Feb 132018
 

For as long as I can recall, every major supplier has in some way, focused on marketing their products to the female consumer.  Once again, this topic is front and center at many winter and early spring wholesaler meetings.  As the overall industry continues to lose volume to other types of drinks, one way in which to aid the industry is marketing to the female consumer. This is nothing new.

Before light beers, Coors Banquet was one of the very first beers to actually have some success selling to the female market.  Coors had a tagline, “America’s Fine Light Beer,” and the beer was sold in a tall, slim can, similar to today’s Michelob Ultra packaging.  Light beers aided in adding volume, but when the first RTDs came to market, it looked as though the industry finally had a product-focused straight for women.  Soon Bartle and James arrived on the scene, followed by Mikes Hard Lemonade and others.

While these products resulted in additional female consumers, the beer industry continued to fall behind the sales of wine and flavored spirits.  The most recent product category to impact the female market was the Not Your Father’s Root Beer and related flavors which are sweet to the taste. Retailers quickly created serving suggestions, including NYFRB atop ice cream resulting in a root beer float.  Such specialty drinks did well, but all were short-lived.  As recently noted, NYFRB sales were down 60% and still trending down. Finally, ciders added a small bump with females, but that category, too, has recently moved to negative trends.

A recent extension, based on wine’s success, might be the liquid to finally jump start beers’ market share with the female segment.  Rose’ ales and ciders are the new, latest and greatest flavor to hit the market.  Cidergeist Bubbles, a rose’ ale from Rhinegeist in Cincinnati, is now producing 20% of the volume and growth.  According to the brewery, Rhinegest cannot keep up with the demand.  Now the big boys are all jumping in as Boston Beers has Angry Orchard’s Rose’ and MC will have Crispin Rose’.  Expect AB to add a product in this category.  Although smaller brewers will have a rose’ expect, as always, that the big boys will own this category. Even Ballast Point will have a rose’ supported by Constellation brands and their team.  Look to see rose’ everywhere.

The question is, will rose’ be the long sought-after breakthrough product for females, or will rose’ be just one more product to rocket up and then fall back within a short time?  Distributors and retailers, now in tune with these specialty flavors, will probably stand back and watch at first, making as much profit as they can until the industry sees what kind of legs rose’ possesses.

Will rose’ be another NYFRB, or will it be the next Blue Moon?  Will we know by the end of the year?

Buffalo wings and ciders is all I need…

 

 

 Posted by at 7:00 am
Feb 062018
 

Two major sporting events were held this past Sunday, the Super Bowl, and the Waste Management Phoenix Open.  The water cooler conversations this week has focused on the football game and, of course, the halftime show and the Super Bowl commercials. As we know, many people watch the Super Bowl simply for the commercials.

Over the years, AB has not only been the company with the most commercials, AB has also won the best commercial award multiple times.  This year, a 30-second commercial was said to have cost around $5 million dollars.  At the time of writing this post, the first viewership numbers for the Super Bowl just became available, however, if this year’s trends continue, viewership for the game has been declining by around -7%.  AB, or any advertiser, cannot be pleased with these numbers even though millions still watched the game.

There are a number of reasons viewership of pro football is down.  Much of the reason is due to cord cutting and costs, but no doubt, the political and abuse issue actions by the NFL and their players have had a negative effect on viewers.  More than likely, even if AB chose not to advertise at the Super Bowl, some other major brewery would have jumped in and bought the available spots.  There are still millions of people watching the game.

Yet, some years ago, the Phoenix Open made the decision to be the golf tournament which would be played on the week of the Super Bowl.  This golf tournament, put on by the Thunderbird organization, annually has the largest attendance of any PGA tournament around.  The goal of tournament officials is to end the final round just prior to kick off of the Super Bowl.  And fortunately, this has successfully happened every year.

In last year’s tournament, attendance on Saturday was around 200K people. This year the Thunderbirds are anticipating up to 220K people on Saturday.  Attendance for the week exceeded 700K people, an amazing fact!

