Nov 262019
 

My first assignment, 20 years ago when I joined Glazer’s, was to oversee the statewide rollout of New Belgium for which the distribution rights had been awarded to Glazer’s. Texas was New Belgium’s fourth state with the brewer already having a presence in Arizona, New Mexico, and of course, Colorado. 

Glazer’s felt that New Belgium was going to be the key brand the distributor needed to build a world class malt portfolio. Even without any internal malt structure, and a delivery system not built for beer, the first order for New Belgium products consisted of 20 trucks of bottles and three trucks of kegs. New Belgium did not have the cooperage to fill that first order so they postponed the rollout date until New Belgium could fill the kegs.

That first year Glazer’s sold more than 500,000 cases without a malt infrastructure, without cans, and with only three brands and no single serve packages. Had this all been in place, it is not unrealistic to think 750,000 cases could have been sold. New Belgium started with only two rangers in Texas and one did not last long.

New Belgium has had great success with their sales footprint; yet like Glazer’s, both entities were attempting to find their own way in the beer industry. As New Belgium grew they encountered multiple challenges including hiring experienced beer managers, while simultaneously ensuring the cultural integrity of their founders.

By 2008, Glazer’s entire view of the beer industry had changed. The distributor began selling off their beer brands in markets where they had no Miller/Coors houses. Other distributors were more than happy to pick up New Belgium along with a multitude of other fine brands including Sierra Nevada and numerous imports. Glazer’s, however, kept the fine brands in their core MC markets.

New Belgium expanded across the country, hired top beer people, and soon became employee owned. Many of the employees were invested after just one year and remained with the brewery. In recent years, New Belgium built a world-class brewery in North Carolina to service the east coast, but this created a huge debt load.  After growing to becoming the fourth largest craft brewery in the U.S., New Belgium appeared to have hit a wall with their growth, and even though the brewery has begun to grow again, the employees decided to sell to Kirin’s Lion Little World in an all cash transaction. You can rest assured the New Belgium employees had a good weekend.

The acquisition of this craft brewery by Lion is just the most recent purchase of a major U.S. craft brewer by a foreign brewer. Others include: Laginatis, Founders, Anchor, and to name a few, all acquired by non-U.S. brewers…and why not? The U.S. and Canada are where the world goes to get gross profit. China, India, and Africa have people, North America has money.

Over 300 current and past New Belgium employees will divide up over $190 million from this sale, and with Lion’s global resources, their professional careers look secure.

Treat employees like partners and they act like partners.

 Posted by at 7:00 am
Nov 192019
 

During my tenure as the head of U.S. operations for Warsteiner, the German management team attempted to centralize global marketing and decision making for the brewery. This was a time consuming process which required me to make multiple trips to Germany for face-to-face meetings with the owner and her team.  While we disagreed on many issues, at the end of the evening we all congregated at the bar to enjoy a cold Warsteiner. Though the meetings were often contentious, those evenings spent enjoying beers were enjoyed by all and many friendships were made that continue still today.

Simply put, what makes the beer industry special is the beer.  Beer is the vehicle by which many extraordinary moments and relationships are created both within and outside the industry. There is not a meeting or a convention that does not end over beers.  There was a bar at the U.S. Warsteiner corporate office which enabled us to all enjoy a beer at the end of the day. For many years, wholesalers opened their hospitality rooms for employees to have a cold one after work.  Coors Brewery had taps in the lunchroom for employees to enjoy Coors beer.  Unfortunately, the days of hospitality rooms are gone, but the relationships are still being created. 

It is not uncommon for friendships to develop over a cold beer, whether it is in college, while serving in the military, or working to perfect one’s career, most social events include beer.  Beer is often the means by which great friendships are created. I think back to the years and friendships that have come and gone, those made both in the industry and out, and inevitably these friendships were formed over beers.

