Sep 272016
 

2016-nbwa-convention-logoFor decades, the Wholesale Beer Distributors of  Texas has published a monthly report analyzing beer shipments into the state.  This report begins with a summary of the entire state’s beer by volume, by brand, and by package.  The report also converts the brand totals into barrels.  Obviously, this is a pretty handy report as it provides a clear indication of volume rankings, who is hot, and who is not.  Talking points, if you will.  The remainder of the report is categorized by distributor, not by market. The report does, however, list distributors by the city in which the distributor receives the beer.

In the 1980’s, as Coors expanded into Texas, the brewery appointed four Coors distributors in San Antonio and five distributors in Houston.  In San Antonio, these four distributors competing against one Budweiser distributor, one Miller distributor, and one Schlitz distributor, in addition to several other distributors including a Pearl, a Lone Star, and a Falstaff house.

Acquiring accurate shipment numbers reflective of one’s standing in the market, obviously took some creative accounting.  The one-house operations typically had only one county to service, however, all the Coors houses had a part of San Antonio, plus to three to four more counties outside the city.  Therefore, one had to attempt to line up counties as best as possible.  Certainly not a perfect system, but it worked.

The Wholesale Beer Distributors of Texas was published monthly, along with other industry publications, including Modern Age Blue Book and Beer Marketer’s Insights published on orange paper. At the time, these were the only publications reporting on the industry.

In the 1960s, and into the 1980s, there were still a number of very small beer distributors in the state.  Almost all were in rural counties, producing small volume, so at times, these small distributors had no beer shipped to them, and thus, there was no report.  By the end of the 1980s, most of these small operations had been purchased by larger distributors.

For years there was only one Hamm’s distributor in the state, a very small operation in Mission, Texas.  In addition to owning the distribution rights for Hamm’s, the distributor in this little southern Texas town, also sold Femsa products, mostly Carta Blanca and Tecate.  The town of Mission is on the Rio Grande River, a Mexican border town, and a seasonal destination home for many retirees during the winter months.  Because many of the retirees were from the upper mid-west, there were a plethora of Hamm’s consumers in Mission during the winter months.  All of which is surprising considering that these old, small, operations are the forerunners of today’s start-up craft/import distributors!

Today is the last day of this year’s National Beer Wholesalers Association convention in Chicago.  As is the norm, most attendees are AB or MC operations and suppliers.  While attendance is around 2,000 people, the beer industry saw 12,000 present at May’s Craft Brewers Conference; a huge difference in attendance between the two conferences.

The distributor tier could now be experiencing the same growth as the craft brewers have enjoyed.  The number of distributors operating today is growing, as more and more, highly focused distributors open representing only the crafts segment of the market.  These operations are experiencing the same issues as craft breweries: undercapitalization, lack of knowledge, shortage of experienced professionals, logistic and operational challenges.

As with craft breweries, those companies that are aware of their weaknesses, and work to improve them, will be successful; while those that do not recognize their weaknesses, they will die out.  Some will grow, some will sell, and others will fade away, but these start up craft distributors are here and growing.  Soon there will be new faces at the annual NBWA convention and we will not know them!

Across professions, consistency is a direct product of work ethic….

 

 Posted by at 6:00 am
Sep 202016
 

st-arnoldsThere is the saying: “Those who do not learn from history are doomed to repeat it.” Such is the case in the beer industry, but not necessarily in a negative way.

We see history repeating itself in the birth and incredible surge of craft beers, aided, of course, by the internet and social media.  Go back in time to the years immediately preceding prohibition.  Tied houses aside, the industry had thousands of breweries across the U.S.  Similarly, today, we have 4,000 breweries and the trend shows no signs of slowing.  Those breweries 100 years ago were local breweries, serving the community not just with beer, but said breweries served as the social gathering place for locals.   Often these breweries serviced their patrons more along the lines of segregated establishments based upon the nationality of those in the region.

History is repeating itself as the local flair is back, bigger and better than perhaps anyone could have predicted.  Every industry publication, distributor and even breweries say the same thing:  Local is in, regional, and some national brands, are out!

