Oct 242017

While building the beer portfolio at Glazer’s, I initially focused on acquiring either the number one or number two best-selling imported beer from each country.  In each case, these brands were from long established breweries and were committed to continuing to build the growth of their respective products through their investment in new countries.

Although Glazer’s had a descent, but small portfolio to start with, once it became known that Glazer’s was a viable option for going to market, many importers began taking the initiative to make the contact.  These brands included: Sapporo, Asahi, Singha, San Miguel, Tiger, Yanjing, and other small brands from Asia. These brands were solid and very successful, and while the volume was small, it was steady and growing.  The importer were easy to work with, and most importantly, realistic as to their requests and goals.

Fast forward to today’s environment and the change is astounding.  Wholesalers today spend a great deal of time analyzing potential suppliers to determine which of the suppliers will be long term players?  One would think importers or breweries that were long-established would be exempt from such scrutiny.  Not so with the craft breweries of today.

Look at some European breweries of today and how they are investing in the U.S.  Carlsberg and Bavaria both walked away from their U.S businesses, turning from their own importing operation, to instead being a part of an independent importer.  Warsteiner, once twice their current size, now merely survives while maintaining their own agency.  How long will this trend remain?

Most of the Asian brands continue to just take what is out there, with one exception, Sapporo.  Although Sapporo has extensive holdings in Asia, unlike others, they are focusing on North America.   After some time as a JV with Sleeman Brewery in Canada, Sapporo purchased the operation and then added Unibroue, a highly regarded brewery, also in Canada.  Sapporo then, not unlike ABI, MC, Heineken and Constellation brands, purchased the iconic Anchor Brewing Co. of San Francisco.  These three operations, when combined, have compiled a nice portfolio for Sapporo, and one that any wholesaler would love to represent.  You know Sapporo is not going anywhere.

So the question is: why does Sapporo see North America as the place to invest, and not China, India or Africa?  Europeans breweries are backing out of, or slowing in their investment in North America, yet, Sapporo is continuing to invest.  Beer sales in Japan are soft, just like in Europe, so why not invest where there is money!  North America!

There may soon come a day when these brands from Sapporo become a “must have” for a wholesaler!  Until then, we will just be watching how Sapporo continues to grow, and what will happen to those European imports who gave up!

You have to make it happen!



 Posted by at 6:00 am
Oct 172017

Last week’s NBWA convention was once again held at Caesar’s Palace in Vegas and hosted approximately 4,000 attendees, including 250 vendors who took up three massive halls in Caesar’s convention center.  AB, MC, Diageo, and Pabst had their large hospitality display booths open, as did a number of other suppliers.  The craft brewers had their own row of booths displaying all, or a majority of their products.  There were also the multitudes of vendors that sell their products to the wholesaler. Vendors who sold trucks, software, specialty items, uniforms, glassware, warehouse equipment, and many other industry- related items.  To see all the booths and visit everyone, it would have taken both afternoons of the convention.

A comparison of the NBWA of today, to that of four decades ago, is a study in contrast. The NBWA at Caesars in the late 1970s was much smaller, despite the fact that there were many more wholesalers in operation.  At that time, the middle tier consolidation was just beginning and the various topics of conversation between the wholesalers and the industry executives were strikingly different.

In the late 70s, the hot topic, by far, was the eastward expansion of Coors.  Since I was running one of Coors’ largest wholesalers, many hopeful wholesalers were looking for information and direction as they were preparing their RFPs for Coors.  A number of wholesalers, and even some non-wholesalers, were anticipating the opportunity to visit our operation, and many did visit.

By contrast, at the NBWA convention of 2017, Heineken had a huge Mexican booth behind their Heineken front, and of course, Constellation Brands had their usual blast across the street, taking over a large popular roof-top venue, complete with bands and entertainment.  These two brands were not even around in the late 70s.  At that time, imports were just beginning to catch the wholesaler’s attention, just like the crafts that have recently caught the attention of the wholesale market.