These posts have highlighted a number of outstanding beer industry heroes who have passed on. The memories of such great beer professionals as: Paul Murray; Albert Cramer; Diane Fall; Pat McEntee; Jim Barrett; Paul Harvey; and Scott DeMartine revolved not so much around their expertise, but around those afternoons and evenings where beers were shared over industry talks.  Great times and great memories. These relationships have become more meaningful as the years have passed.  Some people leave the beer industry and move on, but often the friendships continue and grow throughout the years. Often when one reconnects with past friends, it is over a cold beer!

The beer industry is changing quickly, more so now than ever before. The magnitude of the seltzer segment is yet to be determined, but rest assured those real, long-term friendships will continue to be created over cold beers. That glue will remain intact.

Remember, the most valuable antiques are dear old friends.

In memory of my close friend, and the one with whom I shared my first beers, Dennis Koustoubardis.

 Posted by at 7:00 am
Nov 052019
 

Last week it was announced that the boutique wine, spirit, and beer company, Artisanal Beverage Distributor, is being acquired by Ben E. Keith in Dallas. The small, successful portfolio of Artisanal will ensure BEK’s ability to build their new spirit division in the distributor’s non-AB footprint markets across the state of Texas. 

Artisanal Beverage was founded by long-time industry veterans, Mark Monfrey and Jeff Daniels just five years ago. Prior to owning Artisanal Beverage, both Jeff and Mark worked together as beer importers. Mark’s uncle, the legendary John Monfrey of San Antonio, was one of the largest Falstaff Distributors of his time.  Monfrey was also employed with Miller Brewing and Molson. Prior to the creation of Artisanal Beverage, Mark had been employed with Pyramid Brewing, but in an effort to cost-cut, Pyramid moved Mark from the role of employee to that of consulting; a realignment which subsequently started Mark on the road to creating his own consulting and importing company.

Jeff Daniels was a longtime employee of Glazer’s and eventually assumed the role of state beer manager. Like Mark, Jeff found upward mobility at Glazer’s to difficult and made the life-changing decision to join Mark in the consulting and importing business. Not a bad move for two dispatched managers.

The story of Mark and Jeff is not uncommon in the beer industry, as there are many with similar accounts. “Sam,” a seasoned sales manager for Glazer’s in El Paso was also dismissed from the company. He was soon discovered by a German beer importer and excelled in his work with chains, a move which did not go unnoticed by Republic National. “Sam’s” love of the wine industry led him to accept a position with Republic where he now holds the title of Senior Vice President and he is a key member of management.

After a successful stint selling wines with Republic, “Sue” made the transition to Glazer’s as a member of their beer selling team.  She later transition into Glazer’s training division, but soon thereafter, hit the glass ceiling,  Upon leaving Glazer’s,  “Sue” joined an eclectic training company, accelerated their program to new heights, and purchased the business.   She built the establishment into a training powerhouse with renowned corporate clients including Ford, Target, American Airlines, and AT&T.  “Sue’s” business continues to be highly successful today.

The professional stories of these four individuals have one factor in common: companies who will not, or cannot, identify their employees’ skill sets and talent, lose them and the talented individuals move on to become highly successful in their chosen fields.

Booming brands can cover up a company’s lack of talent and leadership, however, when said brands begin to slide, the leadership gaps surface. Mark, Jeff, Sam, and Sue, had they been given the opportunity at Glazer’s or Pyramid, could have made a difference. Unfortunately for their former employers, it did not happen.  The irony of the story is that none of these individuals looked back; they are not bitter at their previous companies, in fact, they are grateful. If they had not been treated in the way they were, the four may not have become the success stories they are today.  

Motivation will always beat mere talent. 

 Posted by at 5:00 am
Oct 292019
 

The SMU football team is currently undefeated and ranked 16th in the nation. As college football fans know, the SMU program was given the death penalty during the mid-1980s for numerous NCAA violations. For over 39 years, the SMU football program suffered severely from that penalty and each year brought the school another losing season. Due to this fact, the NCAA has never given another school the death penalty. It is somewhat surprising that SMU just did not abandon its football program all together, but they did not and remained persistent.

