Geoff

Previous key positions: President/CEO Krombacher USA 2010-2012, President/CEO Warsteiner Importers Agency 2006-2010, Corporate Director of Malt Beverages Glazer's 1999-2006, Regional Sales Manager Gambrinus 1996-1998, VP Marketing and Distribution Texas Brewing Co. 1996, President Distributor Investment Group 1991-1995, General Manager Coast Distributors (Columbia) 1988-1990, Distributor Development Manager Coors Brewing Co. 1987, President Texas Beers Inc., 1981-1987, Executive VP and GM Coors of Kansas 1978-1981, VP Sales Coors NE 1976-1978, others were sales manager Mid-State Beers, District Mgr. Lone Star Brewing Co and route sales Willowbrook. Active member of many industry associations such as NBWA, WBDT, Oregon Beer, Washington Beer, Utah Beer, Kansas Beer and Louisana Beer assoc. Nominated or won: Inner Circle, Founders, Proud Lion and other awards. Named industry expert in US Bankrupcy, Federal and many state courts.

Oct 232018
 

The last Coors distributor convention I attended was in Hawaii in the early 2000s.  As with many others, the highlight of this convention was Bill Coors’ speech featuring that year’s business overview.  As with every other Coors convention, Bill received a standing ovation from the distributors following his speech.  The ovation was not for his comments, but for his many years of contributions to the beer industry and his decades of successful leadership at the helm of Coors.

In the late 1970s, when the annual Coors convention was held in Phoenix, I was the general manager of Coors of Kansas, one of the five largest volume Coors houses in the nation.  The trip from Kansas to Phoenix required me to change plans in Denver. As I boarded the plane in Denver, I noticed Bill Coors sitting next to an open seat.  I happily joined him on the flight to Phoenix.

At the time, Coors was just beginning to expand their footprint into the eastern U.S.  The expansion was the result of the excessive volume caused by a California Farm Workers and gay right boycott.  Yet, despite the boycott, Coors remained the number one selling beer in their western markets.

During the plane ride, as Bill and I discussed this topic and others, I gleaned additional appreciation for the challenges the brewery was facing.  I was thankful for Bill’s time during the two-hour-long plane ride. Then, as is true now, it was most difficult for a distributor to have the privilege of spending time with such a storied industry leader.

That convention in the late 70s proved to be interesting given what the brewery was facing in California.  Coors had arranged a barbeque for the distributors at an area ranch during the convention.  The conversation on the bus ride to the ranch was focused on the California distributors and their complaints of lost business due to the Coors family’s anti-union policies.  The distributors were having a difficult time understanding why and how our Coors business in Kansas was still growing despite the turbulent times in California.

Many years have come and gone since the Coors convention in Phoenix, but the recent announcement of Bill Coors’ passing puts an end to a period in the beer industry where dynamic leaders backed their beliefs with actions, sometimes to the determent of their wholesalers.

I have had the opportunity to work for, and spend time with, a number of beer industry leaders during my years in the industry including Harry Jersig, Bob Uhlien, Paul Kalmanovitz, Jack Joyce, Bill, Joe Coors, and others.  All have left a lasting legacy on the industry.  Decades from now, the leaders of the craft movement might be viewed in a similar light to these great leaders.  For the well-being of the beer industry, let us hope that holds true.  Their shoes are very big!  Yes, it has been an interesting career.

“I’ve taken my kicks, but I have a fascinating life and I have been richly rewarded.” – Bill Coors

 

Beer Fodder;

 Posted by at 6:00 am
Oct 162018
 

Like many college students, I was uncertain about the direction of my professional career following graduation.  During the summers I worked as an assistant on Coors beer trucks and it was at that time that I developed an interest in the beer industry as a potential career.  It became clear to me that in the industry, one could work for either a brewery or a distributor.