The Phoenix Open and the Thunderbirds have used the proceeds from the tournament for various local charities and have given away millions throughout the years. Since 2010, more than $50 million has been donated.  All in all, the PGA tour has given billions to charity. In every city in which a tournament is held, local charities benefit from professional golf.

In 2019, Michelob Ultra, the fastest growing beer in the U.S., might be the second largest selling brand in the country, surpassing both Miller Lite and Coors Light in dollar sales. Ultra has been the longtime beer sponsor of the PGA, a fact that most certainly has helped Ultra.

In fairness to the NFL, they do contribute to charitable organizations and many star players donate to their charity of choice.  The NFL issues are political, drug use and abuse.  On the other hand, the PGA issues deal with slow play and on-course rules.

In some way, it is almost like two sports going in two different directions… not unlike Bud Light and Michelob Ultra.

The character of a people may be ruined by charity…

 

 Posted by at 7:00 am
Jan 302018
 

History has proven that in the beer industry, when a brand begins to die, it will eventually end up in the grave yard with little chance of revitalization.  The list of dead brands in this category is long, and could take up this entire post. However, the list of brands that almost died, but did in fact revive themselves, is very short.  One such beer is Pabst Blue Ribbon, with perhaps the number one story of a near-death beer returning to life.

Along with PBR, the Pabst portfolio consists of by-gone labels including: Schlitz, Rainer, Old Style, St. Ides, Stroh’s, Schmidt’s, Pearl, Blitz, Olympia and Lone Star to mention a few.  Many of the Pabst brands are referred to as legacy brands.  Outside of PBR, only a few of these brands are showing growth.  Lone Star and Rainer, in recent years have found their footing again and are showing signs of progress by focusing on their regional roots: Lone Star in south Texas and Rainer in the northwest.

Small Town Brewing and Pabst joined together several years ago enabling Pabst to leverage its marketing and distribution system to aid the growth of the hot new product, Not Your Father’s Root Beer.  Pabst staffed up, adding a number of field sales people across the country, which added potency behind the NYFRB and other Small Town brands.

In today’s market, when the launch of a new product has a dramatic upturn, the downward curve is typically just as dramatic, often resulting in a typical bell curve shape. Accelerated growth leads to accelerated death.  In NYFRB’s case, it appears there was a great deal of sampling (consumer trial), but little to no repeat sales.  2017 numbers indicate a -60% decline for NYFRB.  In response to this brand’s decline, Pabst laid off 70+ people this month.

NYFRB is still a very viable brand, at least going into 2018, but it is almost certain, giving current trending, that the consumer will see NYFRB’s shelf space reduced along with losses in on-premise distribution.  The elimination of that magnitude of staff will certainly have a negative effect.

The question is:  how do the Pabst wholesalers view this situation?  It is safe to say that the NYFRB wholesalers sensed that this product had a shorter life span and thus leveraged that belief by maximizing profits and minimizing market spending.  They did not miss the chance to make as much on this product as possible, and since this brand is still somewhat viable, Pabst expected wholesalers to continue to do the same.

NYFRB might have legs to survive and be a profitable brand going forward for wholesalers, but one wonders what would have happened had Pabst not staffed up to that level and focused on their legacy brands?  It is possible that many of the recently laid off employees had only joined Pabst as NYFRB took off, and that many may have given up jobs at other beer companies?

Pabst, in spite of going from an independent and top five brewery, to several different owners over the years, has beaten the odds and survived.  Pabst’s portfolio is composed of mostly unknown names to the millennial generation, which could be an advantage to Pabst in the years to come.  NYFRB may not survive.

Success is survival…

 

 

 Posted by at 7:00 am
Jan 232018
 

In just the last month I have had a couple of small and new craft breweries, those which opened  within the past two years, with successful taprooms, vent their frustration at process of bringing their beer to market.  One craft brewer already had a distributor in place, while the other wanted to bring their beer to market.   Neither brewer had any direct industry experience prior to building their brewery.

