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Penn Beer Distributors

Penn Beer Distributors

All in the Family

 

written by Danya Henninger

Penn Beer Distributors President Matt Funchion is a Bud man. Has been all his life. Sixteen-ounce cans of Bud were his go-to in college, and you’ll find Budweiser in his fridge today. For two whole decades, he worked the East Coast for Anheuser-Busch, and he now owns the AB InBev wholesaling rights for the Philadelphia area. Matt Funchion is a Bud man. But he couldn’t be more thrilled about the surging state of craft brewing.

“The craft beer explosion has been terrific for the entire industry,” he told me on a visit to his Roxborough distributorship, and he’s unequivocal on this point.

As I followed him on a tour of his 145,000-square-foot facility, I saw traces of his company’s AB parentage everywhere, including prints bearing slogans from the brewery’s recent (somewhat controversial) Super Bowl ad. “BREWED THE HARD WAY,” shouted a banner draped across the print shop floor. “BREWED THE HARD WAY,” blared a framed poster in the upstairs office. “Just don’t get those in your photos,” he said, only half-joking.

pennbeer-credit-danyahenninger12But right next to the poster with that ambiguous taunt was a much more prominent sign. “The right people, in the right positions, building the right relationships,” proclaimed a set of six-inch-high letters encircling a giant cutout globe. It’s a concise mission statement for Penn Beer, and it reveals Funchion’s true conviction. He believes the rise of craft beer does not sound the death knell for established macro-brands, but that it’s sparking healthy competition.

“Craft brought a lot of romance back to beer, and created a whole lot more interest in beer overall,” he said.

Volume-wise, Bud is still the top mover at Penn, but the multiple storerooms now stock more than 1,110 different labels from a variety of brewing partners. In one climate-controlled warehouse, towers of Bud Light Lime-A-Rita and tequila-flavored malt beverage Oculto were easily lost among stacks of ales from Oregon’s Rogue, steam beer from San Francisco’s Anchor and stouts from Virginia’s Starr Hill.

I stopped to peer more closely at a case of six-packs I didn’t recognize, and discovered they were from Twisted Manzanita Ales, a new-to-me San Diego brewhouse that produced less than 4,000 bbls last year. Turns out Twisted’s co-founder, Jeff Trevaskis, is a Scranton native, and badly wanted to have his fledgling brewery’s products available at bars “back home.” After surveying the options, he chose Penn Beer as his regional wholesaler because “it was the right fit.”

This was the same conclusion Magic Hat Founder Alan Newman came to in 2004, when he was looking to expand the Vermont beermaker’s footprint to Philly. At the time, Penn had no other independent breweries in its distribution lineup, so Newman’s choice was far from a given. But Funchion made a strong pitch.

“I personally reached out to [Newman] and expressed interest in wanting to partner with him,” he explained. “[Magic Hat] did their due diligence and talked to all the wholesalers, and they made the choice to join us. We were very, very proud of that.” The partnership marked a major turning point for Penn, one that may have saved the company.

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By 1999, when Funchion accepted his friend Jerry Bowes’ invitation to become a partner in the business, sales of domestic macro-brews had begun to slow, with some brands seeing drops in sales volume for the first time in decades. The silver bullet of Coors Light ricocheting through the ‘90s ad-mosphere didn’t help an Anheuser-Busch franchise, but that wasn’t Funchion’s big concern. Over the horizon, he could see something else that might have an even more noticeable effect in retailer loyalty to his distributorship.

Penn1“We were definitely behind the curve,” Funchion said. “We didn’t have the craft portfolio to compete in a market where craft beers were starting to take off.”

Adding Magic Hat was his first step toward filling that gap, and soon afterward, Funchion pulled off an even bigger coup. That same year, he acquired the Philadelphia distribution rights for Victory.

Up to that point, Victory brands had been handled in Philadelphia by the Edward I. Friedland Company. Eddie Friedland was a true pioneer in the craft beer world, and a crucial part of its growth, but he was pretty much a one-man show. His was, by design, a relatively small operation.

Funchion saw huge potential in Victory—“We all knew they were a great brand,” he told me, understating the case—and realized Penn’s well-buttressed network could benefit the young brewery’s quest to grow. After a couple of years of conversation between Funchion and co-founder Bill Covaleski, Victory decided it would be mutually beneficial to partner up. Funchion paid Friedland for the Philadelphia rights, and in 2004, Victory joined the Penn Beer stable.