These two employment options remained static until the 90s when the beer industry digested the Bush administration’s doubling of the federal excise taxes.   It took years for the industry to return to its annual growth rate and for companies to begin the hiring process following the legislative act.  During this time the beer business experienced extremes in cultural differences within certain companies.

Perhaps the most desirable beer importer to work for was Wisdom Imports.  This company hosted a growing and fun portfolio along with an employee-centric culture.  All that changed, however, when InBev bought Labatt’s.  Sound familiar?

During the same time period, Modelo was imported by Gambrinus and Barton Beers.  While both companies had similar portfolios, the cultures of the two distributors were polar opposites.  Many previous AB, Miller, or Coors employees who transferred employment to Gambrinus had the perception that they could easily adapt to the Gambrinus culture.  They soon discovered they were only kidding themselves.

Perhaps the personification of a culture change was the dramatic shift instituted by InBev during their take-over of AB.  Most former AB employees lamented those changes as they moved on to other brewers and careers.

Likewise, many of today’s successful crafts have also undergone cultural changes.  When a start-up craft begins to find some traction in the market, the company’s culture begins to shift.  Over time, brewers like Sierra Nevada, New Belgium, and Founders have discovered that experienced and professional beer executives are needed to continue the growth curve.

With 7,000 breweries currently in the market and more to come, the talent pool is limited.  A big challenge is for potential employees to decide with which brewery to hang their hat.  Will the potential brewer meet the expectations of the employee?  Because many small, start-up brewers work with an unstructured entrepreneurial culture, few provide much in the way of policies or procedures.

Recently a young, highly qualified sales rep with a new brewer was concerned over the lack of structure in his company.  Perhaps this individual would have preferred a more structured and formal company, though he may not have realized such a need for more structure without first experiencing work in a start-up brewery.  This is especially true for those individuals who have high career aspirations.

Many early employees of Sierra, New Belgium, and Founders have moved on as these breweries were no longer a fit.  Finding the right culture is a challenge for both the brewery and for the individual. Perhaps this is the underlying reason that companies attest that they cannot find qualified employees and qualified employees say they cannot find top jobs.

Keeping customers is about the experience, and frequently the employees control the culture and temperature of the business.  Never forget that.

 

 

 Posted by at 6:00 am
Oct 092018
 

There is no doubt that the beer business has many convoluted laws governing the industry.  The law dealing with beer packaging, however, might take the cake.  Take, for example, the law that required Florida and Texas to implement 12-ounce packaging restrictions.  In Texas, a beer with 5.0% ABV or less could only be sold in either a 12-ounce package or a 32-ounce package. The law stated beer of that ABV had to be in a 288-ounce case.  Schlitz, thinking outside the box, came with a 12/24 ounce can.  This package turned out to be a huge success for Schlitz.

So do creative packages like Michelob’s teardrop bottle aid in sales?  The Michelob bottle and Corona’s clear longneck bottle might be considered the two most successful packages in years.  Even with the success of the Michelob, Schlitz, and Corona packaging, however, these containers two of them are long gone, and only the Corona packaging continues today.

A couple of years ago, ABI increased the can volume from 24 to 25 ounces in their single serve c-store cans, thus providing the consumer with an extra ounce of beer for the same price.  Perhaps this technique has not worked like no other major brewery has followed ABI’s lead.

The c-store trade channel which has long been dominated by both AB and MC has now become a target of the craft industry.  In recent years, this channel has seen Constellation Brands, with their single serve offerings, chip away at both the AB and MC’s market share.

Both Texas and Florida changed their packaging restrictions years ago by eliminating the 12-ounce requirements, thus opening the door for imports to move from their .355 ounce packages to their .33 (11.2 ounces) package. This 11.2-ounce package is now used worldwide as it is more convenient for international breweries.

Crafts have discovered the 19.2-ounce package.  By reducing the amount of liquid in the can or glass container, as other CPG companies have done, the volume can be lessened instead in lieu of increasing the PTC. As an example, the product might be in a 12-ounce product but instead of a price increase, the product is now an 11.2-ounce package.