In situations such as the above, two simple, yet effective explanations revolve around comparing the three tier system to an hour glass.  The top bowl is the brewers and bottom bowl is the retailers.  The sand, represented by the beer, has to go from the top bowl to the bottom bowl thru the neck.  The neck is the middle tier or beer wholesalers.  The sand can only shift from the top to the bottom by going thru the middle which is clogged and slow.

The second explanation is simple; it is the history of what has happened in the last 40 years.  In 1980, there were less than 50 production breweries in the U.S. with there were more than 5,000 beer wholesalers.  Now the opposite is true. In 2017, we have close to 10,000 breweries with less than 2,500 wholesalers.  The tiers have effectively turned upside down.

The history lesson examines the death of the small to mid-size regional breweries and the death of mega-brewer Schlitz, both of resulted in a devastating effect on the middle tier.  Now, in 2018, the industry could be re-living the 1980s.

Early shipment and depletion numbers for 2017 are in, and to no one’s surprise, it is not a pretty picture for AB or MC.  Recently, however, the industry began to feel the true impact of the decline of these breweries.  As we know, millions of barrels of beer have been lost by both AB and MC and the trend is set to continue with no end in sight.

Now, however, the industry is seeing a repeat of the Schlitz wholesaler’s responses. Those AB and MC wholesalers who do not currently have the Constellation portfolio are now restructuring their companies.  This is industry speak for layoffs!  The MC or AB houses that are lucky enough to have Constellation and Femsa are seeing their Mexican imports at 50%+ volume and 60%+ in GP in total!

No doubt, in this day and age, the times are substantially different for wholesalers than they were in the 1980s.  Both houses have more brands, crafts and imports.  AB still has the hottest beer in the country with Ultra, and the MC houses have two major light beers.  These houses have relied on the volume from these low calorie beers for years,,

But in 2018, this beer segment may be facing its greatest challenge. Led by Founders All Day IPA, large craft brewers, who are looking for accelerated growth, are bringing low carb and low calorie beers to market. Crafts see an opportunity to increase their volume with the introduction of these reduced calorie beers.  CBA just announced a national rollout of their Sessionable beer and Firestone 805 is doing likewise.  More lights will be produced in the future, including Corona Premier and Ultra-Pure Gold.

If these light beers and other beers yet to come are successful, it will not be good for either MC or AB.  2018 will be interesting.

Millions saw the apple fall, but Newton was the one who asked why.

 

 

 Posted by at 7:00 am
Jan 162018
 

The Julius Schepps Co. of Dallas, a very successful and large wine and spirit house, made the decision to sell in early 1997.  Although Schepps was predominately a wine and spirits house, they did have a very impressive beer portfolio, including the Modelo brands: Shiner, Guinness, Moosehead and other fine imports and specialties.

The wine and spirit company, now known as Republic National, bought the majority of Schepps W&S brands. Schepps offered the entire beer portfolio to the Miller network.  Miller at the time, and still today, is headed by Andrews of Dallas and the Cranes of Ft. Worth.  The other network, Coors, is was at the time headed by Willow of Dallas and Coors of Ft. Worth. The AB house, Ben E. Keith, was exclusive AB at the time so they were out of contention for the brands.

As a buyer, this portfolio was a slam-dunk. Corona and Shiner were on fire. But the main reason this was such a good buy was because Schepps operated as the personification of a wine and spirits house.  Schepps’ service, outside of the package stores, was at best, spotty, especially in the c-store channel.  Both Miller and Coors could literally pay for the brands in a very short time by simply servicing the market, something which Schepps had not previously done.  The demand for these beers was there, the retailers and consumers did not have access to the brands.

For reasons never explained, the Coors distributors dropped out of the negotiating process, allowing the Miller network to buy the Schepps portfolio.  As a result of this action, the Coors wholesalers sold out to the Miller wholesalers within just a few short years.  Today, Andrews is the MC distributor in much of north Texas.