Recently the NCAA revised their transfer rules for athletes. Prior to the revision, an athlete could not transfer and play without first sitting out a year. The exception applied to athletes who had already graduated and remained eligible.  The newly revised regulation now allows the athlete to enter the transfer portal and move to another school where he or she can immediately play. If a top athlete is not playing at their desired school, for whatever reason, they can enter the portal, transfer to their school of choice, and receive immediate playing time. Perhaps no other school has benefitted more from this new rule than SMU’s football team, which has received more than 30 transfers. Most of the players relocated from top schools, including the University of Alabama and the University of Texas.  All wanted an improved opportunity to play and showcase their talents. The new ruling is certainly a win-win for SMU and other schools, including the University of Oklahoma,  which is now potentially hosting a third consecutive Heisman Trophy quarterback.

So, the question is, if the NCAA can modify their “pigeonholed” rules, is it possible that wholesalers can/will create a transfer portal for brands who want out? Unless a state has a buyout provision in their franchise statues, a vendor cannot leave under any circumstance. Even when a distributor decides to sell their business, there can be numerous restrictions for a vendor who desired to pass the buyer on to another distributor.  A wholesaler has the right to obtain fair market value for their efforts in developing a brewery; however, a vendor should also have the right to choose its preferred wholesaler. All parties should be able to work through such issues without threatening letters or correspondence from lawyers. In many instances such letters only serve to aggravate progress and potentially cause undo delays.

Is the college transfer portal changing the landscape of athletics? Probably not yet, but it has given many athletes the opportunity for another chance. Perhaps brands and breweries should be given this same opportunity?

Every team feels they are better after the transfer. 

 Posted by at 6:00 am
Oct 222019
 

From the 1960s until the early 1980s, when a brewery team announced an upcoming crew drive, it typically meant one thing: the brewery was out to get the wholesaler. The brewery team’s purpose was to document deficiencies within the wholesaler, including out of date beer, out of stock beer, and distribution gaps. Depending upon the state of where the wholesaler was located, the timing for termination could have been drawn out for several months, supported by performance letters to the distributor. These crew drives were not fun.

The other type of crew drive during this time frame involved a three-day event with the wholesaler being graded on their performance. This was typically the result of the wholesaler’s nomination for that brewery’s “Wholesaler of the Year” category. These crew drives, of course, were fun and interesting because of their involvement with high performing operations.  With the arrival of the 1980s, however, crew drives shifted focus to QA performances. Brewers wanted fresh beer and incentivized the wholesalers with dollars and awards. These crew drives could have swung to the positive or the negative, but all in all, they typically went well.

Fast forward to today’s crew drives that deal with rollouts of either a new vendor or a new product.  When a wholesaler launches a new breweries’ product, a team of brewery people come to the wholesaler’s market and for one week, team up with a salesperson from that wholesaler’s team. The teams’ focus will be on the on-premise side of the account and will deal with draft handles and package placements. The overall success of these rollouts usually boils down to planning and pre-selling by the wholesaler. The wholesaler, with the brewery’s input, understands the brewer’s overall marketing and strategy.  Based upon the brewer’s communications of their vision, the wholesaler can drill down and target the right channels to provide the new brands with the best opportunity for growth.

The highest performing wholesalers are the ones who make the effort to send not only management, but also key sales and marketing staff to the new vendors’ breweries. When the wholesaler makes this commitment, the payoff can be tremendous for both companies. Wholesalers who do not visit the brewery will initially fall short of their rollout goals and the subsequent effort by the brewery to educate the team can be difficult. 

The success of the rollout dictates the immediate success of the brewer, the brand, and the wholesaler.  A poorly planned rollout makes it difficult for the brand to grow. Even with a strong and well-planned rollout the long term result is still not guaranteed, but why should any of the players take a chance?

Yesterday is not ours to recover, but tomorrow is ours to win or lose.