Crafts are offering their beer at a PTC near or at the domestic price, but only giving the consumer a 19.2-ounce package versus a 24-ounce package.  Everyone but the consumer wins with this model.  It becomes incumbent on the craft brewer to prove that their beer is worth the cost versus a larger size competitor.

One wonders how these crafts would do if packaged in a 24-ounce bottle/can when competing against the main domestics or imports?  This c-store trade channel is one of the last remaining strongholds of the domestic premiums.  If these crafts can steal market share from the big boys, then the 19.2 package wins.

Sometimes life gives us lessons sent in ridiculous packaging.

 Posted by at 6:00 am
Oct 022018
 

Grupo Modelo was founded in Mexico in 1922, and within just three short years the Mexican brewery introduced Corona and Modelo Especial.  Now, 93 years later, Grupo Modelo maintains a more than 60% market share in Mexico and is part of ABI.  In the U.S., Constellation Brands now owns Modelo, with Corona and Modelo Especial being the number one and number two imported brands, respectively, in the U.S.

In the last fifty years, perhaps only the success of Bud Light, Miller Lite, and Coors Light, equals that of Corona.  In the early 1980s, Corona was packaged in a stubby brown bottle and was predominantly sold in border cities, sales, however, sky-rocked when Grupo Modelo began packaging Corona in a clear long neck bottle.  For decades, the brand grew at double-digit rates.  Fueling Corona’s growth were the sales teams of Barton Beers and Gambrinus. The relationships developed with wholesalers, and increased package additions, which included 12-packs, seven-ounce bottles, cans, single serve, and draft, all added to Corona’s sales explosion.

Modelo Especial’s growth, however, was much slower, taking years to establish a foothold.  Part of that sluggish growth was due, in part, to the poor quality of Modelo’s packaging, but also because both importers’ primary emphasis was on the growth of Corona.  In recent years, however, Modelo has caught fire with some truly effective advertising and support.

Modelo and Corona are the two great success stories of the beer industry.  Wholesalers who have had Modelo for years are envied by their competitors.  While Modelo Especial continues to produce double-digit growth, the recent scan data proves that something is happening to Corona.  Corona and Corona Light are beginning to show a decline in sales.  In fact, Corona Light is down as much as -13% in the recent four-week period.

Much of Corona’s waning can be attributed to Constellation’s roll-out of new products, including Corona Familiar, and the very successful Corona Premier, targeted at Michelob Ultra.  The beer industry has historically shown that when a successful product produces offshoots, the flagship brand begins to lose volume. Or can Corona’s slow decline be attributed to the much-discussed product lifecycle?  After over 35 years of growth is the consumer looking at Corona as another product of the past generations?

Many brewers’ brand-marketing groups view line extensions as an easy way to add instant volume and increase the brands’ retail space.  But perhaps the question is: what is the real cost of line extensions?  The argument can easily be made that if the overall portfolio grows, then the brewer wins!  The real cost of these extensions, however, might be paid by the wholesaler considering the warehousing, logistics and manpower investments that have to be made.

The industry can only wonder what other future line extensions are being planned by Constellation brands.  Perhaps wholesalers will see Corona Lime, Corona Light Lime or Orange in the coming years?  Why not?  It seems to be working for Bud Light.

The next five years will be interesting for the Corona family.  Success is a lousy teacher.  It seduces smart people into thinking they can’t lose!

 

 Posted by at 6:00 am
Sep 252018
 

It is likely that if you have been in the beer industry for any amount of time, you are aware of either a wholesaler or vendor who has broken state or federal laws.  This is nothing new.