In 1997, Corona was the real prize in the deal.  All the other Modelo brands, Corona Light, Pacficio, Negra Modelo, and Modelo Especial, were no more than bolt-ons.  The marketing strategy was to deeply discount the Corona 2/12 bottles in an effort to drive distribution and sales.  This two-year marketing program was highly successful.  Andrews, excited about Corona, put all the distributor’s efforts behind that brand, and their secondary focus was Shiner Bock, another brand which was also on fire at the time.  Low hanging fruit.

Soon, Gambrinus began to make Modelo Especial a focus brand. Initially, however, Andrews, was pushing back, but they, too, eventually began to also focus on Modelo.  Within two years of the acquisition, Andrews experienced some success with Especial in the Hispanic grocery accounts and independent c-stores. These stores were predominantly supported by Mexican Nationals, consumers who drank Especial in cans in Mexico and wanted the same in the US.  Modelo bottles could be found only in Mexican restaurants.

In spite of the wholesaler’s reluctance to focus on Especial, and with very little marketing support from Gambrinus, it was not long before Modelo took off.  As 2017 came to an end, Andrews set multiple new-volume records with Modelo.  After 20 years, Especial now sells four million cases a year!  Especial, which is much bigger than Corona, is still growing

Especial was just another brand, once thought to be no more than a bolt-on brand. But it became a gold mine for the distributor.  Had the Coors network been successful in buying this portfolio instead of the Miller network, it is certain that the shoe would have been on the other foot.

If you never try, you’ll never know what you’re capable of.

 

 Posted by at 7:00 am
Jan 092018
 

George H. W. Bush was elected President, in part, due to his famous line: “Read my lips.  No new taxes!”  The U.S. economy was on fire during the Reagan years, due in part to the fact that President Reagan lowered taxes and removed the price controls put into effect during the Carter era.  The 80s were a time of great economic growth for the country, which drove beer sales to new highs.

Soon after Bush Senior was elected into office, however, he walked back his pledge to the U.S. voters, and raised taxes on a number of items, including taxes on beer.  Bush doubled the U.S. federal excise tax on beer.  His broken tax promise was one of the major points in his failure to gain reelection for a second term. Needless to say, overall beer sales slumped, and remained that way for some time.

In a major strategic marketing move, both the U.S. importers of the Modelo brands, The Gambrinus Co., and Barton Beers, decided not to pass along the tax increase to their consumers, with both companies absorbing the increase in their own margins.  Corona, which had been on a roll since introducing the clear, longneck bottle, was still struggling to regain their momentum due to a previous vicious rumor spread about the beer.  The great majority of all the other beers in the market, however, passed on the tax increase to the American consumer.  Corona did not raise prices, and soon the brand’s sales regained its lost momentum and took off again.  The rest is history.

The new tax bill recently passed by Congress, and signed in law by President Trump, includes the long attempted reduction in FET taxes which reduces the current tax rate to $3.50 per barrel on the first 60,000 bbls. produced for breweries with production of under two million bbls.  The new tax bill also reduces the FET to $16 per bbl. on beer, up to six million bbls. produced.  The law is under a “sunset rule” of two years, meaning these taxes will be reinstated unless the beer industry can show a positive return from the tax cut.

So the question is: what will happen as a result of these tax rollbacks?  It is no secret to anyone that much of the current negative beer sales trends are a result of high pricing.  Price increases for the craft industry as a whole were postponed last fall, with anticipated increases due this spring. Will these craft brewers see the tax reduction as a price increase?  Because their margins have just been aided by the passage of this tax relief, the brewers will not increase any PTW in an effort to increase sales.

No doubt some brewers will raise prices, but will they increase spending in their marketing or add additional field people?  Some crafts will raise PTW and pocket the margins, and their respective wholesalers will see that immediately.  These craft brewers might use the two-year window, not as a positive, but as a negative.