After the end of prohibition and the end of WWII, many of these successful local breweries made an attempt to expand outside of their local footprint, some even building breweries in other states. One such example came from the state of Texas, when a local brewery decided to supersede its state boundaries and built a brewery in Oklahoma City.  One by one, these out-of-state breweries failed for a myriad of reasons, many because they simply could not compete with the big domestics beers.  We all know the story.

To some extent, this is happening again.  Just last week, St. Arnold’s, the oldest surviving craft brewery in Texas, announced it was leaving the state of Florida and instead has decided to focus sales and marketing efforts only in the states of Texas and Louisiana.  What makes this decision interesting is that the feedback from St. Arnold’s Florida wholesalers was that the brewery had done everything by the books.  St. Arnold’s hired the right people, made the right chain calls, priced the beer right, focused on the right marketing strategies, and had plenty of feet on the street,  yet St. Arnold’s could not get the traction to match their efforts.

Now St. Arnold’s is upping their efforts in their own backyard.  They are going back to the basics, often referred to as the “300-mile rule,” which states that it becomes difficult for a brand to establish itself competitively against local brands, if said brand is 300 miles outside the radius from its home brewery.

In some sense, there are markets and states, including Oregon and Colorado, where breweries are like Starbuck’s:  one on every corner. And in some instances, there is extreme pull-back. For example, Grapevine Brewing in Grapevine, Texas, just pulled all their packages and kegs out of the market, deciding instead to sell beer only at their brew pub, located in their new facility, and in their beer garden.

Some may say that this pull-back is a breweries’ last attempt to survive, and while this might apply to a brewery like Grapevine, it does not apply to St. Arnold’s.  St. Arnold’s move could be defensive maneuver to combat the growth of Karbach and other Houston area breweries.  Either way, expect more and more breweries to limit expansion or retrench.  We are not retreating…we are advancing in another direction!

 

 Posted by at 6:00 am
Sep 132016
 

bud-nfl-cansShortly after Jerry Jones purchased the Dallas Cowboys he sold the beer concession rights to Texas Stadium.  What was unusual about this deal was that Texas Stadium, at that time, was not part of the Dallas Cowboys, because the NFL had a sponsorship with AB.  When Jones sold the rights, the football team was experiencing several back to back losing seasons, having won just one game in the recent season.  The price was reported to be one million for stadium rights. Initially, Coors turned down the sponsorship right, but Miller jumped on the opportunity.

The rest is history, including the fact that the Cowboys are now in AT&T stadium and Miller continues to hold the concession rights.  As a side note, Miller’s purchase of the sponsorship rights in the early 90’s, fortunately for the distributor, coincided with the Cowboy’s ride to three Super Bowl titles.  The beer sponsorship also includes The Star, the new, state-of-the-art, Cowboy practice center, along with signage, the Cowboys preseason camp, etc. It is close to impossible to find any brand other than Miller Lite in AT&T stadium. Not a bad investment for Miller!

Professional sports sponsorships are nothing new.  As the NFL grew in popularity, so did the rising costs of sponsorships, but measuring the overall effectiveness of said sponsorships on market sales is, at best, challenging.

Wholesalers benefit when their supplier obtains the rights to sponsorships.  The benefits include not only direct sales, but also the the spill-over effect into the wholesalers’ market from the leveraging of tickets, events and other activities with the team.  It is hard to beat that kind of excitement.

The industry is changing rapidly, including traditional media methods of marketing.  In the craft world, social media has become the media giant of this segment of the industry, in many ways, defining crafts.  The craft industry owns social media, live social media and depends upon social media.  While all beer companies use social media, social media is the life blood of the craft industry.

So the question for the major breweries is how can they effectively market their products?  Especially, how can these major breweries market their product to the young consumers who are cutting the cord for cable TV.  So far, traditional marketing has not worked, nor have their efforts in social media.  Numbers do not lie.

