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Retailer of Distinction - John’s Grocery
WHAT MAKES A GREAT BEER STORE TICK IN IOWA
January 27, 2005
When I first read the Retailer of Distinction story on the Blue Max, a few places popped into my head immediately. Bottleworks and Belmont Station are classic beer stores that I’d love to hear more about, but the first place that really came to my mind was John’s Grocery in Iowa City, IA. So back in October, I made the 4.5 hour drive from my door to the back door of “Dirty” John’s to talk with Doug Alberhasky, the beer guy.
Doug is the grandson of John Alberhasky, who originally opened the grocery store in 1948. The building itself has been around since 1848. It has seen a few different incarnations in its day. Once it was a Pabst bar. I quickly found out that Doug is enthusiastic not only about beer, but also about the store and its long and varied history. Today, it is the last completely independent grocery store operating in Iowa. I met Doug in the John’s Annex, which is a house next to the store that serves as the display room for their few hundred items of glassware and other breweriana, as well as Doug’s office and the shipping room. Old photos of the building hung here and there and served as props for Doug as he retold the history of the grocery building. For those interested in such things, check out the John’s Grocery website to get little more info. If you are heading through Iowa City, let Doug know and he try to be there to give you a personal tour.
Since John’s Grocery is his family’s business, it doesn’t come as a surprise to find that Doug has been involved in some manner since he was a child. In 1989, during his sophomore year in college, he began managing full-time. At that point, the beer selection consisted of returnable cases in the middle of the store and imports on 12 feet of shelving above the pizza freezer. Today, you will find a “beer room” at John’s stocked with over 450 beers from all over the world. The pizza freezer has been moved.
One reason I wanted to do this interview was to find out “Why Iowa City?” How is it that a Midwestern college town of less than 100,000 is one of the best places in the USA to buy Belgian beer? I asked how he has been able to carry this sort of stock. Here’s what he said:
“Iowa City is really unique in the fact that so many people travel abroad. When you sit down in a café in Munich or in Brussels and you try this beer for the first time, you’re going ‘Wow!’ You’ve got the entire setting, the entire history around you. So when you come back, you try that beer and say, ‘Oh, man, this brings back memories.’ So much of Iowa City has traveled abroad; I would say probably 60-70% of the town has been outside the US. Whereas you look at Cedar Rapids it’s maybe 10%. So that has really helped the thirst for good beer.”
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Doug Alberhasky of John’s Grocery
“The other thing, when I first started was when the microbrewery revolution was really taking hold. I remember there were a couple years where it seemed like we were getting 2 or 3 new beers every single week. And that growth has, for the most part, almost continued. The more that we’ve added, the more service and expertise our staff has been able to provide. The more customers we have coming from a longer distance and the more we’re selling allows us to continually grab more and more products. So it’s been kind of a self-feeding cycle.”
So how does one decide what beers to stock?
“When we get a new product in, I order additional shipments with cautious optimism. Based on what I have read about the beer, the number of customers who have been asking for the beer, and the importer’s recommendations. And we just kind of see how it goes. There are some things that we order 5 cases of, and BOOM! It’s gone. Other things, I order 5 cases and I’ve got a 6-8 month supply. And there are so many random things that go into that. Seasonality is so huge. Ya know, this beer will go great guns until this point and then it will fall off. So that has to be taken into account.”
Recently, another factor has added to the difficulty in deciding what beers to stock. John’s has begun act as a wholesaler in Iowa for “liquor.” In Iowa, anything over 6.25% ABV is “liquor.” As of October, Doug said they were selling to 6 different bars, adding a new dimension to carrying and ordering stock. “We got in 8 kegs of Piraat, and it took us 6 months to get rid of them. Then, we got another 8, and it has taken me a month to get rid of them. It’s really hard to order! Especially when you have to order by the pallet,” Doug laughs.
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John’s Grocery lines up the goodies
After Doug mentioned that John’s was now acting as a wholesaler, I decided to find out a little bit more about the way the system in Iowa works. The 3-tier system is a different monster in nearly every state. Basically, in Iowa, the state is the wholesaler. Although John’s can act as a wholesaler, they must purchase their beer from the State of Iowa first. This means that a shipment of beers that have never come into the state before can take a long time to get, sometimes up to 8 months. Since the state “sells” the beer, it takes a lot of pushing paperwork to get them to bring in new products. The fact that the state “sells” the beer, certainly doesn’t mean that the state of Iowa has government employees going around and sampling beers, however. Basically, Doug contacts the importer and gets them all the necessary paperwork once the order has been finalized. Then the same must be done with the State. After everything has been cleared, filed, signed, stamped, shuffled, and copied in triplicate, the State will issue a release number. That means the beer can be shipped. All this wrangling of paperwork by a government bureaucracy is by nature prone to delay. This causes problems for the importer as well, who may have a pallet of beers sitting for 8 months waiting to be shipped to Iowa. I’ve had some personal experience with this system.