Both Gambrinus and Barton took a huge chance over 25 years ago with unbelievable results.  The industry will be watching, as will Congress, to see how this tax reduction plays out.  If it fuels the industry’s growth, and brings additional jobs and taxes, then one can count on the lower tax rate remaining.  If, however, the craft industry becomes greedy, then one can expect a return to today’s tax rates.

Read my lips: no new taxes…

 

 

 Posted by at 7:00 am
Jan 022018
 

Editors note;  We are having server problems but should have them fixed soon.  Sorry for all the issues.

The highlight of any annual brewery convention has traditionally been the unveiling of the next year’s new ad campaign.  This was especially true when a brewer had experienced slowing sales in its main brand, typically the result of the brewer having changed either management or ad agencies, or sometimes both.  Effective ads not only meant that the brand would respond, but effective ads aided in building confidence in the brewer’s wholesalers.  That alone was important, if not more important, for the brewery than how the consumer viewed the product.

As we start 2018, this decade has seen a revolution in how breweries, especially crafts, have changed their marketing and media programs.  Social media, not traditional media, has become the main and sometimes only means by which crafts, especially startups, market their beers to the consumer.

If a brewery uses social media as its only form of marketing, it becomes incumbent on the consumer to find the brewery.  Sure, brewery labels, other forms of p-o-s, and other social media outlets (Twitter, Facebook, Instagram, etc.) will have the website address for the product.  But ultimately, the consumer has to find these addresses and look up the brewery.

Traditionally, above the line media functions just the opposite by seeking out the consumer.  If the message from the brewery is on target, the consumer will seek out the brand or information about the brand.  Take, for example, the current, and quite successfully AB Dilly Dilly ads.  It is somewhat doubtful that this tagline would be such a hit if it had been used only through social media forms of marketing.  No doubt, AB has hit on something with Dilly Dill, yet it is a little too early to see if it has a positive effect on sales for Bud Light.  Either way, AB is on to something.

Then there is the question of cord cutting by Millennials.  With ESPN losing millions of subscribers, as has commercial TV, the question of how traditional advertising will function in the coming years is worth of discussion.  There are now a plethora of choices: Netflix, Hulu, Apple TV, YouTube TV, and others. That, combined with Disney’s purchase of Fox’s assets, means that changes are coming.

Much of the blame for the volume losses experienced by AB and MC has been attributed to ineffective ads that do not resonate with consumers.  Miller changes ad agencies almost every year, and AB has recently changed, too. Yet both breweries continue to pump millions into traditional media marketing along with extensive social media platforms.

For those local, and successful crafts, who are experiencing difficulty in expanding their footprint outside of the 300-mile local radius, those breweries’ marketing techniques might be better suited by a traditional campaign instead of solely relying on social media which forces the consumer to find the brand. And why should the consumer go to the trouble of finding another brand if that consumer already supports the areas local brands?

Breweries that have designs on aggressive growth and survival need to support both social and traditional media programs.  Without using both means, breweries limit themselves, somewhat like a brewery that only offers their products in bottles and kegs.  In doing just that, the brewery sells to less than half the market.

Nowadays, social media is the easiest place to go and find something…

 

 

 Posted by at 7:00 am
Dec 122017
 

By the mid 70’s, due to the continued success of the brand, Coors Brewing Company’s expansion into the southern half of Texas focused on two key must haves.  One must have, was naming wholesalers who were either sports idols, political icons or other famous people within the brewery’s major markets.  The other must have, was to ensure all of the brewery’s wholesalers would attain the volume necessary so as not to cause a problem for Coors.  The Dallas distributor, in the 70’s, sold three percent of Coors’ total business.  Coors appointed five wholesalers in the Houston area, and four wholesalers in San Antonio.

All the newly awarded wholesalers in South Texas were startups that distributed only Coors.  The distributorships were awarded the brand in the summer of 1975, with the opening projected to be in 1976.  Some appointed wholesalers included: Bob Lily in Waco and Roy Butler, the former major of Austin.