 Posted by at 6:00 am
Oct 152019
 

While at the NBWA convention, wholesalers are offered the opportunity to attend a multitude of seminars on Monday and Tuesday mornings from 8 to 9:30.   Distributors can sign up to go to the seminar of their choice, unfortunately however, due to time constraints; it is possible that one cannot attend all the desired discussions. This year’s convention was no exception. 

One workshop offered was led by Joe Verno, one of the founders of The Denver Management consulting group. Denver Management has been in existence for a long time and in the 70s and 80s, their focus was on converting wholesaler driver sales to pre-sales for many distributors. At this year’s NBWA Joe and his son, now consultants in the family business, Verno Consulting, discussed what they believe are 40 things wholesalers should stop doing. Last week Beer Business Daily highlighted these same 40 issues outlined by the Vernos. The subject matter covered all segments of a wholesaler’s operation including, but not limited to: training, delivering, sales, talent, and vendor relations.  The top 40 areas that wholesalers should avoid outlined by the Vernos should be eye- opening to many wholesalers, although many may bypass these important points saying, “It’s not my operation, we are a step ahead of all of these points, my business is doing very well.” 

The wholesalers who are fortunate to have White Claw, Truly, Constellation, or Ultra in their house only have to look at their bottom line and smile. Using technology, almost all wholesalers have improved their overall operations and logistics while adding a number of new vendors and now, many carry non-alcoholic products.

It is clear that the Vernos are saying to wholesalers: While you are growing, are you sacrificing the long-term for the short-term? It was also clear that the Vernos see obvious wholesaler short comings including: internal structure, lack of talent, bench depth, and training. There are good odds that when questioned, almost all vendors would agree with that position.

On the reverse, wholesalers see the same issues with many new or recent vendors. Both parts of the industry hire to fill a void, not for leadership, experience, and growth. Both sides will make a point of not being able to find the right talent which is only an excuse. Talent is out there, but to obtain the best, both parties have to step up. The talent gap between wine and spirit companies and beer companies can be eye-awaking, especially when dealing with mid-management areas.

Expect to see more on the 40 key metrics outlined by the Vernos in the coming weeks. Or, one can always contact the Vernos directly for more information on this topic, for a fee, or course. 

Thank you, Captain Obvious.

 Posted by at 6:00 am
Oct 082019
 

The beer industry has an old adage that holds true even today:  A full truck is a happy truck! In the days when the deliveries were all driver-sales and the wholesalers represented only one supplier, it was the driver who loaded out the truck. An experienced driver would typically return to the warehouse with an empty truck. He knew when, and how, to load the truck according to the day and/or the promotion. Of course, during these times, the industry was using eight bay trucks to deliver beer, and reloads were not uncommon on big drop days. The advent of 16 bays and bigger trucks put an end to the reloads.

Fast forward to today and the technology on beer delivery has totally changed. Wholesalers have learned to maximize their delivery; however, what still remains relevant is what the industry calls, golden cases. The true definition of a golden case is dollars floating to the bottom line on high margin crafts or imports (maybe seltzers) with little or no investment from the wholesaler. This model works well for wholesalers. If a brewery closes its doors, for any reason, the wholesaler only loses those golden dollars.  And as we know, closings are becoming more and more common today. On the other hand, if a golden case grows and the vendor begins investing behind their brands, at what point does a golden case become a golden brand? What metrics must a wholesaler identify when this transition happens? How much does the wholesaler subsequently increase their commitment?

When Truly and White Claw hit the market, one would suppose both were nice golden cases and the rapid growth of both brands quickly turned them into golden brands. Truly and White Claw are owned by major breweries with their own professional sales and marketing teams, and both products have the backing of wholesalers. Many golden cases, however, are from local or regional breweries without the support needed to become golden brands. So, the question arises: Is the transition from golden case to golden brand the result of volume or something else? Volume would be the easiest metric, but what would that number need to be? 50K cases or more? Does it include an across-the-board advertising and marketing support program? Perhaps all of the above are necessary to make the shift from golden case to golden brand.