The main issue this year, as in recent years, was the topic of what ails the beer industry and why the industry is struggling to maintain volume.  The principle speakers from Heineken and AB, along with others brewers, had their ideas as to why the industry is struggling, and in upcoming weeks, these pages will address those issues.  That said there was one vendor at the NBWA who traveled a different path.

Many longtime European brewers, who have actively participated at the NBWA over the past decades, were not in attendance.  It seemed that these breweries have either given up, or just walked away from the industry.  After investing for years, they have quit, leaving wholesalers to fin for themselves.  This abandonment was befuddling to many in the industry.

This issue of abandonment, however, was not true for the Japanese brewer, Sapporo, who has, in recent years, invested heavily in North America.  Their last acquisition was the iconic brewer, Anchor Steam.  Sapporo began their upsurge in investing some years ago with the purchase of the Canadian Brewer, Sleeman, and subsequently Unibroue. Sapporo is definitely bullish on North America.

It is a fact that attendees at the NBWA have a good time every year.  Seeing old friends and making new ones is what this industry is about.  Until next year in San Diego, all the best to the NBWA!

Remember the most valuable antiques are dear old friends…


 Posted by at 5:30 pm
Oct 032017

Beginning this week, and until the middle of next week, the beer industry has two of its three largest and most important industry conventions:  the Great American Beer Festival, in Denver and the National Beer Wholesalers Convention, in Las Vegas.  Both conventions are extensive and important to each other.

For decades, the GABF has recognized breweries who submitted their beers for judging by awarding the top beers with gold, silver and bronze medals.  The winning breweries typically displayed their medals at their respective breweries, and leveraged their marketing materials to reflect their winning status, which also included displaying graphics on their product packaging.

This is really nothing new.  Pabst Blue Ribbon Beer, whose label was the grand prize winner of the best beer blue ribbon at the World’s Fair in the late 1800s, did the same thing, and  Pabst has been leveraging that ribbon ever since.  Winning a medal at the GABF gives that beer, its brewery and the head brewer a celebrity status in the beer industry.

Award winning beers also help their wholesalers.  With today’s emphasis on beer styles, flavors, colors etc., and the role of the cicerone, an informed sales person can again use an award winning medal to gain placements and handles, not to mention promotional opportunities in the on-premise market.  These convention awards are a win-win for all parties.

Immediately following the GABF, the NBWA will begin this Sunday.  The key question for this year is: what does the industry need to do to once again jumpstart growth?  There will be many industry experts and executives talking about this particular subject, not to mention panel discussions.  Seminars, speakers and exhibitors will be everywhere. All eyes will be looking at reestablishing relationships and creating new ones, as vendors hope to gain new business.  The exhibition floor will be full, and, of course, the Monday night get-together, with all the various vendors, will be the place to be and be seen.  As a wholesaler, one year I had 16 invitations just on that one Monday night.

Like the industry itself, the number of conventions and industry events seem to have become unmanageable.  This is most likely more so for wholesalers with their multitude of brands and the various conventions like the GABF, the CBC and the NBWA.  While at Glazer’s we used to flip a coin to see who attended what?  It is crazy.

I feed on conferences….

Editor’s note; As reported last week the BBUP blog is still down and not fully working.  I hope to have it back up and working this month so please bear with me.  It will not be long and thanks to all who have responded with encouragement!





 Posted by at 6:00 am
Sep 282017

In the summer of 2012, these pages ran a post on the coming tsunami regarding the number of projected new SKUs and craft breweries being constructed.  Now, five years later, it appears that the tsunami has blown itself out.

Last week, Brett Cooper, of Consumer Edge Reports, stated that SKUs have dropped from a high of 13,238 to 12,786, down -3.4%.  That is the overall number of all beer products being produced, and when one looks at the number of craft products produced, that translates to 9,021, this too a negative trend, down -5.7%, from a high of 9,537 SKUs.

Brett calls this drop “a period of rationalization” in beer SKUs which seems to be occurring across the board. The only exception is the economy segment, in which new SKUs are driving this division.