There were four wholesalers appointed in San Antonio, one of whom was Charles M. Duke, Jr. the 10th man to walk on the moon.  Charlie, at that time, was a colonel in the U.S. Air Force Reserves, having been educated at the U.S. Naval Academy, MIT and eventually joined NASA as an astronaut.  Prior to becoming an astronaut, Charlie was a fighter pilot, stationed around the world.  Charlie and his partner, Richard Boushka, had originally applied for the Austin market, but when offered the northeast San Antonio market, Charlie agreed.

Charlie Stidham, who had been awarded the Coors Southwest San Antonio market, recommended that I join Charlie Duke’s team and run the operation.  I soon joined Duke’s team as VP of Sales.  Charlie had no beer industry experience, and really no business background, but during his tenure as the Coors Northeast Distributor, Charlie’s celebrity status attracted a multitude of visitors ranging from movie stars, athletes, astronauts and politicians The hospitality room, a common feature of distributors in the 70’s, held a multitude of famous individuals all coming to meet the 10th man to walk on the moon.

We were once visited by Tommy Nobis, the linebacker from the Atlanta Falcons, who grew up in San Antonio and had gone to The University of Texas.  Nobis had just retired from pro football and wanted a public relationship job with Charlie’s distributorship.  Charlie considered bringing Tommy on until I said that I thought Charlie, himself, was our PR person, which is what Charlie was!

Once we opened the business and settled in with a 13% share of market, Charlie seemed to drift away.  I always wondered if someone as accomplished as Charlie could be challenged by running a small Coors distributorship.  I felt that someone with a resume as outstanding as his would have been bored.

Coors Northeast did well, and we were awarded the highest grade Coors had given to any start-up operation at that point. The company was always profitable.  That being said, after only two years, Charles sold the business to the Azar family of El Paso in the spring of 1978.

Charlie continued on in the Air Force Reserves and eventually retired as a general.  He started a speaking career and was heavily involved in the church.  He and his wife, Dottie, have lived in New Braunfels since their Coors days.

The moon man…

2017 – Charles M. Duke, Jr. – Coors Distributor

2016 – Carter S. Huber – Schlitz/Miller

2015 – Albert Jaenicke – Hops

2014 – R.D. Hubbard – Coors Distributor

2013 – George Henricksen – Royal Imports

2012 – Diane Fall – Warsteiner

THIS IS THE LAST POST OF 2017.  I WISH EACH OF YOU A HAPPY HOLIDAY SEASON AND A MERRY CHRISTMAS.  NEXT POST WILL BE ON JANUARY 2, 2018.  

Geoff

 Posted by at 7:00 am
Dec 052017
 

Do products or breweries have a life cycle, or does a brand manager have the life cycle?  Perhaps it is not the brand manager, but it is the CEO or Board of Directors that has a life cycle?  Ask the many regional brands from 50 years ago, or ask Schlitz or Coors about life cycle.  Yes, even Coors.  What happened to these fast growing and popular beers who hit the skids and either died or became a memory?

Schlitz and Coors were riding high in the 1970s, but then crashed.  Budweiser and Miller Lite took off like a rocket and maintained that momentum for many years.  Miller slowed some years ago. Budweiser, well we know that story and what has happened the last ten years.

We have seen brands and breweries come and go.  It is inevitable, and is once again happening.  The recent numbers from California indicate there is another brand coming to an end.

Thru the first half of the year, Constellation brands were up +14%, while AB and MC were down three percent.  What makes these numbers even more astonishing is the fact that AB and MC depletions were down seven percent and between five/six percent, respectively.  It has been estimated that both companies have lost 10% of their business in the last two years.  It could mean a total loss of up to 800,000 bbls. this year!  This finding is astonishing considering that 20 years ago, AB and MC had 85% of the California market.  This year they will come in at 50%, a drop of -35%.  AB has lost over 2.5 million bbls.

Through the 7th of October, in the state of California, Constellation has surpassed AB in terms of dollars.  In dollars, Constellation is now the number one brand in off-premise scan data!  Constellation has jumped 11%, and its share rose +2.9%, while AB numbers have dropped seven percent with a share loss of almost two percent, falling to 26%. This is verses 26.9% held by Constellation.  Consider the magnitude of the losses given that AB owns Michelob Ultra, a hot brand.

