Grey market beer

I'd not heard of this one before. @yeastieboys points to controversy over the status of grey market beers: beers imported into a country market without the brewer's explicit authorization. If I were to buy a few cases of some interesting beer from the UK or US, shipping it via surface mail, it probably wouldn't taste the best on arrival if I didn't take precautions to ensure that it were refrigerated and handled properly. An authorized importer will presumably follow whatever guidelines are set out by the brewer; a grey market distributor will take care that varies with the expected effects on his reputation.

Foreign brewers worry that they'll bear the reputational cost if a grey market importer fails to take due care and beer arrives in subpar condition: customers will reckon the brand isn't very good rather than blame the distributor.

I've a few of worries about this line of argument.

First, even in home markets, a brewer's product isn't always sold through authorized outlets with guaranteed fridge temperatures. A bar can buy a keg of any kind of beer, fail to clean its lines, and provide a poor experience to the customer. The beer vendor (barring those that own the taps) can't guarantee that the bar does a proper job in cleaning its lines just like it can't guarantee that a shipper will take due care. Why is the latter that much worse?

Second, importers will still face reasonably strong incentive to handle product with care. Even if the customers can't tell what's a brewing fault and what's due to rough treatment, the beer buyer for a serious outlet ought to be able to. And it's that buyer who chooses whether again to deal with the importer. A retailer who consistently sells quality interesting products will have an easier time in getting customers to try new things than one that sells products that have gone off.

Finally, the reputational damage is likely to be fairly constrained. Beers will only arrive in a country via the grey market if the brewer hasn't reckoned the country worth the effort, if the brewer tries to engage in international price discrimination, or if retailers are insensitive to product quality and prefer product that's been poorly handled but sells at a discount. But retailers also earn reputation. Let's assume for the moment that the grey market supply always provides poor product experience. If a US microbrew figures that the New Zealand market isn't worth exploiting due to the fixed costs and it's subsequently served by a poor grey market, what are the losses to the brand?

• Its reputation within the country is somewhat eroded, making it more expensive for the brewer to open an official channel - they'd have to work to rebuild reputation. But how likely is it that they ever would have sold product here anyway?
• If Kiwis post bad reviews of the beer on the various online beer forums, surely folks would start picking up a fixed effect: glowing reviews from domestic reviewers followed by scathing reviews from folks thousands of kilometers away ought to look to most folks like shipping problems. It's hard to see this as having big reputational costs for the brewer.

The bottom line for beer lovers ought to be that they shouldn't hesitate to buy grey-market beers, but that they should:

• Check the expiry date on product
• Only buy from retailers who care about quality product. If a retailer's chiseling on buying cut-rate imports that arrive in damaged condition, how do we know he's not chiseling on other margins that affect product quality? But if the retailer cares about quality, he's probably making sure to stock from distributors who also care about quality: grey market or not.
• Have a chat with the retailer if they get a bottle that seems off. A good retailer will take it seriously and check other bottles from the same shipment for faults; one that doesn't may not be worth repeat custom.