These recent reports verify what many industry pundits have been saying for some time, that the industry is on track for consolidation or even contraction.  More and more, crafts are not selling out, but closing down.  Many are actively seeking buyers.  Just this past week, the 29-year-old taproom, Pacific Coast Brewing, in Oakland, announced it was shutting down, citing uncertainty on future leases.

So the question is, when, or at what point, does a craft brewer call it quits?  Much, if not all, of the PE or even JV money has dried up.  This situation makes it even harder for even an established brewery to find an exit.

In last week’s post, we highlighted a market in Florida in which there are five craft breweries and taprooms, all five are unable to expand, and now actively looking to sell.  If the five breweries were to consolidate into one operation, that operation would be very successful.  Unfortunately, that scenario most likely will not come to fruition as the surviving brewery would not be able to handle the debt incurred in the purchase of all four breweries.

Consider how or what the buyer might do with their taprooms?  The revenue would disappear if the taprooms were closed; the equipment could be sold, but the building leases, if not leased, would have to be addressed.  There are simply too many moving parts.

This is not to say that if one or two of these operations were at the point of no return, perhaps some type of deal could be reached, but would that just be a short term remedy?  Two sick operations combined does not make a one healthy operation.

After decades of ownership, when a family-owned distributorship is sold, the selling family must deal with their emotions.  The same can be said of these brewery owners.  Investors want a return and are simply not willing to continue to reinvest in a craft that has hit a wall.  Many of these investors want out, and are willing to limit their losses in order to accomplish the exit.

The industry’s current situation has been forecasted for some time, and it appears this forecast is coming into fruition. Many now will say, enough is enough, now is the time to close the door.  The end for many crafts is inevitable.

The best way to guarantee a loss is to quit.



 Posted by at 1:15 pm
Sep 282017

To all BBUP readers:   I have experienced an unexpected technical problem with our site.  Unfortunately it will have to be rebuilt which means I will not be able to send out weekly blogs for about a month.  I am sorry this happened and ask all to be understanding until it is fixed.  You can still access all current and past blogs by just logging on.

Again, I want to thank all readers who have so kind to send messages and comments on BBUP posts.  Thank you,

Until later,


 Posted by at 7:30 am
Sep 192017

The stories coming out of Florida and the deep southeast following the devastation that Hurricane Irma caused, are similar to those from Texas and Louisiana following Hurricane Harvey.  Help is pouring in from all over the world and stories of people helping each other are populating the news.

What you are not going to hear about in the main stream media, however, is how the beer industry continues to do what it does best, help their local community in any way possible.  One such beer distributor, who will remain nameless for the purpose of this blog, exemplifies this philosophy of helping.

A distributor in a mid-size Florida market had, some years ago, built a hurricane-resistant warehouse that could withstand 150 mph winds complete with windows built to withstand 125 mph winds.  When Irma hit, he had approximately 100 people and 20 pets (dogs, cats, etc.) sheltered in his building. A building which did not sustained any damage, with the exception of minor damage to the fence around the building’s perimeter and some trees being affected.

And this is where the story becomes even more interesting. In this particular distributor’s market, there are five small, local crafts, all struggling to survive by dividing between themselves; the volume lost from the major crafts.  These little breweries could not expand their footprint without the resources necessary.  During the hurricane, one brewery, who lost all power, called our hero distributor, desperate for help.  It seems this small craft brewery had $15K worth of keg inventory which would go bad without refrigeration.  Our hero agreed to store the keg inventory for this small brewer, and even sent trucks to pick up the beer, virtually saving the brewery from the potential ruin that Harvey would have caused.

Another local brewer, who also lost power, had $300K of beer in their tanks and no generator.  They called the same distributor who, fortunately, had a commercial generator, and again, asked our hero distributor for help.  The generator was sent, on the distributor’s truck, complete with the distributor’s own electrician, to set up the generator and ensure this small brewer was going to be ok.  The owner walked out of the brewery with a set of jumper cables!  I bet that was a sight!  The electrician was able to set up the generator and save the liquid.