What is even more remarkable is that there are over 850 craft breweries in California!  In San Diego alone, there are 150 tap rooms possessing an estimated six percent share of the on-premise market!  Further impacting the market is the fact that that five of the top 10 crafts are down, with four of these crafts down double digits.

Does California, in 2017, look like the other states in 2020? Will Constellation be the dominate brewery along with hundreds of craft breweries and taprooms?  Will AB and MC continue to lose market share?  Will Constellation dominate the chain real estate?

Unless something very out of the ordinary takes place, the US beer industry should take notice of California, if they have done so already.  A wholesaler with Constellation brands is sitting pretty, but if not, then what?  Consider this scenario:  Constellation attains a 50% share of a major market, add in the taproom craft business, along with the business from other crafts.  How much, then, is left for the non-Constellation wholesaler?

There is much speculation in regards to the craft breweries and their future survival.  Perhaps there should be a similar discussion on the future of non-Constellation wholesalers?  If the trends in California continue and spread across the country, these wholesalers could follow distributors of the past,     Distributors like Schlitz and Coors, to name a few, who have come, and sadly gone.  Consolidate or become a minor player.

The future is purchased by the present…

 Posted by at 7:00 am
Nov 282017
 

The ongoing talent drain at AB, as discussed in last week’s post, has additional ramifications for other beer companies.  In a recent visit with a senior leader of a large MC distributor, this leader commented that when asked by his vendors to do a ride-with, he typically refused, under the assumption that he would not learn anything from a sales rep. After decades of leadership roles in various beer companies, he saw no upside to working with a vendor sales rep.

When InBev took over AB 10 years ago, and opened the gates for AB wholesalers to pursue new products, many of these AB houses promoted from within to handle to job of managing the new vendors.  The upside to this model was that these employees knew the market and their company.  The downside is that, as we now all know you cannot sell crafts or imports using the same techniques as selling AB products.  There was a learning curve for all of these people and beer companies, and unfortunately, it has taken much longer to learn the needed skill sets than anticipated.  Fortunately, however, the AB houses have had the resources to enable their staff the needed time to learn and grow.

That curve has now cycled through.  What the industry is currently experiencing is the next generation of craft managers who are moving into leadership roles and managing various portfolios.  At the moment, the typical career path to a vendor-manager requires promotion to a sales rep.  A number of these sales reps come from the on-premise retail, typically employed as a craft server or manager.   They have a passion for the industry and a good knowledge of craft beers which makes them desirable for the wholesalers to acquire these reps.  It makes sense.

The question becomes: are these craft-passionate young people qualified to lead a wholesaler’s portfolio?  Where the senior MC executive saw no reason to ride with an inexperienced sales rep, perhaps the reverse applies to an experienced team of successful beer people. Those working to develop a brewery’s brand could be assigned an inexperienced manager as the wholesaler.  This is a disconnect.

It is imperative that a wholesaler not only educate their young employees in regards to the dynamics of the three-tier-system, they must also assign portfolios accordingly.  In other words, putting a young inexperienced, or limited experienced, manager against a vendor whose team is highly experienced with a proven track record, is going to cause problems.  The reverse is also true.  Managing a portfolio means managing a vendor.  A vendor does not need to manage the portfolio manager.

When a vendor, at the request of the wholesaler, sets up tastings or samplings, the wholesaler must execute.  Vendors, when setting up a sampling must be in the position to also execute.  This includes carrying the right product and having ample inventory.  Many of you see this as a basic function, yet time and time again, someone drops the ball and the retailer loses.

Vendors and wholesalers need to communicate who, what, when, where, and how to manage and execute a vendor’s portfolio from the beginning.  This is not one sided, either parties must execute or both parties will lose.

Change is the end result of all true learning…

 Posted by at 7:00 am