ABI might be forced to produce a radical marketing strategy that can truly make a difference over time.  First, their NFL-team-themed cans, while not a new idea, should drive volume.  Home town fans will support their NFL team by buying such cans, not only at the stadium, but for tailgating parties, barbecues or simply because loyal fans enjoy a beer at home.  How can you have a get-together to watch your favorite NFL team without serving beer in your favorite teams’ can?  Logo beer cans will be manufactured for all but four NFL teams.

As smart as the NFL sponsorship is, ABI has gone one step further.  In recent years many colleges have gone wet in their football stadiums and basketball arenas, making beer available to all attendees, including LDA students.  The students are going to drink anyway, why not make some money by selling them beer at the event?

A recently announced commitment between with AB and Texas A&M is similar to the transaction between AB and the NFL.  AB will now be able to produce and display signage and logos on campus and near campus pubs, plus, AB will receive the media rights, and probably scoreboard logo rights for A&M.  Not only will ABI have access to these young LDA students, given the political and social environment of the U.S. today, one might expect the lowering of the legal drinking age to 18 or 19.  This puts AB in a prime position to market their products directly to these young college consumers.  Expect a land rush by AB and MC to sign a plethora of major colleges, especially in the five powerhouse conferences.

This is the type of marketing that crafts are not eligible in which to play.  While crafts own the social media, AB and MC will own the sponsorship channel, and over time, it will make a difference in the amount of revenue generated.

You’ll never lose a game if your opponent doesn’t score….

 

 

 Posted by at 6:00 am
Sep 062016
 

marijanaThe west coast has always been the incubator of trends for the United States, and this, of course, includes trends in the beer industry.  Crafts got their start on the west coast, predominantly due to that area’s favorable laws, and as some will point out, the mild climate of that area.  Expect the next big trend in the beer industry to appear on the west coast as well.  It just works that way.

So what will be that next industry trend?  If we knew what that trend would be, we would all probably be living in Palm Springs playing golf.  Perhaps the next trend in beer is not beer!  Maybe it will be marijuana.

How the legalization of weed will affect the beer sales has yet to be determined.  Most industry pundits are predicting a negative impact on beer sales, however, it is too early to make any such prediction.

What is clear in the early days of legalized sales is the dramatic impact on state budgets.  Oregon recently legalized the sale of marijuana for 2016.  Initial projections for the first two years of legal sales were $18.4 million dollars, however the total revenue collected between January 1 and July 31 is more than $25 million!  This is due, in part, to the fact that the Oregon medical dispensaries that sell recreational pot, started collecting a 25% tax on their sales.  In January alone, that amounted to $3.48 million in taxes.  The tax revenue collected is supposed to pay for police, addiction programs and schools.

The amount of tax revenue collected really has a positive effect on all Oregon beer sales, and one must believe that this tax will, especially in the early years of marijuana sales, take pressure off the beer industry for any tax increases!

Even with the marijuana-driven tax revenue increase for the state, Oregon has passed legislation to double the amount of deposits collected on all bottles and cans.  Oregon was the first state to implement a deposit law of five cents per container.  The Portland beer wholesalers created CRINC, a company owned by the wholesalers, to collect, process and sell aluminum and glass.  Even at five cents redemption, CRINC was a profitable company.  Now, doubling that deposit fee, one has to believe CRINC will be substantially more profitable.  The redemption rate of containers sold is below 100% which provides a cushion to cover costs.  It will be interesting to see if containers come in from California, Washington and other states for redemption.  What happens if the redemption rate goes to 105%+?

The impact of marijuana sales on beer sales is yet to be determined, however, early signs are positive for the beer industy, at least in the aspect of any new beer taxes.  Either way, these trends on marijuana sales and increased container deposit has begun on the west coast and will definitely be moving east.  Trends are headed east.  It will not be long, get ready.

Competition is the keen cutting edge of business, always shaving away at costs….

 

 

 

 Posted by at 6:00 am
Aug 302016
 

liveoaklogomain Last week’s post, “Success is How High You Bounce When You Hit the Ground,” brought more responses from readers than normal.  In fact, comments came from all levels of the beer industry, including both large and small companies.  There were two topics in the post, but all the comments were directed at the difficulty vendors are having when negotiating contracts with wholesalers.

