with
McAuslan as both a production facility and distribution partner. An Indirect,
Intensive Distribution strategy would capitalize on this already established
relationship and propel Moosehead's products to distributors. Working with
McAuslan also allows Moosehead to enter into the Quebec market without the
high tariffs associated with provincial importation of alcohol. Furthermore,
McAuslan would be responsible for producing, packaging, and distributing
Moosehead products to retailers and partners, granting Moosehead the
freedom to focus their energy on distribution in other provinces. Also, a
Multichannel strategy does not prove to hold an advantage over the indirect
method. The percentage of profits gained from the retail store at McAuslan
Brewery would be insignificant in comparison to overall revenues from indirect
distribution. Likely the cost associated with the operation of the retail store would
be greater than the profits gained from sales of the product.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
Additionally, employing an intensive distribution strategy will allow Moosehead
to supply to numerous retailers throughout Quebec, including corner stores,
grocery stores, SAQs, restaurants, and bars. This saturation of the market will
ensure that Moosehead products are available to consumers through a number
of channels that will increase consumer awareness and knowledge, and will
potentially lead to impulse buying. An intensive distribution strategy will be
successful for Moosehead since beer is a relatively inexpensive product that is
purchased often and by many different demographics. Furthermore, because
beer is a highly substitutable product, with many brands available for the
consumer to choose from, intensive distribution will encourage consumers to
select Moosehead because it will be a familiar product that is readily available.
The strength of this distribution strategy is not only the cost-effectiveness of
subcontracting with McAuslan but also the establishment of a very strong
distribution relationship. As McAuslan distributes both Moosehead and its own
brand of beer, St. Ambroise, to retailers and partners the retailer then receives
two brand names and two premium ales from the same supplier at the same
time. As retailers are encouraged to sell both premium products (via push
strategy) their overall perceived store quality will increase.
Additionally the Indirect, Intensive Distribution strategy places Moosehead in
an ideal geographic location. Given McAuslan’s location in Montreal, Quebec’s
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
largest city, Moosehead can easily be distributed to the largest metropolitan
area in Quebec. This is a major opportunity to reduce shipping costs as trucks
would not have to travel a far distance to reach high-density, high-consumption
areas of the city. McAuslan’s location in Montreal will save Moosehead money
that can be then applied to any of the company’s many other costs.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
IMPLEMENTATION PLAN
In order to effectively employ an Indirect, Intensive distribution method,
Moosehead Breweries must make sure all the distribution channels available are
employed to the fullest. This includes capitalizing on sales force (sales
representatives), distributors, and any secondary wholesalers Moosehead will sell
product to.
Sales Force
A great way to push the product to the consumer is through sales
representatives. Moosehead can strengthen its sales force in Quebec by hiring
in-house sales reps, as well as working with Les Brasseurs RJ and their wellestablished sales team. These sales reps focus on moving product to retailers
and into the consumer’s hands, thereby increasing brand awareness for
Moosehead. These sales reps will be in charge of creating relationships with
higher-end restaurants, resto-pubs, and campus bars. Ideally the sales reps will
work out contractual agreements that place Moosehead product as the
featured beer sold at each establishment. Creating business relationships with
restaurants, restaurant chains, and the large number of drinking establishments
that Quebec is famous for will greatly increase Moosehead's market share. There
is also considerable potential to work with student societies at universities such as
McGill University. Student societies regularly put on well-attended licensed
events at which large quantities of beer are consumed. The job of the
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
Moosehead sales reps is to place Moosehead beer as the official beer of these
events.
Secondary Warehouses
With its plan to sell beer to many different retailers throughout Quebec,
Moosehead will be relying heavily on distributors. In the Montreal area
Moosehead could be in control of the distribution, warehousing all products in
the McAuslan facilities. Moosehead could also set up warehouses in Trois Rivieres
and Quebec City in order to meet the demands of all of the grocery stores and
depanneurs in the area. These stores would have small but frequent orders.
Readily available stock in these other centres would allow easier distribution to
Moosehead’s many small retailers. Entering into contractual agreements with
existing wholesalers and shippers in these areas would significantly cut costs for
Moosehead the need to build new facilities and shipping would lessen.
By utilizing a strong sales force backed with warehouses, Moosehead will be in
a great position to employ push strategies with retailers. Any retailers who sign a
contract with Moosehead will have an incentive to increase Moosehead sales,
which will, in turn, have a positive effect on Moosehead sales and profits. These
contracts are a simple, effective way for Moosehead to ensure steady flow of
their product into retailers (and thereby to consumers). Although sales reps and
warehouses will no doubt be contributing to this success, Moosehead will still
have to use pull strategies in order to maintain consumer demand. Pull strategies
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
involve advertising and promotions aimed at consumers to incite demand for
the product. Recently, Moosehead partnered up with Les Brasseurs RJ, who
have taken over the sales and marketing for Moosehead (Dunn, 2008). This will
prove to be a huge asset to Moosehead, as there are barriers relating to
marketing in Quebec, such as language differences, and the distinct Quebecois
culture.
An Indirect Distribution method will prove to be profitable for Moosehead.
Brand awareness and demand already exists in Quebec, which will propel the
success of Moosehead’s expanded distribution. Utilizing many different avenues
of distribution and intermediaries will ultimately increase sales revenue for the
company. IronCorp feels that an intensive distribution strategy will allow
Moosehead to continually capitalize on its product’s high-quality image as sales
volume increases. The high percentage of sales made through smaller retailers
will provide more consumers with a high-value premium product and
Moosehead with greater commercial gains.
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
APPENDIX
COURSE CONCEPTS USED

Brand Identity

Channel conflict

Contractual vertical marketing

Convenience good

Distribution intensity

Indirect distribution

Intensive distribution

Multichannel Distribution

Push strategies

Selective distribution

Shopping Good
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MOOSEHEAD BREWERY DISTRIBUTION STRATEGIES
APPENDIX
WORKS CITED
Anon. (2000, November). Retrieved November 10, 2009, from Realbeer.com:
http://www.realbeer.com/news/articles/news-001416.php
Dunn, B. (2008, June 16). Three Breweries Make Distribution Deal. Retrieved from
Marketing Magazine:
http://www.marketingmag.ca/english/news/marketer/article.jsp?content=20080
613_174826_11136
Gouvernement du Quebec. (2009, May 14). Demography. Retrieved November
11, 2009, from Portrait of Quebec:
http://www.gouv.qc.ca/portail/quebec/pgs/commun/portrait/demographie/?l
ang=en
Hughey, R. (2007). Beer distribution in Canada. (I. Real Beer Media, Producer)
Retrieved November 10, 2009, from Realbeer.com:
http://www.realbeer.com/library/authors/hughey-r/distribution.php
Rubin, J. (2008, May 21). Carlsberg returns to Danish roots. (T. T. Star, Producer)
Retrieved November 11, 2009, from thestar.com:
http://www.thestar.com/comment/columnists/article/427947
Russi, R. (1997, December). Exclusive distribution agreements and competition
law : an analysis. Retrospective Theses and Dissertations . Vancouver, BC,
Canada.
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