In a past blog, it was illustrated that, as a Schlitz wholesaler with a 30%+ market share, I lost all of my draft handles on South Padre Island just prior to spring break, the largest selling month of the year.  It turned out that AB had obtained my draft accounts. Soon, however, the TABC investigated and discovered inappropriate activity and the AB wholesaler was fined $2,000.  Given this action by the TABC, a wholesaler could assume that a $2,000 fine was the baseline for buying draft accounts.  That being said, the wholesaler or vendor could then determine a risk/reward approach to buying accounts.  Is the account worth the risk of a $2,000 fine?

The recent $900,000 fine paid by Warsteiner for trade violations continues to be a focus for TTB seminars and discussion.  Going forward, this fine could be considered the baseline for penalties against similar sized importers or brewers, regardless of whether the actual violation fits the crime.  If the TTB maintains this standard in fines, does the industry have a 2019 baseline going forward?  If so, then a vendor of Warsteiner’s size, 75,000+ HLs, could assess the risk/reward benefit for incurring TTB violations.

Perhaps the most sought-after venue in the U.S. for any German brewery is the German pavilion at Epcot Center in Florida.  This pavilion hosts over one million visitors annually and depletes over 7,000 kegs.  A multi-year pay-to-play contract for a German brewer and their local wholesaler at Epcot is highly sought after and could facilitate positive momentum for the vendor and their brands. The vendor could totally focus its annual marketing on Epcot’s German pavilion by using the location in a majority of its p-o-s and incentive programs for wholesalers.  Winners of the incentive could receive an all-expense paid visit to Epcot and the German pavilion.  Conversely, the pavilion’s leadership could visit the German brewery, spending time there with brew masters and senior management.  Most vendors will see the opportunity to be showcased in a venue like the Epcot Center as a reward, and might be willing to risk a fine of $900,000.  Consideration for such a fine would include: the keg volume over a three-year period; the opportunity to showcase one’s products in front of over three million people; and having one’s brand be the primary product served.

Warsteiner’s willingness to pay a fine of that size without further negotiations with the TTB may, or may not, motivate other vendors to do the same thing. Or, that amount alone may cause some vendors to remain on the fence.  Either way, do not expect this type of activity to disappear.  Such inappropriate pursuits have been going on for years, and in all likelihood will continue

I have no problem with cheating…whatever you can get away with….right?

 

 

 

 

 Posted by at 6:00 am
Sep 182018
 

When Miller Lite was introduced in the early 1970s, along with AB, Coors, Schlitz, and other light beers, it took the industry ten years to realized that the light segment was not only here to stay, but could make a major impact on industry sales.

When Corona changed from their stubby brown bottle to the longneck clear bottle, sales for the beer skyrocketed. Corona, however, unlike many other light beers, was not taken seriously until the early 1990s, a full ten years after the bottle change.

It can be said that the craft beer segment took about 10 years to develop.  Boston Beer, Anchor, Sierra Nevada, and other breweries were established long before the mid-2000s, but it was not until AB was purchased by InBev that the crafts actually began to soar.  Now, more than 10 years later, crafts are part of the industry fabric even though their overall sales have begun to slow.

In the September 4th issue of Beer Business Daily, Harry highlighted several of the beer brands that realized successful sales over the Labor Day weekend.  Michelob Ultra remains the engine driver for AB, but Bud Light Orange seems to have grown legs.  Natty Daddy and Ultra-Pure Gold maintain their growth, thereby further adding to AB’s successes.  Corona Premier and Corona Familiar continue to look like winners, and with Modelo and other Constellation brands, life is good!  MC’s Keystone Light and Keystone Ice sales are rising, and add Hamm’s and Steele Reserve to the mix and one sees the number increasing. As BBD illustrates, MC does not have a premium growth share until you look at Sol.  Coors Banquet, however, continues to chug along.  Most of these beers are light lagers that are increasing in volume and share.  Once again, the light segment remains alive despite the struggle that Bud Light, Miller Lite, and Coors Light are experiencing.