Not too far from this Florida town is another very successful brewer who self distributes.  This brewer, long known for its dislike of distributors, was also able to shelter a number of people in his building, but this brewer ran out of fresh water.  Knowing that our hero distributor had an inventory of bottled fresh water, the brewer called asking for help.  Without hesitation our man again saved the day and sent over his truck with four pallets of water.

Finally, the most amazing event is that in the city where this distributor is located, the city morgue called him asking for aid!  The city had no power and needed refrigeration for their corpuses.  The distributor sent over an old, but workable, draft truck which the city used to store the recently deceased!  Once the power was restored, the distributor thought it would be best to sell the truck.

No doubt the beer industry will continue to have its issues. If, however, there comes a time when the middle tier goes away, it will not be the beer industry that suffers, it will be the local community that will lose.  Distributors are the backbone to their community, and in a disaster; it is often the beer distributors that are the community heroes.

I say, find one true friend that will help you get through the tough times…



 Posted by at 6:00 am
Sep 122017

The University of Texas at Dallas, under the direction of Dr. Richard Harrison, is conducting a semester-long graduate study class on the Texas beer industry, with a focus on the state’s craft beers.  The class is a continuation of what many universities are providing for their students who are desirous in attaining an education and specific skill sets in the beer industry.

This graduate class is scheduled to have 11 guest speakers, three of whom are graduates of UTD and owners of local breweries.  I was honored to be Dr. Harrison’s first speaker and provided the class with the various models currently used in today’s industry, along with a history of beer and a study in how the industry arrived in its current-day state.

Over the years in the beer industry, the most frequently asked question I have receive is: “How big is the craft segment going to get?”  Since this was a class of grad students, the last question was: “If I was going into the business, what model would I chose?”

Instead of choosing the “hop-in-the-box” local brewery, I selected the role of a beer distributor.  After explaining the responsibility and function of a distributor, the class had a more clear understanding of what is required to run a distributorship.

A part of the discussion dealt with last year’s acquisition of Revolver by MolsonCoors and ABI’s acquisition of Karbach.  When comparing the two breweries, Revolver self-distributed and Karbach went with the ABI network.  Self-distribution can be very effective as the brewer recaptures the wholesale margin for themselves.  Though a self-distribution brewer can usually only go so deep into the market, Karbach, with the ABI network, had total market coverage.

When Revolver sold to MC, the first act of MC was to assign distribution rights to Andrews, the local MC distributor in DFW.  As you might expect, Revolver’s distribution and sales increased dramatically with Andrews’ assistance.

Karbach’s distribution was provided by the AB network and the results showed in the speed at which Karback reached 50K bbls. and continued to move upwards.  Revolver is now on track to have a similarly dynamic growth with the MC network.

Most of the students grasped the basic function of building a brewery.  The roll of the retailer is one that is also easy to understand and discuss, but delving into the middle tier becomes challenging in the explanation of the options a brewer has in getting product to market.

Explaining the different functions of the various distribution systems further compounds the clarification of the middle tier system.  For example, AB, MC, W&S, and indie craft function are all quite different. Once the students develop their business model and the components of their brand’s vision, then combining that with the distribution network, will aid the student in achieving their individual goals.

It will be interesting to see how the class finishes the semester and what the students learn from the various speakers.  I hope to have the opportunity to learn how they view the industry at that point and compare it to their views at the beginning of the semester.

By getting into distribution and production, I am widening my base…


 Posted by at 6:00 am
Sep 052017

In the summer of 1970, my second year as a helper at the Dallas Coors distributor during my college years, Corpus Christi and south Texas were hit by Celia, a category three hurricane.  Hurricane Celia, not unlike Hurricane Harvey, hit Corpus directly during the first week of August.  Damage, at that time, was estimated at just under one billion dollars.  All of Southeast Texas was shut down.

