Oct 302012



If you’ve been following the Lance Armstrong story over the past weeks, you know that he now has lost all his sponsors including ABI where he had been hired as a spokesperson for Michelob Ultra. The fact that ABI was using Armstrong reminded me of all the athletes and celebrities who have, or were, involved in the beer business at one time. As Coors expanded their footprint in the 70’s and 80’s, many ex athletes, and some politicians were appointed distributors. Coors appointed individuals including: Bob Lily, Bob Aspermonte, Joe Morgen, John Myers, Pete Rose, Dan Devine, Tom Selleck, Willie Davis, and Roy Butler (ex-mayor of Austin) to name a few. AB, of course, had distributors the likes of Roger Maris. Most of these appointments didn’t work out.  In fact, when I worked at Coors in the 80’s, I mentioned several times how grateful I was for these appointments as my job was to go in and “clean up” some of these messes.

Charlie Duke, Jr. was appointed the distributor in San Antonio (NE) in 1975. Charlie was the 10th man to walk on the moon and later became an Air Force General. His financial partner was a man by the name of Richard J. Boushka. At the time, Dick was the President of Vickers Energy Company out of Wichita, Kansas. At 6’6″, Dick had been an all-American basketball player at St. Louis University in the fifties and was later drafted by the Lakers. In those days there was no money in professional basketball, so Dick (a petroleum engineer grad) went to work at Vickers.  The company sponsored AAU basketball teams, which, at the time were big. In addition to winning two AAU national titles, Dick played on the 1956 US Olympic basketball team with Bill Russell and won a gold medal. By the time he was 26, he was the sales manager and by 29, he was the President of Vickers. Dick had five sons, all of whom were all-state in various sports in Kansas and went on to play college ball. Two sons played football for Notre Dame and one was on the team when the Irish won a national championship.

In San Antonio, Charlie was President of Coors NE and ran the company successfully, but after almost three years, he decided that being a Coors distributor wasn’t what he wanted to do. I always thought running a beer distributorship could not have been much of a challenge to someone who walked on the moon. After the sale, with Dick’s help, I got the GM job at Coors of Kansas. Dick always said to “find another distributorship we can buy,” so I did. We bought Texas Beers in the Rio Grande Valley and almost immediately we disagreed on how it should be run. He structured the purchase with no equity in a leveraged buy-out. Given the economic conditions, the sale of Schlitz to Stroh, high unemployment, and high interest rates, we struggled. In 1986, in an effort to save the business, I had a deal to buy the Coors operation in the lower Valley (South Padre Island), which was pre-approved by Coors,.  Unfortunately, the deal was turned down by Dick. I was always able to run the company profitably (before interest), but after the Coors decision I saw no future. In early 1987 I left Texas Beers. Dick sold his part soon after, and the company only survived another five years, then sold. It’s now part of Glazer’s.

Fifteen years or so later, a former Kansas Coors wholesaler, who was now living in Dallas, called me and said he had heard the Dick had gotten into trouble with the government. After searching the papers I learned that Dick had been arrested and charged with bank fraud. Dick later pleaded guilty on four counts of fraud, his assets were seized by the government, and he sent to the federal prison.

I always wondered how a person who seemed to have everything: money, fame, family, respect, and admiration could do what he did and lose it all. For what? Armstrong, Boushka, and many others have come and gone from the beer industry, and as far as I see, it is good riddance!

 Posted by at 7:13 am
Oct 162012


If you’ve been around the industry for a while you either have a story or you have heard one of many stories of how Coors Light got its name, “The Silver Bullet.” I have heard dozens of stories from the brewery and wholesalers from coast to coast regarding how the name came into being. Well, as you can guess, I have one, too.

Coors opened South Texas in March of 1976, and during this time I helped get San Antonio up by running the sales department at Coors NE. Once the market settled down (about six months after opening), we had achieved a 13% share.  Schlitz was a strong #1, but Miller Lite had been introduced to the market several years earlier and was making headway. Coors decided to test their new light beer “Coors Light” in San Antonio. We rolled it out in mostly off premise stores with little success. In a very short time we found that the package design, which was the same color as the Banquet can, got lost in the cooler! The consumer couldn’t tell the Light from the Banquet. Coors, too, became aware of their error, and within six months had redesigned the package to the current silver/red look and the brand started growing.

Coors NE sold in the spring of 1978, so I moved to Wichita and began running Coors of Kansas. I had gone from a market where Coors had 13% share, to one where we had a 60% share! By now, Coors Light had passed its testing phase and the brewery decided to introduce the beer throughout its territory, which included Kansas. Because of our dominate market share, we had no problem getting distribution.  AB, however, decided to introduce Busch at the same time in an effort to blunt the Coors Light roll out.