A recent visit to the local Total Wine store before the Labor Day weekend revealed what might be the beginning of another ten-year change.  While walking into the retail store, looking for the holiday weekend’s beer specials, the end-caps revealed a true surprise. There was not a single end-cap that highlighted either a light lager or a beer.  Every end-cap featured a seltzer!  White Claw, Truly, Seagrams and others were with special PTCs.  Prices on the light lagers and imports were not special PTCs!  I cannot recall a major summer holiday that did not have any lager beers displayed or featured on the floor!  Perhaps this was an enigma, but the fact remains not a single light lager or a beer was starred at this particular retail establishment.

Scan and syndicated data show these seltzer products are on fire this summer.  So the question is: are these products just a summer seasonal or are they here to stay?  As with light lagers, Corona, and crafts, the industry could be on another ten-year growth of a new category.  This time it appears the industry is taking these products seriously.

Whatever happened to “Light Lagers!”

 

 

 

 Posted by at 6:00 am
Sep 112018
 

At around 6 AM west coast time, 17 years ago today, my wife called my cell phone and asked if I was watching “Good Morning America.”  At the time, I was at the MGM Grand in Las Vegas getting ready to attend the NBWA’s annual conference morning events.  Shortly after switching the channel to the news program, I watched the incidents unfold at New York’s World Trade Towers.  It was then that I received another call.

This call was from the VP of Malts at Glazer’s, my employer at the time.  At his suggestion, I quickly contacted the in-house travel agent for Glazer’s and asked to reserve a van at the Las Vegas airport.  Within minutes we were all downstairs in the lobby with other beer industry wholesalers, brewery reps, and state association members.  We were all trying to understand the events that were occurring in our nation.  We had just heard from one of the state executives who had a contact at the White House that there would be no commercial flights until the weekend. All U.S. airline flights had been canceled.

We made the decision to grab the van that I had earlier reserved and make the drive back to Dallas.  The VP and I headed to the Dollar Rental office, where approximately 50 other people waited in line for rental cars.  The Dollar employees handed out bottled water and cookies while the stunned patrons awaited their turn to secure a vehicle.  By the time we got to the counter, there were only two vans left. We quickly secured one of the vans and headed back to the MGM hotel, loaded our Glazer’s team members and stopped by a convenience store to obtain food for the long drive home.

A number of the beer industry people at the NBWA convention had decided to stay in Vegas, but many others searched for ways to return home.  Some people, once they learned there were no more rental vehicles, actually bought cars in order to get home.

Because Hoover Dam was closed, we drove west and around the dam from Vegas to Albuquerque, arriving in New Mexico sometime after midnight.  During the entire drive, we were glued to the radio trying to discern what had happened.  The van was dead-quiet throughout most of the drive.

We left Albuquerque early the next morning, arriving in Dallas late on the afternoon of September 12th. Upon arrival at the Dollar Rental car location at Dallas/Fort Worth International Airport, we found the typical 12,000 rental car inventory at the DFW airport had all been rented. All the lots were completely empty. The return of our rental van from Las Vegas was the only vehicle, not only the Dollar Rental location, but all the rental car locations at the airport. It was an unbelievable sight.

By now the country knew what had happened in New York.  Glazer’s, like many companies, grounded its employees from flying for a while.  Many beer industry people who had stayed in Vegas were able to fly out on Saturday.  Security lines were a nightmare with over five-hour waits to get on the planes.

Today, September 11, 2018, marks the seventeenth anniversary of that fateful day. The world has never been the same.  And, just as the world has changed, so the beer industry has changed dramatically in the past 17 years.

In three years the NBWA convention will return to Las Vegas. Those of us there on September 11, 2001 should gather together and recall that ominous day 20 years ago. It was a day that would define the world.

Whenever I think of the past, it brings back so many memories.