What happens if all of those key components are in place, yet the wholesaler still looks at the brewery as nothing more than a golden case? How does a vendor view themselves with the wholesaler? Often the vendors see their brands as golden brands while the wholesaler still views the vendor’s brand only as a golden case.  Therein lies the problem.

I believe in the golden rule, the man with the gold… rules!

 Posted by at 6:00 am
Oct 012019
 

In the 1970s, it was common for most medium to large size cities to have a local beer wholesaler association, in addition to their state association. There were even some strong regional beer associations, including the Rocky Mountain Conference of Beer Wholesalers Assoc. Most wholesalers had only one supplier. Most markets would typically have an AB, Miller, Pabst, Schlitz and Coors distributors along with regional houses, like Lone Star and/or Pearl house, which was the case in Texas. In the northwest, the regionals might have included Olympia, Rainer, and Henry’s. Other parts of the country had their own regional houses, as well. There could have easily been six or seven wholesalers in any given market. All of these associations turned to the National Beer Wholesalers Association for a national presence. As the years went by, however, and the consolidation of the beer industry became a way of life, most of the local and regional beer associations disbanded, leaving only the state associations and, of course, the NBWA.

In the 70s, the national NBWA convention’s political focus was on fighting deposit legislation, while the convention show concentrated on vehicles and delivery equipment. At the time, convention conversations often centered on Coors’ eastward expansion. Interested wholesalers would locate Coors wholesalers who could provide them with information to assist with their Coors distributor applications.

By the 1980s, the convention moved to highlighting imported beers, mostly European breweries, who were interested in expanding into the U.S. Wholesaler consolidation had not yet impacted the overall attendance at the convention, the suppliers conducted wholesaler meetings during the NBWA. Because wholesalers typically had only one vendor, many major breweries hosted their national golf tournament and other events during the convention.

By the 1990s, Pabst and Schlitz were almost gone and the rise of crafts and the Corona “miracle” became a national topic of discussion. Multi-brand beer houses became the norm which resulted in more hospitality rooms and dinners, thus enabling the vendors the opportunity to entertain their wholesalers. Some vendors, like Diane Fall of Warsteiner, invited key volume wholesalers for a private limo pub crawl across Vegas. At each casino Diane handed the wholesaler a $100 chip and a Warsteiner. The evening typically lasted until sunrise. Many other vendors also had their own unique evenings.

The NBWA frequently featured a beer segment that was particularly popular during the given time frame and provided that segment with a special section on the floor during the convention. The NBWA created the craft beer sections which enabled craft breweries to feature their respective beers while, at the same time, enabling conversation with current and potential wholesalers. This style of presentation was popular for years.

This year’s recent convention was a real eye opener for those who have attended the NBWA for decades. The massive three room exhibition hall featured seltzers, ciders, CBD, Hemp, and alcoholic infused waters. It seemed as though one had to really look for the beer segment. In one seminar, the presenter graphed the number of suppliers a beer wholesaler represented. This graph illustrated that the average wholesaler had 61 vendors, but a mere 30 were beer vendors.

The question is: does this indicate the direction the industry is taking or does this indicate the reason that beer sales have been losing share of stomach to other beverages?

Perhaps it is time to call the NBWA, the National Beverage Wholesalers Assoc. and drop the word “beer.” Some people seem to think so. 

 Posted by at 6:00 am
Sep 242019
 

Breweries will go to great lengths and spend millions of dollars to create internet meme for a brand. It is very difficult to simply create an effective branding tactic, not to mention having a brand’s identity become part of a generation’s lingo. If a brewery is fortunate enough to create such a marketing home run for a brand, then it becomes a question of how long can the brewery ride this success, and how does the marketing evolve?

Corona could be considered the personification of building a brand without losing its identity and core message.  After decades of touting the brand as “Beach in a Bottle,” the phrase still rings true today. 

Some great brands created slogans, and thus branding, that the consumer instantly connected to:  “When you are out of Schlitz, you are out of beer!” or “For all you do, this Bud is for you” and another, “If you got the time, we got the beer, Miller beer.” But with each of these brands, the advertising changed as the years passed and the brands’ popularity faded.

