I visited Peerless Beverage Company, a leading beer wholesaler in New Jersey, and met with charismatic 3rd generation owner/manager, Chuck Salzman. Read on to see him shed some light on the often-hidden middle tier of America’s beer industry.
As anyone who reads the Drinking Classes often (hi mum!) will know, I am fond of remarking on the contrasts between the American drinks industry and that of my British homeland. Perhaps the biggest contrast is a legally enforced, structural one: the three tier system.
As a condition of the repeal of prohibition in 1933, it was legally mandated that alcoholic beverages could not be sold directly to retailers by manufacturers. Instead, they must pass through what is now a vast network of beer and wine and spirits wholesalers, who buy product in bulk from its makers and importers, then sell it on to stores, bars and restaurants at a profit.
When I arrived on these shores back in the summer of 2010, I was convinced this was a classic American wheeze: an artificial opportunity to skim some profit off the drinks industry that the government of 1933 had been lobbied into creating. But in the past six years I have become a champion of the system. It not only protects retailers and suppliers from being overly influenced by one another, it also enables choice at the point of retail. The exciting craft beer revolution now sweeping the globe would probably not have happened were it not for the three tier system.
“People probably don’t realize how much work goes into delivering beer!” I was told by Chuck Salzman, grandson of one of the two founders of Peerless Beverage of Union, north New Jersey, when I visited his offices and warehouse.
“At any one time we have about 600,000 cases of beer on site, and we need to keep it fresh and get it to accounts as and when they need it, as efficiently as possible,” he explained. “That requires commitment and flawless processes.”
Peerless is a case study in the middle tier of America’s beer industry. It was founded right after the repeal of prohibition by Salzman’s grandfather, Charles Salzman, and Jake Beim, who was grandfather of the current President, Scott Beim. The two were immigrants involved in bottling and selling soda and “near beer” products.
It has grown to be an 8.5 million case business that services the seven northernmost counties of New Jersey (about 20% of the landmass of the state but in which, my geography geek friends, about 40% of the population resides).
“Not a lot of people know this, but it’s actually illegal for beer distributors to be public companies,” explained Scott Beim when Chuck and I met with him. “When you’re a public company, your first obligation is profit growth, and that often means short term profit growth. Chuck’s father [Rich Salzman, Chairman of Peerless], Chuck and I are committed to the long term health of Peerless, which means managing the business in a way that’s right for us, our customers and our suppliers. And ultimately, that’s a good thing for consumers. It’s why the three tier system exists.”
I don’t know many folks who work in a family business, so I took the opportunity to ask Chuck what it’s like when your boss is your dad.
“It makes the relationship interesting, that’s for sure,” he explained. “We’ve probably had a few more candid conversations than many fathers and sons have had. But it’s a real privilege to see my dad at work every day. And at its core, a family business is just that: a family. We treat everyone who works at Peerless like extended members of the family, which means both open, honest conversations and genuine, heartfelt affection.”
Times are changing for distributors as they are for every part of the US beer industry: as this article by Jason Notte recently pointed out, the number of beer brands in the States is multiplying, with the number of SKUs (stock keeping units, or individual packs) having tripled in the past seven years. How does Peerless cope with this intensifying complexity?
“In the past five to ten years we’ve seen a dramatic increase in the suppliers and brands we carry. MillerCoors and Constellation [importers of Corona and other brands] make up 50% of the volume. Heineken, Diageo-Guinness, Yuengling and Boston Beer are also big, but we now have another 22 suppliers in addition to these bigger companies, and far more brands to manage than the handful of major domestics and imports we once had,” Chuck commented.
“The trick is to constantly improve your systems and the training of your people, especially sales staff,” he continued. “For example, we’re now paperless with our ordering and invoicing. And we put all our teams through pretty rigorous beer knowledge and tasting training. We have a broad portfolio, and we expect our guys to be able to explain and sell every beer on our books.”
Along with evolving process and selling technique, distributors are also under pressure to play a more supportive role in the industry, helping foster quality and growth in particular. Despite a radical increase in suppliers and SKUs, beer sales in America are actually in slight decline. The National Beer Wholesalers Association takes a lead here, but individual distributors are also expected to set an example in how the beer industry can step into tomorrow.
Peerless does many things to support the business of its suppliers and retail customers, but it’s also pioneering new ways of doing business.
“Let me show you something we’re very proud of,” Chuck said as we wrapped up our interview. He proceeded to lead me out onto his warehouse’s roof where over 2,000 solar panels gleamed in the sunlight. “These provide over 90% of our energy needs,” he explained. For a warehouse that constantly has tens of thousands of gallons of beer in refrigeration, this is no small thing.
As we surveyed the impressive colony of solar panels I had to ask Chuck, as a Jersey guy and a beer guy, literally born and bred, why his home state is lagging when it comes to craft beer. Unsurprisingly he was eager to disagree with me.
“Maybe five years ago I would agree that New Jersey was behind the curve, but I think we’re right up there now,” he stated defiantly. “One of our key accounts, The Cloverleaf Tavern in Caldwell – which co-incidentally was also founded in 1933 – has twice been voted the best beer bar in the Northeast on CraftBeer.com. And the number of breweries in the state is blossoming. We continue to see a boom across all of the market from cities like Hoboken and Jersey City to Morristown and just about every suburb in between.”