 

 

 Posted by at 6:00 am
Sep 042018
 

By the late 1980s, Coors Brewing Co. had almost filled their U.S. footprint with the brewery’s eastern expansion.  At the time, Coors’ field sales were managed by two U.S. regions: one eastern, and one western.  Coors chose an executive from Pepsi, a man with no beer experience, to manage the western division.  He conducted his first regional meeting in California, during which he outlined his 10 key “turn around” points for Coors.  At the end of the presentation, the executive asked for questions. A young woman in the back raised her hand and explained that of the 10 points mentioned, a majority of them violated either federal or state statutes.  Within two years, that executive from Pepsi was gone.

In recent posts, we have discussed the fact that the major suppliers require that their wholesalers employ an experienced beer executive in the day-to-day management position.  This has been the status quo for decades, while many wine & spirit houses had attempted to break into the beer side of the alcoholic business without an experienced beer leadership team.  The requirement for experience in the beer industry has been mandatory.

Tammarron Consulting annually conducts a reverse survey allowing wholesalers to rate their major suppliers in a number of categories.  Suppliers now take the results of this survey seriously.  It is one of the best measurement tools delineating wholesalers’ input when it comes to a vendor’s performance.

Perhaps this alone is the main reason franchise statutes continued to exist.  Wholesalers do not have any input as to who leads their suppliers; however, the suppliers have a great deal of input over their wholesalers’ senior leadership.  Unfortunately, the industry has repeatedly seen a negative outcome when a brand’s senior leadership is not capable of leading (e.g., many craft breweries).

Franchise laws protect the wholesaler from vendors who are unfamiliar with the beer industry’s rules of operation.  Portfolio diversification by wholesalers adds to that protection, however, when a major vendor changes its executive leadership, the wholesale’s business may be negatively impacted.

This week Warsteiner announced new leadership for its U.S. market.  Given Warsteiner’s recent troubles/fines with the TTB, the company has put themselves in a most difficult position.  Warsteiner has made a number of personnel changes in an effort to correct past leadership decisions that did not follow federal laws.  The company needs a highly experienced and respected industry leader.  That said Warsteiner has named an outsider whose background is in German vacuum cleaners.  Since both companies are German-based, there must be a relationship, otherwise, why would Warsteiner have made this hire?

Larger beer companies have followed this route in the past and it typically takes three to five years for new outside leadership to establish relationships and learn the U.S. beer industry’s functions.  So the question is: does Warsteiner have the time to wait for this leadership change to work?  Obviously, Warsteiner believes they do but do the Warsteiner wholesalers believer they do?  Once again, time will tell.

My slogan is: I’m the least qualified guy for the job, but I’d probably do the best job.

 Posted by at 6:00 am
Aug 282018
 

Lone Star Brewing Co., like so many other regional breweries during the late 1940s thru the late 1960s, rode a successful business model by being regional.  Sound familiar?  Of course, regional breweries also had a built-in price advantage during these years.

By the late 1960s, the regionals were under attack by AB, Schlitz, Coors (were sold), and the soon upcoming Miller Lite.  A number of regionals sat back and did little or nothing to advance their business, thereby sealing their fate.  Lone Star, in recognizing these industry trends, however, moved quickly to remain relevant.   Lone Star not only closed their Oklahoma City Brewery, but brought in new and highly experienced leadership from national breweries including Schlitz, Hamm’s, and Miller.  These executives replaced closed-minded officials who had been running the brewery since the end of World War II and brought in more forward-thinking management.

Lone Star tied into the then youth movement of the boomers thru the Texas Red Neck Rock music genre led by Willie Nelson and others.  This marketing platform changed how the young LDA people perceived Lone Star.  The brand quickly grew and remained relevant in Texas until many years after Lone Star sold when the brand’s owners decided to walk away from the Texas music scene as well.

This year there a number of major breweries have announced layoffs and/or restructuring of their companies.  Not surprisingly to those of us in the industry as these breweries’ brands/products have slowed or gone negative.  The question is: Now where do these breweries go?  Should they conduct business as usual or go in a totally different direction?