In 2006, Dos Equis discovered an internet meme that quickly became embedded into everyday language and drove the brand to double-digit growth. “The Most Interesting Man” campaign had great success with the line, “Stay thirsty my friends,” along with the myriad of impossible accomplishments that made up his stories.  Dos Equis rode this highly successful marketing campaign for 10 years. But when the man who played The Most Interesting Man part, Jonathan Goldsmith, was replaced with a younger version, the magic was lost and The Most Interesting Man campaign soon ended.

Now along comes the industries’ latest rocket ship, White Claw, which appears to be resistant to anything that will slow down its growth. While White Claw’s advertising is not unique, the brand has developed a strong online presence through ironic memes and parodies. There are a number of Instagrams devoted to jokes about White Claw, including whiteclawgang and itsawhiteclawsummer.  Retail accounts that either ran out of White Claw, or do not carry the product, are referred to as being “declawed.” It seems these White Claw memes are never ending. One truly cannot buy this kind of marketing, it is so unique. No doubt White Claw and its distinctive marketing have resonated with the millennial generation.  White Claw is a breweries’ marketing department dream product, and if played right, will remain that way for a number of years. Even the line extensions for White Claw could drive further sales. Think of the options:  Black Claw, Red Claw, Brown Claw, and others. The possibilities are endless.

White Claw, unlike Dos Equis might be a brand that the marketing people cannot mess up, however, that remains to be seen. Until that time comes, life is good for the White Claw distributors!

 Posted by at 6:00 am
Sep 102019
 

The frequently used statement  “People don’t leave jobs, they quit bosses” is often seen in today’s  social media posts, which makes one wonder, what goes through a boss’ mind upon seeing such a comment?

During Gambrinus’ hey days when Corona was on fire, many employees complained about the workload and the required correspondence with the brewery and wholesalers. Conversely, many employees enjoyed their time in the market for the simple fact that Gambrinus’ brands were on fire. Often employees were miserable until the annual bonuses were dispersed and only remained with the company until such time, typically at the end of the first quarter.  Once the bonuses were dispersed, the mass exodus began.

During the years that the Jos. Schlitz Brewing Co. was nipping at AB’s heals, Schlitz’s employee turnover was said to have been up to 70%. While it is difficult to quantify, it is safe to say that this loss and subsequent turnover of talent at Schlitz had to have a negative effect, resulting in the demise of the brand.

On the other hand, employees of the Mark Anthony Company are currently in the mist of one of the most incredible rides the industry has ever experienced. White Claw’s growth is remarkable. How does a company establish annual goals and bonuses when the growth is north of triple digits? One wonders what those numbers would look like if the White Claw production could be maintained. Tactical spending against While Claw would only be throwing gas on a roaring fire. Do the younger employees of Mark Anthony realize just how good it is for them?

Employees working for struggling companies express a completely different complaint. They know that their annual bonuses will not be paid, and they know that if their major brand is declining when the bonus goals are delivered, the internal pressure for management can be difficult. This despite the fact that in many cases, the brand’s decline started in the first place as a result of poor brand management.

Once again, AB announced another round of reorganizations, simply one of many, this time of their field sales teams. With the continued decline of Bud Light, at both the AB wholesalers’ and breweries’ level, pressure continues to mount. AB employees must be very thankful for Michelob Ultra. When Ultra growth slows or flattens, employees’ complaints will most definitely increase.

It seems a week does not go by without news of another craft brewery closing. Some of have been in business for three to five years. Many of the employees started with the craft, many of whom worked for free simply to get in the door. They put their heart and soul into a brewery only to see their dreams fail. One knows the complaints of these employees!

Employers and bosses need to be available to their employees and aware of their complaints, but employees also need to be aware of their environment.

There are times in life when, instead of complaining, you do something about your complaints. 

 Posted by at 6:00 am