It’s a move that ruffled some feathers in the local beer community. There were prognostications that Penn would use Victory as a “wedge” to get into bars that had previously resisted doing business with them, and then use their entrée to push tap handles of Bud and Bud Light. Some even insinuated the switch could spell doom for Victory in the area, as a few Philly bars temporarily banned Victory from their draft lines.

That didn’t happen. Victory flourished, and Penn Beer was on its way to building a new model for itself, one in which a macro distributor could also be a cheerleader for a few smaller, independent breweries. Penn’s salespeople immersed themselves in learning about craft brewing, adding phrases like “IBUs” and “whole-flower hops” to their vocabulary.

“[Matt Funchion] built a progressively-minded team that noted the prospects in craft beer rather early on,” Covaleski said. “He is of the highest integrity, the type of person you feel very secure in entrusting your business to.” After proving their success in Philadelphia County, Funchion and his team took on Victory for the rest of his distribution footprint, which encompasses Chester County and parts of Montgomery County.

Another local brewmaker impressed by Funchion was Chris Trogner, who signed with Penn shortly after Victory did. Tröegs had also been with Penn1Friedland for Philly distribution, but when news came down that Friedland would be selling his business to King of Prussia-based Kunda Beverage (which would soon after be acquired by Origlio), Trogner decided to make a move. He and his brother John Trogner interviewed all the area distributors, and eventually settled on Penn.

“Matt was very interested and eager to grow his craft segment. That meant he was going to dedicate a lot of energy to Tröegs, and we felt we could contribute to his bottom line. It felt like a good synergy,” Trogner said.

The alliance has worked out well. “That brand is hot as a firecracker,” said Funchion. Asked whether AB InBev cares that Penn dedicates time and energy to craft brands, especially given their recent advertising, Funchion demurs.

“We have a very strong reputation and partnership with AB, but we make independent decisions to grow our business. It’s such a fun industry, and the worst thing anyone can do is throw rocks,” he said. “We’re not selling cell phones. We’re not selling computers. We sell beer.”

Funchion is a longtime believer in common-sense detente. In fact, he once ran for public office. If the election had turned out differently, he might not have entered the beer industry at all.

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The youngest of 12 kids from a working-class Irish Catholic family in Peabody, MA, Funchion was the only one of his siblings to go to college. He got into Boston College on a full football scholarship, but made the most of his time at school. During his last semester as a political science major, Funchion decided to run for state representative. His platform was “A breath of fresh air”—fitting for a 22 year old with no prior experience but lots of drive. His energy wasn’t enough to take him to the Statehouse though, and he lost in the September primary. Faced with a looming post-graduation void and no one to support him, he scoured the Sunday Globe for job listings. He found one for an entry-level position at Anheuser-Busch.

“Sure, I know a little bit about beer,” thought the young Funchion to himself. He’d worked a couple of summers doing beer deliveries for a Schlitz-Knickerbocker wholesaler and loved the smell of the trucks. Plus, he loved drinking the stuff, and drinking Budweiser, specifically. He applied, and got the job.

Penn2Over the next 20 years, Funchion rose through the Anheuser-Busch ranks, but it wasn’t easy. He was shifted around from market to market, which meant his wife Diana and their three kids had to pick up and move no less than eight times.

“I’ve lived all over the East Coast—New York, Massachusetts, Connecticut, New Jersey, Florida, Pennsylvania,” said Nick Funchion, Matt’s 32-year-old son.

Now Penn Beer’s business development manager, Nick was in fifth grade when his father got the assignment to manage AB’s Mid-Atlantic division, a territory comprised of Maryland, New Jersey, Delaware and Southeastern PA. Funchion bought a house in Devon, on the Main Line, and moved his family there during the summer of 1993. He and Diana promptly fell in love with the Philadelphia area. They even felt a little like it was their destiny: their first date in college had been to go see Rocky. They haven’t moved since.

When Funchion came to the region, Penn was the Anheuser-Busch wholesaler, and he cultivated a good relationship with distributorship co-owners Stan Engle and Jerry Bowes. Bowes was a second-generation owner. His father, Norman Bowes, had been an executive with Schaefer Brewing, and in 1953, had left to establish his own business. His company, Penn Beer Distributors, became one of the largest Schaefer wholesalers in the country.