It was surprising that one response came from a large craft brewery, despite that fact that this same brewery has, in the past, noted difficulty when negotiating contracts for new wholesale appointees?  Their solution:  that the NBWA needs to lead, and if they do not, the crafts will continue to legislatively attack franchise laws.

Last week’s topic is a perfect example of the NBWA’s inability to lead.  Three Texas brewers:  Live Oak, Peticolas, and Revolver, sued the state to overturn a 2013 statute which prohibited brewers from selling their distribution rights. Wholesalers retained such rights, however, the brewers did not.

District Court Judge Karlin Crump sided with the brewers in this lawsuit.  The ruling stated that the government had no compelling state interest in restricting the ability of brewers to be paid for their distribution rights.  Matt Miller, an attorney with the Institute for Justice representing the brewers noted, “The Texas Constitution prohibits the legislature from passing laws that enrich one business at the expense of another.”  Miller further stated, “This ruling is a victory for every Texas craft brewery and the customers who love their beer.”  The state has 30 days to appeal, and more than likely, the Wholesale Beer Distributors of Texas is working with their legislators to ensure the state appeals this ruling.

Now the question is, how will this ruling affect vendor-wholesaler relationships going forward?  Small or new craft breweries will probably have little to no leverage without any history of sales, yet they will still have the ability to self-distribute.  One would predict that if the start-up crafts did get some traction, that the wholesalers would, in turn, become aggressive.

After last week’s ruling, the more established or larger breweries, like the three who sued, should be in a stronger negotiating position.  Of course, once a price is determined, a contract needs to be executed.  Now the vendor is in a more neutral position to get a contract whose language reflects a vendor-favorable agreement instead of being behind the eight-ball with the wholesaler.

Finally, the most interesting situation to watch will be how wholesalers approaches the handful of super craft brewery start-ups.  One such brewery is Wild Acre in Ft. Worth, a brewery that spends millions on state of the art equipment, hires experienced beer executives, and has retained a highly acclaimed brew master with a capacity of 20K+ bbls.  Breweries like Wild Acre will be successful. But how aggressive will the wholesalers be in trying to get the distribution rights of these super crafts?

Whatever happens going forward, it is safe to say that this overturned statute in Texas is just the beginning.  There will be more and more attempts to change what many vendors feel are the barriers erected to prevent them from getting their beer to market.  This will happen.  Success is a lousy teacher; it seduces smart people into thinking they can’t lose…

 

 

 

 

 

 Posted by at 6:00 am
Aug 232016
 

Tx Beer AllianceThe beer industry of the 1980s was quite different than that of today.  Of course there have been many brand changes, and there is the obvious rise of crafts and imports, but there has also been an underlying transformation in the culture of the industry as a whole.

Consider that in 1980, there were less than 50 operating breweries in the US.  At the same time, however, there were approximately 4,550 operating beer wholesalers.  Today there are more than 4,200 operating breweries with over 6,000 brewing licenses, yet the US has only 3,000 beer wholesalers.  The growth in the number of breweries, is, in itself incredible, and has dramatically changed the industry. One could, however, also make the case the that loss of over 1,500 wholesalers has had an even more dramatic impact on the industry than the growth in number of breweries!

In 2013, the beer wholesalers in Texas were able to get a law passed that prohibited breweries from selling distribution rights, yet allowed wholesalers to continue to sell those rights if they so desired.  In 2014, three breweries sued the state to overturn this provision: Live Oak, Revolver and Peticolas.  The court heard both sides this past week and a ruling is soon expected.  It is possible this case could end up in the Texas Supreme Court.  As of late, this case has been a hot topic for industry publications.

This is just one key example of how the middle tier has evolved due to the resulting decline in number of wholesalers.  Even though the overall numbers have declined for wholesalers, and an unprecedented number of breweries currently exist, the franchise laws which protect the wholesalers, have strengthened.

Another example of this change is apparent in vendor-wholesaler contract negotiations.  Most wholesalers of any size, even the new start-up craft/import specialty wholesalers, have their own contracts.  All have been written by lawyers familiar with the beer laws of that particular state.  These contracts, to some, are heavily sided to the wholesaler.  Even a few contracts are evergreen. Given the fact that access to market is now so limited for craft brewers, many feel compelled, or even forced to sign these contracts just to get to market.

