2. The postProhibition \"threetier system" requires the separation of the productionI distribution, and retailing of alcohol in most states. That wasn't much of an issue for craft brewers during the explosive growth years between 2011 and 2015I when craft beers doubled their percentage of the beer market and could hardly keep up with demand. Howeverl craft beer volume through the threetier system is now slowing down.growing less than 2 percent per year. causing craft brewers to turn to direct distribution for growth. Adding direct distribution. mainly through operating taprooms and brewpubsI resulted in 24 percent volume growth. Taprooms are located in working breweries where consumers can buy beer' and brewpubs are restaurants with a brewery. Such establishments now account for almost 10 percent of all U.. bar trafc and for as much as 35 percent of trafc in Denver and San Diego. Some independent craft beer bar chains are closing locations in states like Texas because of lost sales following a 2013 law that relaxed the three-tier system and allowed breweries to sell 5.000 barrels a year for 99539. consumption. Small craft brewers are excited about this trend-they make higher margins selling direct compared to using an indirect channel of distributors and bars. A brewer's average cost per keg of craft beer is $60, and a keg sells to distributors for 590. The distributor then resells the keg to a bar for 5120. Each keg serves more than one hundred 14.5-ounce glasses, the amount typically poured into a 1Ecunce glass at a bar to accommodate a foam head. A bar's cost per glass of craft beer poured is $0.88 per glass. The standard in the bar industry is to have 20 percent liquor cost, meaning 20 percent of the price to consumers represents the bar's cost of goods sold, leaving 80 percent for the bar's gross margin. [15] (a) Draw both the indirect and direct channels described in this vignette. [2] Use software such as Microsoft PowerPoint or draw your answer by hand and insert it here. (b) Give the technical term used to describe the permanent removal of an intermediary from a marketing channel. [1] Type your answer here by overwriting this text. (c) Calculate the price at which a bar will sell one 14.5-ounce glass of craft beer at a gross margin of 80 percent. Show your calculations. [2] Type your answer here by overwriting this text. (d) What is the bar's dollar markup on a 14.5-ounce glass of craft beer? Show your calculations. [2] Type your answer here by overwriting this text. (e) What is the bar's markup (as a percentage) on its cost for a 14.5-ounce glass of craft beer? Show your calculations. [2] Type your answer here by overwriting this text. (f) Determine the brewer's cost per 14.5-ounce serving (one glass). HINT: Use ratios to do this calculation and show how you do it. [?] Type your answer here by overwriting this text. (g) What gross margin percentage would a brewer realize if it opened a brewpub or taproom and sold a 14.5-ounce glass of beer at the same price as that at which bars sell it per your calculation in (c)? Show your calculations. [2] Type your answer here by overwriting this text. (h) Is the brewer better off using a direct or indirect channel? Briefly explain your answer. [2]