“I’m Jersey through-and-through, and I’m confident that the state that gave you baseball, Sinatra and Springsteen is now making and drinking some of the best beer in the world,” he continued. “I couldn’t be more proud of the role my family’s business has played in that.”
10 Questions To Educate The Drinking Classes with Chuck Salzman, Vice President of Peerless Beverage Co.
- Can you describe what your company does in one short sentence?
We’re a service-driven company committed to selling, delivering and merchandising quality products.
Generally, we’re talking beer, but we have some non-alcoholic products and recently took on a sangria. Things may change over time, but we’re passionate about beer first and foremost.
- How long have you worked here?
For almost 19 years, since I finished college, pretty much.
- How and why did you come to be here?
Beer is clearly a big thing in my family, and I’ve always been extremely passionate about the industry. When I was asked what I wanted to do when I grew up in second grade my answer was, “Drive a beer truck”!
I could have chosen another career if I’d wanted, but it was never in doubt for me. The only thing I faltered on was when I would start. I remember getting home at the end of college on a Friday afternoon, and my dad asking me what plans I had. I said I was thinking about driving across the country over summer before starting work, and he told me, “Unless you have that figured out by Sunday evening, I’ll expect you in my office Monday morning!”.
I started out driving a forklift in the warehouse for two years, then created a human resources department for Peerless. Next I was given a sales route for a few years, which is where I really learnt the business and learnt the industry. I then moved into a brand manager role, and over time built our marketing team to what it is now. A few years ago I was able to appoint a VP of sales and marketing, which freed me up to take on my current role.
The company is run by my father, as Chairman, my friend and fellow 3rd generation owner Scott Beim, who’s President, and me as Vice President.
It’s funny, when I started my dad said it was time to start figuring out how to step away from the business, and 19 years later he’s still very involved. It’s quite remarkable, he’s 81 years old, will be celebrating his 60th year in the business this June, and he still has his finger on the pulse of the industry and our business.
- What is your daily routine?
We’re a company with an early morning culture – which helps us encourage people to leave at a time that allows them to spend the evening with their family. So I’ll usually be in between 7 and 7.30 and then try to get home so I can have dinner with my wife and kids.
About one day a week I’ll be traveling to see a supplier or attend an industry event, and a day every two weeks I’ll be out in trade. It’s so important that I and all our managers have strong face to face contact with our customers, so we can understand their needs and the state of the market.
Most of the rest of the time I’m in the office and the warehouse, managing by seeing people and by making and receiving calls, as well as managing email and performance reports. We have 28 suppliers and we have to stay close to their business as well as ours, so there’s a lot of communication along with the numbers and managing our own teams.
On average I’m probably out at an event or with a supplier one night a week, and I only very rarely work at the weekend, unless we have a major festival or event to attend. Weekend time is family time. Work-life balance is a big deal at Peerless.
- What is the hardest thing about your job?
Put simply, finding ways to grow the business! It’s an incredibly competitive market nowadays so companies have to be rigorous with their internal efficiency and very effective in the market place. We’re always looking at potential new partners who can fuel growth, the latest of which is New Belgium out of Colorado. My and Scott’s grandfathers and fathers did an amazing job creating a healthy, vibrant business for us to steward, and I take that responsibility seriously. I have two young children and I’d love them to be able to take over one day.
(The next generation of the Beim family is already on board and getting to know the business.)
On a personal level, there is a challenge in the workplace to figure out how best to spend my time and how to be hands on enough to support people while giving them the space to do their jobs. My role is currently expanding, so that’s a line I’m learning to tread at the moment.
- In your view, what does it take to make it in beer?
This is a relationship business, so I look for people who enjoy working with other people. Culture is very important at Peerless, and we look for people who we think will fit in – a lot of that has to do with how you interact with others. I also look for passion, organization and very importantly a love for beer. If you love the product you work with, I find that you will add more to the organization and have a greater chance to succeed.
- What is success for you?
We have a clear mantra at Peerless, which is to constantly exceed the expectations of our customers, our suppliers and our staff. If we’re always not only satisfying but delighting those three stakeholders in our business, we know we’re doing everything we can to succeed.
I think it’s important to have a quantifiable, aspirational goal for the business also, and I’m actually working on that right now. We’ve gone through a period of growth lately with a couple of new suppliers, and I want to form a strategy based on our current and potential future portfolio of products that will represent a successful outcome for the foreseeable future. We like to have a target to aim for.
- If you could change one thing about the industry, what would it be?
Perhaps unlike some, I’m happy with and feel confident about the state of the industry and the three tier system. You know, working at a distributor I think you have a unique view of what’s going on, and with an expanded supplier base, an increasingly knowledgeable customer base and an increasingly efficient distribution network I think the beer industry is in good shape. You won’t be surprised to learn I’m a big fan of the three tier system and what it does for beer drinkers, and I think the craft explosion is proof of that.
But there is one thing that no one at Peerless is ever satisfied with, and that’s quality. The industry can always do more when it comes to giving consumers the best possible experience with every beer they buy. In Belgium you get the right glass for the beer you order, your server will always know your beer inside out and it always tastes amazing – at least in my experience. That’s the standard America should aspire to.
- What are your three favorite beers, and why?
All I’m going to say on that is that all my favorite beers are definitely part of the Peerless portfolio! You’ll just have to sample from our catalogue to find your own favorites.
- Where’s the best place to get a beer in north New Jersey?
That’s easy: Peerless Beverage on a Friday morning, sampling beers with our sales team and enjoying fresh Jersey bagels.