Is this the definition of a partnership?  Wholesalers will say the same about a brewer’s contract, that it is one-sided in favor of the brewer, even if the contract has the language supporting that state’s beer franchise laws.  For the small brewer, the relationship starts with a bad taste in their month.  Many feel as though they figuratively have a gun to their head.

But as we all know, this does not apply to those larger, well established crafts such as Yuengling, Founders, or New Belgium.  For the big boys, it is a different ball game when it comes to contract negotiations.  Such breweries can have a dramatic financial impact on a wholesaler, especially if they are awarded the brand.   Even with a substantial financial support commitment, most wholesalers will do whatever it takes to land one of the big suppliers.

In the foreseeable future, crafts will be addressing this contract issue through the legislative process. Many believe the Texas law will be overturned and allow self-distributing brewers to sell their distribution rights.  Stay tuned!

Success is how high you bounce when you hit the ground…

 

 Posted by at 6:00 am
Aug 162016
 

Stroh BohemianHistorically, when a brand died, it was truly dead. This adage, however, was proved untrue when Pabst Blue Ribbon became a favorite of the young anti-establishment consumers.  Pabst changed what was once a tried and true rule in the beer industry.  You might even say that Pabst was the incubator for the retro trends we are seeing and continue to see.  While the industry enjoys the benefits and growth of crafts, retro beers like Pabst, are sliding under the radar, albeit some retro brands are more successful than others.

What is the definition of a retro beer?  One definition is as simple as saying it is a beer that your parents drank!  Or, depending upon your age, maybe a beer your grandparents drank!  Several years ago the on-line news Thrillist, named 23 retro beers your parents drank.  Some of these included: Narragansett, Rheingold, Ballantine, Schaefer, National Bohemian, Dixie, Jax, Falstaff, Iron City, Stroh’s, Schlitz, Schmidt, Hamm’s, Grain Belt, Old Style, Lone Star, Pearl, Olympia, Rainier, Brown Derby, Acme and Lucky Lager.  Shiner was also named, but some others were left out, including Drewry’s and Grain Belt.

Last week, Pabst, owners of many of the above brands, announced that it was bringing back Stroh’s Bohemian Style beer to the Detroit area.  Stroh’s, like many of the other retro beers who are making a comeback, appears to be resurrecting an old line extension.

There seems to be no one definitive strategy that works across the board, as each brand has a different approach.  Pabst is just Pabst.  And Lone Star is just Lone Star.  Both brands are doing quite well without line extensions or flavors.  Rainier is another beer with one brand doing well, although a new Pale Ale in a retro style bottle is out.  These are examples of simple business models which hold on to their traditions and regional appeals.

Then you have the brands that are playing not only on the retro wave, but also on the craft wave, none more so than Narragansett.  They are producing a myriad of flavors including Light, IPA, and Hefeweisen, in addition to their flagship beer, Narragansett Lager… all with great success.  Stevens Point is another brewer that has also been successful producing multiple lines.  Iron City has both focused on their retro core brands, while also adding flavors along the craft lines.

Yet other brands, even with support and dollars invested, cannot seem to get the traction their owners had envisioned.  Look at Schlitz and, although localized, Drewry’s in Indiana.

Rumors and stories abound about where more retro brands will be reintroduced, including Jax in New Orleans and Olympia in Washington, both great old beers that have a long heritage.  The demise of many of these breweries and brands vary, but it always boils down to two things:  money, or lack thereof, and/or questionable management decisions.

Whatever the reason, the demise of these once viable brands has now been reborn to new consumers and a new generation that may has yet to come to appreciate their heritage.  Let’s hope all can be successful.

“You hear about all the fourth quarter comebacks a guy has, and I think it means a guy screwed up in the first three-quarters.” - Payton Manning.