Pabst Brewing Co., who had major layoffs earlier this year in lieu of how Small Town Brewing’s Not Your Father’s Root Beer sales turned south, has taken a different direction.  Pabst, similar to Lone Star’s experience many years ago, is undergoing a transformation versus an extensive reduction in force.

Pabst is taking bold moves in the method they not only go to market but how they reposition PBR by pricing their 12-ounce packages at 85% of the domestic premiums.  Pabst is also looking at their sales team and building it to mirror the current/future demographics the United States.

The Pabst plan is not only transformational but bold, similar to Lone Star’s strategy.  The success of Pabst’s plan is dependent on, first, the leaderships’ ability to execute, and secondly, the Pabst wholesalers’ ability to get behind the tactic at this level.  Wholesalers know that the industry needs more success stories like Pabst as this proves to be beneficial for the entire industry.  Wholesalers, retailers, and consumers all win when Pabst is successful.

PBR indexes higher than any other domestic, with craft consumers in the neighborhood of 12 xs for craft drinkers.  This puts Pabst in a unique position. Such aforementioned businesses changes could, however, put Pabst’s current position in jeopardy.  Only time will tell.

Winning takes talent; to repeat, takes character.

Editor’s note:  I regret to inform you of the recent passing of Pat McEntee.  Pat, who had previously worked with AB, Coors, Gambrinus, Tiger, and Warsteiner was not only a close friend but an outstanding professional in the beer industry.  He will be missed.

 

 

 

 

 

 

 

 Posted by at 6:00 am
Aug 212018
 

The Pabst Brewing Co., the Jos. Schlitz Brewing Co., the G. Heileman Brewing Co., and perhaps ABI all seem to have one key metric in common:  leadership.

Once Paul Kalmanovitz took control of the Pabst Brewing Co. in a hostile takeover, he immediately began slashing overheard from the company, with cuts predominantly made in sales and marketing departments.  Kalmanovitz subsequently made similar cuts with the other brands he acquired and consequently each company experienced massive sales losses.  It was not until after Kalmanovitz passed away and the Pabst holding company, S&F, acquired different leadership, did a sales resurgence occur.

Despite Frank Sellinger’s attempts to revive Schlitz, the company never survived after finance and accounting took control.  Once Stroh acquired Schlitz, the heavy debt and leadership voids sealed the future for both companies.  G. Heileman was so far in debt, there was no way it could survive and they too, soon succumbed.

AB, once the envy of the beer industry, has lost millions of barrels in volume. The company is, however, the darling of Wall Street and shareholders alike as AB continues to build a financial powerhouse.  ABI and its distributors are fortunate because Michelob Ultra remains on fire, something the others brewers never experienced.

Shareholder equity, ROI, ROA, and other financial metrics are the keys to the health of any company, including breweries, but without brand building, the financial measurements will be meaningless if the company dies as referenced by Pabst Brewing Schlitz, G. Heileman, and others.

Craft brewers, many of whom are undercapitalized, cannot take advantage of any growth opportunities because they are cash-strapped.  The beer industry is now experiencing this phenomenon as a number of breweries are either cutting staff, shrinking their footprint, or making other dramatic changes.

A major reason the above mentioned companies are failing is that while they all had, of have had, in-house talent that could overcome challenges and build successful companies; either ownership or senior leadership did not allow them to do so. They have all paid the price.  The question is: why hire this talent if one does not allow them to perform?

What is even worse is when control is turned over to someone internally who has no ability or experience to run the company.  This is typically the worst possible situation as the company’s moral dies and unless ownership quickly addresses that problem, the end result is devastating.

History has shown time and time again that when decisions are in the hands of people who are not qualified to make such decisions, the results are disastrous.  When history looks back on the craft industry, it might well be the personification of such a model.

It does not make sense to hire smart people and then tell them what to do; we hire smart people so that they can tell us what to do.

 

 

 

 Posted by at 6:00 am