I hope you have been following the dispute between Alliance Beverage and Four Peaks Brewing which has lately been the topic of many publications . This issue is much larger than whether or not a “commercial agreement” existed between the two companies, it does however, demonstrates just what can happen when two companies are between a rock and a hard place. I have an interest in following this as Glazer’s is an owner of Alliance so I had contact with them when I was at Glazer’s.
This issue reminds me of two recent situations in which I was directly involved that personify how many vendors view wholesalers. First, I had a large distributor who told his vendors, myself included, that he would never hold any vendor hostage if they wanted to leave if the business agreement wasn’t working out for them. Just inform him where the brands would go, and he would try to make it happen. When I had the opportunity, and it was appropriate, I requested that we be allowed to find a new distribution network. He leaned back and responded to me, “you really think I meant that?”
Secondly, another large distributor (same summer) with performance issues, was asked to sell our brand. He agreed, but the corporate office did not. They did however, sign a performance based agreement stating that if any metrics (the distributor submitted the goals) were not accomplished over the year, they would sell the brand to the proposed buyer. After 11 months the review took place, none of the metrics were made, and the corporate office said they would not honor the signed agreement and would not sell the brand.
Two separate distributors, on two separate occasions, had no intention to honor their statements and or agreements. Understand that the volume of the combined distributors was over 25% of my US business. Two examples of how distributors “hide” behind state franchise laws.
Many of you are saying that it’s a “two-way street” and you’re right! I can also recall numerous times when the vendor came in and either “forced” or tried to force a distributor out, even going so far as to send a team in to do a 90 “blitz” in the market looking for any deficiency they could find. One which I will discuss at a later post as an example of this is G.Heileman vs. Maletis Beverage in 1991. You might be thinking that these are “isolated instances” but they are not.
Say what you will, franchise laws weren’t designed with this in mind. If a vendor has a performance issue with a distributor, you’d better listen, however, if the distributor wants to DQ a vendor, there isn’t any legal issue, is there? So, a distributor can DQ a vendor, but a vendor can’t DQ a distributor without at least some compensation! Think about it.
The Alliance and Four Peaks conflict is just the tip of the iceberg. With hundreds more craft breweries coming they will need wholesalers and vice a verse. So the question then becomes, how do they get along and what is the role of franchise laws in the future?
Just don’t tell me it’s raining down my back when I know it’s not rain……