Beer Fodder;  http://bit.ly/1hy9W0U

 Posted by at 6:00 am
Aug 092016
 

GuinnessPerhaps the only thing more desirable to a beer wholesaler than Guinness, are the Modelo and Heineken brands, though Stella could be a close second.  Even before the 1970s, when imports were the crafts of that time, Guinness and Heineken were considered staples.

As discussed in previous posts, no brand of beer owns a holiday as well as Guinness .  Sure, Cinco de Mayo is all about Mexican beers, but Corona, Tecate, Dos Equis and other Mexican beers have their own share in that holiday.  Oktoberfest belongs to the Germans, but it’s more a style of beer that celebrates that holiday.  Many German beers do well, including the six Munich breweries who are the official Oktoberfest beers, and other German breweries that brew special beers for the fall celebration.  Though not sold in Germany, these exported beers do well in the States as well.  To thicken the competition for Octoberfest, many American crafts brew Oktoberfest beers. Even at this time of year, one will see Oktoberfest beers on the shelves.

When March rolls around and St. Paddy’s day arrives, however, it is all about Guinness!  Over the calendar year, the month of March could represent 50% or more of  Guinness’ annual sales.  So the question is, what else does the future hold for Guinness?  In the mid-1980s, Diageo came out with Smirnoff Ice, one of the first RTDs, along with Bartle and James from Gallo.  In test markets, Smirnoff Ice was a big hit and when rolled out nationally, the brand did very well.  Today with all the competition, Smirnoff Ice is still a viable brand.

Then there is probably the biggest flop in the beer industry. In 2002, Diageo rolled out  Captain Morgan Gold. An immediate flop.  Diageo spent hundreds of thousands of dollars on not only marketing, but destroying unsold product.  Needless to say it left a bad taste in the mouth’s of many.  Since that time, Guinness has added more line extensions, some of which have failed while others, like Guinness Blonde and Nitro, have succeed.  Through the first half of 2016, Diageo’s beer portfolio is off three percent, including Smithwick and Harp.

Diageo just announced it was expanding its investment in the US beer market by changing its name to Diageo Beer Co. USA.  This will signal the company’s “commitment to the broad category of premium beer,” the company said.  On Friday, Diageo said it has “a deep innovation pipeline for beer and flavored malt beverages” including creating a new alcoholic soda line and launching a Smirnoff spiked seltzer.

This expansion represents a culture and mind-set shift for Diageo which, on the surface, should make all the Guinness wholesalers happy given the investment in the US.  Even as early as last year, Diageo was focusing on Asia and Africa for growth. This shift in their approach will mean one or two things for Guinness:  one much better growth and profitability; or two, Diageo could just be positioning its beer division for divestiture, as has been speculated by many pundits in recent years.  ABInBev….

Sometimes the right path is not the easiest one….

Editors note;  52 week Nielsen numbers show that Guinness dollars are up +9% and volume up +8.2%.

 

 

 Posted by at 6:00 am
Aug 022016
 

AmericaIn the popular movie often played on many cable channels, Heartbreak Ridge, Clint Eastwood plays marine Sargent Tom Highway, who has been in the service for decades.  There is a line Eastwood refers to regarding his win/loss record as a soldier:  “No wins, one loss, and one tie.”

Prior to 2008, one can argue that AB’s win/loss record was spotless.  It seemed that everything AB touched resulted in a home run.  All wins, no losses.  Let’s look at AB’s win/loss record since 2008 when they were purchased by InBev.  How does that win/loss record look since that year?  More losses than wins?

As of today we know that SABMiller will soon be rolled into ABI.  In the past week China’s regulators have approved the merger which was the final regulatory precondition.  Prior to China’s decision, in a classic study of the game of chicken, SABMiller’s board recommended that it’s shareholders accept ABI’s final offer.  This final offer had been increased to L45 a share, up from L44 a share.

Per the Wall Street Journal:   “The drop of the British pound by more than 10% against the dollar drove the value of ABI’s cash offer to SABMiller well below its alternative cash-and-share offer because ABI shares are priced in euros. Initially, the cash offer was designed to be a premium.”  ABI had increased the offer by $2 billion to head off any game of chicken.