AB had targeted the college accounts around Wichita State University for Busch. My sales manager, Larry Bell, who had spent his entire professional career at CKI, took Coors Light 8-ounce cans (multiple sizes were legal in Kansas at the time) and used them as the targeted package for the same college accounts that AB was going after. Larry’s first attempt was naming the promotion “Coors Light Grenades,” which was actually quite successful. The kids really got into this promotion, but during the middle of it, Larry and some of the kids started using the cans as “bullets.” Larry jumped on the Lone Ranger and the “Silver Bullet”. Obviously, the college kids loved it, as did all the bar owners, so the brand was off and running.  Busch never got established at that time.

The brewery heard about the promotion, and the “Silver Bullet” name, and let us know they did not approve the name and discouraged us from using it. That worked well, didn’t it? Now look at Coors today. One of the great success stories in our industry over the last 40 years has been Coors Light and much of that success is because of the name “Silver Bullet.” I was glad to be part of the early years and development of the brand, but I have always considered Larry Bell as the one who named the “Silver Bullet.”


 Posted by at 5:50 pm
Oct 162012



Back in the early 80’s, on a hot summer afternoon, I was getting in a quick 9 when an elderly man drove up in his cart wanted to play in with me. We started talking, and I learned he had been the first Pearl beer distributor in the Texas Rio Grande Valley after prohibition. At the time, I had the Pearl brand, so we continued to visit. The elderly gentleman mentioned that his business had lost money every year through 1938. Then, all the Texas distributors came together and raised $60K to lobby the state legislature to pass the “cash law.” In 1939, he stated, he made $1,000. The WBDT had become a force in politics as have many other state associations.

In recent years, consultants including IBG and others, have championed wholesaler consolidation in an effort to eliminate costs from their operations. Over the years, the result of the consolidations and political activity have created a beer model that resembles an hour-glass. The top being the breweries, and the middle, the wholesalers, and the retailers, the bottom. Today the sands in the top are overflowing. Breweries cannot sift through to the bottom as the wholesalers are now so clogged that little moves through to the retailers.

When Beer Marketeers’ Insights started in the 70’s, the articles were almost all sales and marketing.  Today when you look at these publications, all we read about are law suits; legal actions; legislative issues and problems; three-tier attacks; and of course, the ongoing franchise disagreements between wholesalers and suppliers. So the question should be, why can’t we get by these disagreements and grow the business?

Business models, like products, have life cycles, and whether or not you agree, the current model for beer is outdated. When I purchased the Schlitz operation in the Texas Rio Grande Valley in the early 80’s, there were nine companies selling beer. Until just recently there were now only two, and a third has opened in the past year. How can consumers find the brands they see on the internet? How can new products get to market? How can retailers get competitive pricing and the service they want?

Consolidation, state franchise protection, and national associations have all contributed to this “hour-glass” model which is choking the three-tier system. When awarding Krombacher in Florida, I had a wholesaler tell me he wanted language in the agreement which would have had the brewery pay him three times the value of the brand if he went out of business, even if he lost his license. His position was that he had invested in trucks, warehousing, personnel, inventory, etc. and should be compensated for his effort. I reminded him of “our skin in the game,” that breweries were not cheap, to consider the costs of kettles, packaging lines, cooperage, etc.. and that he was not paying for the brand and was making a nice GP off each case. This was not an isolated situation as these comments are more common than you may realize.

As this is being written, the NBWA is going on and I’m sure this topic will be one of the major issues being discussed. Will anything come of these discussions? Nope, I doubt it. What we can plan on, however, is more attacks, more legislation, more lawsuits, and more negative press on the system. The model is broken, and if it doesn’t change soon, there will be no three-tier system as we now know it. There are none so blind as those who will not see!


 Posted by at 7:25 am
Oct 092012


MillerCoors has drawn a line in the sand over the Chesbay-Reyes issue and maybe it’s about time! I’ve read many of the comments from the industry regarding this big issue but first, let me tell you about my experiences with Reyes. I will defend their right as a wholesaler to create their own business model, however, the same goes for the vendors. Vendors need to have the right to either accept it or find another alternative.