My fraternity big brother, who was from Corpus, had planned his wedding the second week of August in Corpus.  Earlier in the summer I had notified Willowbrook, the distributor, that I would need that weekend off to attend the wedding.  Than the hurricane hit.

The parents of the bride and groom were able to get the Holiday Inn, which was located on the beach, to open just for the wedding party.  Those in the wedding party were allowed to stay on the second floor, as the first floor of the hotel was flooded during the height of the storm.  Somehow, perhaps because of the use of a generator, we had electricity at the hotel, where the remainder of the city remained without power.

Since there was no Coors distributed in Southeast Texas, as Coors was only available in North Texas and West Texas, I loaded up my van with Coors and took off for Corpus Christi.  The National Guard were on every corner in town because the traffic signals were not functioning.  Remains of buildings and palm trees had not been pushed to the sides of some of the major streets, so we had to stop and get clearance from the National Guard at every intersection.  It took forever to get through town.

Other than those in the wedding party, the hotel and the beach were desolate. And like all hurricanes, Celia had cleaned all the trash and debris from the beach, which now was pristine.  We had the beach to ourselves, and with all that Coors beer, needless to say, the wedding went off without a hitch.  While the beer was much appreciated, finding ice to keep it chilled was another challenge.

In the wake of Hurricane Harvey, the beer industry, has mobilized on all levels, supplying everything from canned water, supplies, clothes, and even donations from all over the country.  From ABI to the small craft brewers, all are working hard to help in any way possible to provide relief for those who were caught in Harvey’s wake.

This level of commitment is not a surprise to anyone in the beer industry.  Wholesalers and breweries of all sizes have always been the corner stone of community involvement and support.  Hurricanes, tornados, earthquakes, or simply coming together to help in time of need, it is the beer people who step up again and again, without any hesitation.

When the rebuilding of Southeast Texas is well underway, and all the other groups have returned home, the beer industry will still be there, doing what is necessary to support their respective communities.  People can say what they like, but in these times of need, the beer industry steps to the plate, ready to assist.  That is what makes this such a great industry.

The hurricane flooded me out of a lot of memorability, but it can’t flood out the memories…



 Posted by at 6:00 am
Aug 292017

By 1980, after years of market dominance by Coors in both Kansas and Oklahoma, it was clear that those states had been targeted by AB.  At Coors of Kansas in Wichita, the largest distributor in Kansas, we had a market share of 61+%.  There were markets in Oklahoma and western Kansas where Coors had a share at, or near, 70%.

During this time, Coors Brewing Co. was battling the beginning boycotts of their beer in California, while simultaneously ramping up national expansion.  The expansion was to offset volume losses coming from the west coast.  Being concerned about AB’s push in Kansas, I flew to Denver to meet with Coors’ senior management.  As I laid out my concerns about AB, it was clear that Coors was preparing to increase efforts in both California and Texas, not in Kansas or Oklahoma.

A one percent volume of market share increase in Texas or California provided a volume increase that I could only achieve with a 10% increase which, when sitting on a 60+% share, was impossible to accomplish.  My position for Coors was to protect its backyard.  Coors’ management went the other way, and as a result, within the decade, AB and Coors had reversed market share in both states.

The Coors distributors in these states felt betrayed and abandoned.  Many sold out, some bought existing brands and wholesalers, but all had to make major changes to continue.  It was a difficult time and many people lost their jobs.

Recently, in Bump Williams’ conference, the topic, the industry’s lack of leadership, was in part, a conference on what is wrong with the beer industry today.  Former industry executives, Tom Carmella, Bob Lachky, and Luis Duran, all agreed that breweries need to either focus on brand stories or efficiency.  Breweries cannot be both at the same time.

Another major point which was highlighted during the conference included the rapid price increase for economy and premium brands, an increase which is much more rapid than that of wines or spirits.