Both ABI and SABMiller need this merger to happen.  While senior management at ABI may look at their record and see an unbeaten one, their performance is certainly not coming up roses.  Second quarter profit dropped $1.77 billion, which was tied to a currency hedge.  According to the WSJ, ABI is spending an estimated $450 million a quarter in interest on debt to finance the deal.

It is no surprise that this merger is going to happen.  SABMiller’s performance has been weak and this offer is a premium to the share holders.  Neither SABMiller or ABI could risk losing this merger.  There is no doubt that once this merger closes, ABI will chalk it up as another win.  This score card , however, might be graded differently if the question was directed to an ABI US distributor who has lost market share and volume.  Much has changed for ABI distributors and employees since 2008.

ABI’s recent seasonal promotion, American, which uses their packaging to celebrate summer and the Olympics, initially created a buzz across all media lines.  Now, however, AB’s numbers illustrate that the renaming has not positively affected Budweiser’s sales as was hoped.  Another loss?

First it was AB, than Modelo, now SABMiller. All have been acquired by InBev, along with a number of smaller crafts and some AB US distributors.  Expect more to follow no matter what their agreement with the DOJ states they can do or cannot do.  It might just not happen as quickly as ABI would like.

At the end of the movie, HeartBreak Ridge, Highway has acquired a win. He now states he is “one win, one loss, and one tie.”  The US beer industry will keep score on ABI after this merger, but do not kid yourself.  ABI will continue its assault on the US market.

The essence of strategy is you must set limits on what you are trying to achieve…

Beer Fodder: http://consumerist.com/2016/07/20/how-americas-two-signature-beer-companies-became-expats/

 

 

 

 Posted by at 6:00 am
Jul 262016
 

beer 101To better understand the role of a beer distributor, take a look at the following analogy:  The distributor’s job is to get the dog food on the shelf; it is the brewer’s job to get the dogs to pick the food up!  It may be simplistic, but it does make the point that the role of each tier in the beer industry is different.

Having said that, a distributor’s insights into selling to a particular demographic are many times more insightful than a brewery marketer’s ability to pinpoint a particular target audience.  No matter how it is defined, people will segregate.  People will segregate into various categories based upon age, education, income, professions or even the college one attended.   Segregation might even be based upon a particular beer or beer segment.

Brewery marketers and ad agencies will develop target demographics such as college educated males, ages 25-39, income $65+ etc. and the brewery then develops marketing strategies to fit the named segment.  Typically, there is little to no input from the distributor, and despite the fact that the brewery or advertising staff go into the market or visit a distributor, they could still not glean a total understanding of the bigger picture.

Beer distributors sell to all demographics across all lines.  There are no boundaries when it comes to selling beer.  My first route was in east Austin, and the accounts were mostly Hispanic.  Since I was selling Falstaff, and Falstaff was sinking in popularity behind Schlitz, Lone Star and Pearl, (Schlitz was about 20 times larger than Falstaff, however, each account was always good for 1-2 cases), it was a rough route, but we all got along well.  Even when my truck was broken into and some beer stolen, the accounts helped out by looking for the robbers.  You do not mess with the beer guys!

No matter where you went to work, beer guys were always accepted by the accounts they called on. About the only way one would dare walk into a bar in Starr county in far south Texas was with having on a beer shirt.  Where riding routes in Watts or Compton when working in LA, or the high end routes of Beverly Hills, I again found that no one messed with the beer guy! There was an unwritten rule on the retail side of the beer business.

Based on this knowledge, beer distributors have the innate ability to sell beers that are the favorite of the various demographics.  Distributors are in the accounts every day of every week of every year.  Every account gets treated equally.  Service is based on volume.

Distributors have historically hired employees that are representative of the demographics of their respective markets.  They had to.  It has not been done due to any contractual agreement, it was simply done because it made good business sense and was the right thing to do.

There is a fine line in marketing between the breweries and the distributors.  This applies to both tiers; however, distributors know the demographics of their market.  Brewery marketers can learn more about marketing to consumers from distributors.  Distributors do not exclude any account.

Beauty is in the eye of the beer holder…

 

 

 

 Posted by at 6:00 am