After a decade, Schaefer Beer’s popularity began to dip, so in 1965 Bowes bid for and won the Anheuser-Busch franchise rights. It was a good get, as Budweiser and other AB brands saw terrific growth over next 25 years. Jerry took over the business from his father in the 1970s, with partner Engle, and Penn continued to prosper. Then came the 1990s, and the attendant sales slowdown. By the end of that decade, Engle was ready to get out of the business. By this time, Bowes had developed a deep friendship with Funchion, and in 1998, Jerry offered Matt the chance to buy in.

For Funchion, it was the opportunity of a lifetime. He jumped at the chance to own his own business, and took out a big bank loan to make it happen. In January 1999, he officially became a Penn Beer partner, buying out Stan Engle’s shares. In 2010, he took the next step and bought out Jerry Bowes.

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The first week of May 2013 was the best week of Funchion’s career. It didn’t have anything to do with sales, or brewer partnerships, or contracts, or tap handles. It didn’t have very much to do with beer at all. It was the week his daughter Caroline began her full-time position at Penn as the company’s inventory manager. Since Nick Funchion was already on staff as the business development manager, it marked the start of the era where Matt gets to spend every day working with two of his children at what is now once again a family business.

pennbeer-credit-danyahenninger10Funchion counts on his kids to help him keep Penn Beer moving forward. A recent revamp saw the installation of motion-activated LED lighting throughout the storage warehouses. The change greatly reduced the company’s energy footprint, since the business operates around the clock, with the crucial third shift making sure the 55-truck fleet is loaded and ready to leave on delivery routes by 6 AM. The sales office was renovated with a modern look, and it’s now full of glass, and light wood, with lots of natural light flooding an open floorplan.

The sales staff itself has become more modern, too—the average age of the 34-person-strong force is around 27, and five or six of them are serious homebrewers. The team starts every week with an office-wide Monday morning tasting session, at which they sample new products from Penn’s brewery partners. Additional tastings happen often, whether led by in-house Craft Beer Manager Pat O’Malley (a level two Certified Cicerone) or by brewers and reps from Penn’s brewery partners.

Despite the fact that they also sell Bud, Penn Beer staff are a welcomed part of the craft beer community, proving one is not exclusive of the other.

“Whenever we have a promotion at a bar, we’re sure to see a few people from Penn show up, and sometimes they bring the whole crew,” said Nick Johnson, Tröegs regional sales manager. He told a story about Philly Beer Week 2014, when the last leg of the Hammer of Glory relay threatened to fall apart: the group assigned to pull the Ghostbusters-themed vehicle from Kite & Key to Opening Tap bailed at the last minute.

“We grabbed a bunch of Penn guys and convinced them to help. All it took was a few cans of Sunshine Pils and they hauled us a mile to the festival. We even got Nick Funchion to dress up in the ghost suit and play Slimer.”

Penn’s portfolio expansion has been good for the company. Although growth is still a struggle—“It’s a very, very competitive environment,” Funchion observed—the distributorship now services approximately 2,300 retail licenses, including beer stores, taverns, delis and restaurants.

Of course, as Penn made its own moves to encompass more brands, so did its largest brewery partner. Thanks to the 2008 acquisition of Anheuser-pennbeer-credit-danyahenninger13Busch by global conglomerate InBev, Funchion was able to add European brands like Stella Artois and Hoegaarden to his portfolio. Then there was AB InBev’s 2011 purchase of Goose Island, which allowed Penn to bring the popular Chicago brand to Philadelphia. Will recent AB buys Elysian and Blue Point end up with Penn? Funchion hopes so, but it’s not a given—those brands are currently distributed in Philadelphia by other companies (Origlio and Shangy’s, respectively).

“I’ll go talk to Dominic Origlio, I’ll go talk to Nima Hadian, and say, ‘Hey, would you be interested in selling me the rights to those brands?’” said Funchion, adding, “Sometimes it works, and sometimes it doesn’t.”

Funchion embraces progress. This spring he will rebrand (changing from Penn Distributors to Penn Beer Sales and Service) and roll out a new logo, signage, and website. He now regularly drinks Victory Prima Pils—it’s in his fridge, right next to Bud and Stella Artois. But there’s one change he’s not yet ready to make. He’s nowhere near ready to step down.

“I’m one of the luckiest guys in the world. I’m so privileged to be in the beer industry in Philadelphia. I love my job.” Does he have an exit strategy? “They’re gonna have to carry me out of here in a pine box.”

About Mat Falco

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