In 2006, Warsteiner’s largest wholesaler was Union in Chicago. Union had made a decision to sell their beer division to the MC network which included Reyes. As President of Warsteiner, I sent not one, but two certified letters to Reyes informing them that I would not approve their Chicago operation based on their performance in selling Warsteiner in Maryland. I was in Chicago finalizing the change of network when I agreed to meet with the VP of Reyes. Given the two letters I had already sent, I was curious to find out why they still wanted to meet with me. We met over coffee and I once again said, no to approving their operation. When the Reyes VP finally realized that he wasn’t going to get the brand, his last comment was, ” If you don’t go with us, we will bury you in Chicago!” Those were his exact words! Had he said, “I understand you have issues with our operations, let’s discuss them and I’ll present them to ownership and get back to you with some answers, at this time, however, will you accept our business plan to review for Chicago?” I would have considered it. All this VP did, however, was to confirm my earlier decision not to go with Reyes. Today, Warsteiner is doing just fine in Chicago.

As the afore mentioned conversation ended that day, I casually mentioned that we would more than likely cross paths again. And, two years later, Reyes consolidated the San Diego market. Because Warsteiner didn’t want to leave that market, and this consolidations  gave us no other options, we met with the Reyes VP of Marketing.  We were assured that they would handle our draft, our brands and promote our Oktoberfest. Even through my Director of Sales was located in near-by LA, Reyes still did not keep their commitments and Warsteiner struggled. Reyes was up front when they’ll told us forth right that they would deliver the product, but without Warsteiner putting someone in their market they didn’t put any effort behind the brands.

Not long ago an AB (and former Schlitz) distributor in Florida, who I think highly of, told me that he and his family owed everything to AB for helping them get their distributorship. AB had made this distributor wealthy and he was extremely grateful! So to the MC distributors who are criticizing the breweries decision, I say that they should be asking, “What can I do to increase my MC business and help them (and all my vendors) achieve their goals?”

Wholesalers enjoy exclusive brands and territory, franchise protection, no receivables, attractive ROI, rising value, and a model B schools, will tell you that it is one of, if not the only business that has little risk of failure. So, what exactly am I missing? Maybe MC doesn’t want to get “buried” either, then don’t let your ego get in the way of your ignorance!

 Posted by at 7:37 am
Oct 022012



“Heineken NV is giving its green bottle a face-lift in the U.S., hoping it will help its flagship Dutch lager and one-time leading beer import stand tall again after years of market-share losses.” reported the WSJ.


Back in the early 80’s, two of the largest and most successful brands changed their packaging and labels in an effort to change their negative sales trends. In spite of these changes, Schlitz and Coors continued to decline. In fact, the CEO of Schlitz at that time, went on TV and said he had come to Schlitz (AB background) to “make the best” beer, when in fact, all this did was to give the consumer(s), who had supported the brand for years, a reason to switch. During this time, many regional brands attempted a similar strategy.  In Texas, two of them were Lone Star and Pearl. None of these package changes worked. What I find ironic, is that now you can buy “heritage” Coors cans (and Miller High Life bottles), which feature various can designs over the years in specially marked packaging. It seems to be working as the brand is now growing. In fact, the current can is very similar to the cans of the 60’s and 70’s. Schlitz is trying to make a comeback by featuring a package that highlights the “original liquid,” the retro label from those days, and some 60’s posters. Then there is the retro winner, Pabst Blue Ribbon.

Since 1946, Heineken, the second largest selling import, has had the same bottle. Now does anyone out there really think this change will reverse sales trends? History says no.

The CEO of Warsteiner commented to me that he could send a German to the States head up their US operation. I asked him, in his opinion, “Just how successful I would be if I went to Germany to establish an American beer?” He told me, “ You would fail.” So what’s the difference between a US beer professional trying to tell a European how to run their business, and a European telling a US company how to run their business?

I have never seen a more episodic and complete marketing program then Heineken had 10 years ago. They really understood their consumer and how to relate to them. Heineken knew what they wanted and they got it. So what has really changed? Crafts? Perhaps, but could it be that a centralized business model has slowed down the brand? How long is the learning curve when the head of the US operation comes to this country and attempts to in-grain their home countries culture?

If you go back four years and look at how the European breweries addressed the US recession, and the decline in the exchange rate of the dollar, you can see how Heineken, along with other importers, reacted and are now are dealing with the results of their reactions. The decision to raise prices (dramatically), reduce marketing, and cut field staff, along with the growing interest in US crafts, might just be why Heineken is in their current position.

Or maybe not? Remember, ABI in the last year changed the Budweiser label, arguably one of the most, if not the most recognizable consumer label in the world, in an effort to change their sales trends! I guess soon we’ll see a “heritage” collection of Budweiser cans on the shelf, too? So look for a similar 12 pack from Heineken in the future! Once you’re in the hole, it’s hard to stop digging!



 Posted by at 8:24 am