It is very clear, after 10 years, that ABI, focusing on ROI and efficiency in the U.S. market, is using their monetary success to develop their global brands, Budweiser, Corona and Stella, in other countries.  There are over a billion people in China and India, so why not develop those markets?  Throw in South America and Africa, both underdeveloped, and which do NOT have a three tier system, and all ABI sees is the upside.

MolsonCoors, for the most part, has just followed ABI’s lead in the U.S. by not jumping on the opportunity provided by ABI to increase volume and share.  Tammarron’s recent survey results, indicate the lack of confidence MC distributors have in MC’s leadership.  “You are what your record says you are,” Bill Parcels.

New Belgium’s recent hire of a new CEO also indicates which direction they intend to head, more of a global or international path instead of focusing on the US market.  The question is: how do New Belgium’s wholesalers feel about this hire?

As Bump’s conference stated, wholesalers should focus on efficiency which seems highly likely given that the leadership void in the industry which will leave wholesalers with no other option if they want to survive.  Similar to what happened to the Coors wholesalers’ in the 1980s in Kansas and Oklahoma; these wholesalers today are feeling abandonment and frustration.  Ask the former Schlitz wholesalers about this from the 1970s.

The definition of leadership is about taking responsibility, not making excuses.



 Posted by at 6:00 am
Aug 222017

The U.S. beer environment during the 70s and 80s was similar to that of craft beers, in that it is similar to the way wholesalers thirty to forty years ago envisioned the future of imports.  Successful European brewers who were importing into the U.S. were, decades ago, highly desirable brands with good margins, despite the fact that finding a wholesaler for the brand was challenging.

It took Diane Fall, Warsteiner’s first U.S. President, over a year to get a wholesaler in Denver where she established the U.S. office for the brand.  This was in 1980.  By the time I took over Warsteiner’s U.S. operation 25 years later, Warsteiner had approximately 260 wholesalers in all 50 states.  Annual volume was 134K+ HL.

My top 10 distributors in the U.S. handled 60% of Warsteiner’s total volume, when one included the next 10 distributors, the volume percent rose to 80%.  Bottom line was that approximately 20% of our U.S. business was done by 240 distributors.  I never considered either leaving or pulling out of any of those markets, ever!

Several weeks ago, Scott Metzler, founder of Freetail Brewing Co. in San Antonio, stated at the Distributor Productivity Conference, that breweries should not expand.  “But for the most part, I think the era of national brands and even regional brands in the scope is long gone…The ship has sailed,” stated Scott.

He continued by stating that all new start-up breweries should have a goal of 500 bbl., rely only on on-site sales, they should have no market distribution and they should “be happy” with that life. At the conference, Scott participated on a panel when he made this statement, a statement which was followed by support from other participants, including some craft distillers.

John Henry, a founder of El Buho Mescal, had this comment, “If you are not going to service a new market like your own backyard, then don’t go.”  That statement alone might be where these owners fall short.

The question is: does the same model used in your home market apply to other markets?  If that were true, then as President of Warsteiner, I might have pulled out of 200 distributors in the U.S. and have only done business with 50 distributions. That would have meant turning my back on 80% of my distributors.

At one time or another, AB, Schlitz, Miller, Pabst, Coors and others were local, but they all expanded nationally.  Even a brand like New Belgium embarked on a national expansion plan, but it was almost 10 years after they started the brand.

Warsteiner put their annual marketing and tactical spending against their volume, but did not forget the other 20% of business.  We focused on off-premise chains and hired experienced and knowledgeable beer pros who managed a number of states and wholesalers.  In some cases, including upstate NY, we used a broker who drove grocery volume thru Wegmans.

It might be that the highly successful local model as it is currently structured does not work for expansion or out of state markets. Perhaps simply developing a market presence in chains managed by experienced beer pros would work.

A local tap room selling 500 bbl. with some food works, the industry knows this, but there are many brewers who have larger dreams.  All they need to do is understand that what works locally will not necessarily work in out-of-state markets, but there is one model which will work.

It is easy to be brave from a safe distance…



 Posted by at 6:00 am