Back in January of 2004, I heard a new batch of Fantôme beers had arrived at Shelton Brothers from Soy, Black Ghost and BBBrr amongst them. Since I knew that Doug did business with Shelton, I immediately called him to request the beers. Doug said he was a bit hesitant on ordering the new Fantôme stuff because the old stuff hadn’t sold very well (which was why I had been able to buy 4-5 year old bottles there that were absolutely amazing!). But he said he would give it a try, possibly buoyed by my request for 3 cases of beer. But more likely he was adhering to his upbringing. At one point in our conversation Doug said, “That’s the way that I was brought up. If a customer asks you for something, there’s only one thing out of your mouth. Yes, I can. I will find a way to make it happen.”
When that call was over, I had a standing order with him for 3 cases of Fantôme and an idea that in 6-8 weeks I would have my hands on the grog. That time came and went. I sent many emails to Doug in the following weeks; the beer was always coming soon it seemed. A random comment I made on the Burgundian Babble Belt resulted in a response from a Shelton rep saying that the beer in question was indeed ready to go, that it was sitting on a pallet ready to be shipped to Iowa, but Shelton hadn’t gotten the go ahead to ship it from the State. Finally, sometime in mid-June, I got an email that the beer was there. When I showed up to get it, there were my 3 cases; set aside in the shipping room. That’s what can happen when trying to get a new beer into Iowa: a long wait.
This system obviously has its flaws. Doug was quick to point out that although it is a headache it has had a good side for him. Doug has to make the contacts and work directly with the importer. Something that usually isn’t the case for a retailer. Doug explains it:
“Right now, from a couple of our importers, I’m buying more beer than they are in Chicago. And it’s because we’ve been able to foster this relationship, working directly with the owner of the import company…ya know, it’s kind of backwards the way in which I do business. Traditionally, the importer would have their sales manager tell one of their salesmen to go to this distributor to talk to their sales manager who tells to their salesmen to go to these retailers and sell them beer. I’ve turned it completely around. I go to the importer and say, ‘I want to buy your product and this is who you’re going to sell it to.’ In this case, the State of Iowa. Then I talk to them (the State) and say, ‘I just ordered this beer. You are going to charge me this much for it, you’re making this amount of money. And, ya know, they don’t have to do anything. They’re just acting as that middleman, taking their cut, and they have to take their cut. But this has allowed me to go and pursue things that going through a traditional method, just wouldn’t work. Ya know, you talk to somebody for the first time and they say, “Iowa??” and then they say, “Oh, you’re from John’s, OK.” And it’s because we’ve been in business for so long and have a reputation for being one of the best that gets us in the door.”
So, how about demolishing that god-awful evil of the 3-tier system completely? One might think Doug would be all for cutting the State out of its cut, right? I was a little surprised by his comments:
“Right now there is a push by Costco to eliminate the 3-tier system. This would allow, ya know, Wal-mart, to buy directly from Anheuser-Busch. And as an independent, that scares the hell out of me. Looking back at history, when there used to be in every state a number of smaller breweries and Anheuser-Busch systematically annihilated them by saying, ‘oh, your beer is $4 a case, well, Budweiser is going to be $3 a case’ and they’re going to keep that up until the other guy goes out of business and in that market, they’re going to raise Budweiser up to $5 a case. And that’s what I see, no, that’s what I know would happen if Costco or Wal-mart or these other huge mega-chains would go through and eliminate that 3-tier system. I mean, this country was built on small business. And there’s no way to compete with that…even for us right now, take the grocery side of our business. We’re competing against Hy-Vee. Well, Hy-Vee owns the retail. They also own the wholesale. And in a lot of cases, they own the manufacturing. So, they don’t have to make any money on 2 of the 3 steps, and they can just dominate in that third step because they have control of the 3-tiers. There’s an awful lot of pitfalls for a small business. But our strength is that we’re able to adapt and we’re able to hit ‘em where they’re not.”
My personal take on the beer scene in Iowa (in the past year The Red Monk has opened in Des Moines, specializing in Belgian beer) is that the existence of John’s is the reason there is any beer scene in Iowa. Without a store to bring in that quantity and quality of beer, I think you’d be hard pressed to find places like The Red Monk, John’s largest wholesale customer, able to serve 60 different Belgian beers. I think even a place like The Sanctuary in Iowa City would have trouble stocking the decently diverse selection they currently carry. I asked Doug if he thought John’s had opened the door to a larger beer scene in the state:
“That’s what I’m really trying to do. My philosophy is the win-win-win situation. The more that we can get beer culture going in Iowa City, in particular, but also Iowa as a whole, the better off everybody is going to be. The on-premise always drives the off-premise and vice versa. In Iowa City, we are a college town, and Bud Light, Miller Lite, and Coors Light is 80% of the game. But one thing I’m really excited about is a new brewpub opening down the road (Old Capitol Brew Works and Public House), and I talked with one of the owners yesterday. Besides having their own beers, they want to have a big Belgian on tap all the time. So, this is going to be our first time, in Iowa City, to be able to work with a bar.”
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