Nov 272012




Over the years many parts of the beer business have changed, but one area that didn’t even exist when I first started in this industry is the area of category management, which has been created partly due to the changing retail landscape. Other drivers in the creation of category management have been the number of new brands and packages, which continue to grow even as I write. Remember in 1980 when there were less then 50 breweries in the US?

Up until the late 1980’s, a brand’s shelf space was allocated on market share. There were not that many brands as compared to today, but in addition, most cold boxes were 12 feet or less, too! At Schlitz in Louisiana in the mid 70’s we used statewide shipments showing our share (48%), however, off premise stores were mostly mom and pop’s, drug stores, and some c-stores. At Coors in San Antonio we had state shipments, but we could figure shipments out by market. Again, off premise was mostly c-stores, ice houses, package stores, and one grocery chain. Later at Coors of Kansas, we sold on state shipments, however, we published our own newsletter every quarter and we graphed shipments (Coors was at 61%). This worked well if you were the market leader or had a “hot” brand which was growing. We had three Kroger’s in the Valley which did 5% of our total business. Their boxes were set by each store manager, so relationships went a long way in what space (and ads) one was able to obtain. Due to a strike, however, Kroger eventually closed and was taken over by HEB.

Last summer while sharing dinner with friends at a local burger joint, I learned one of the guys had worked at the AB corporate offices in St. Louis during the 80’s. As it turns out, my friend was the one behind AB’s drive to create “fact based selling” and category mangement for chains! A man by the name of Jack Lewis (MRIC) had “sold” AB III on how to set cold boxes using a “plan-o-gram.” MRIC didn’t work out, but AB III pulled the process, MRIC into St Louis and had his team develop the concept. It was called ACCUSpace and was under National Accounts. At the time, National Accounts focus was on new distribution and promotions, not on space management. Then using Nielsen and shipment numbers as a base, AB started this new focus which evolved into “fact based selling.” Soon the retailers were asking for facts. My friend bought the first IBM PC and wrote the first PC based shelf management program for wholesalers, then called “ShelfSet PC.” After getting the information from the wholesalers into the PC, retailers could see how the boxes could be set to benefit them. Then the retailers started asking for pictures of the sets. Figures. My friend found a machine used in Hollywood that could take pictures of beer packages and transfer them to 35mm film.  My friend then processed the images and sent back to the wholesalers. And the rest is history.

In the last 20 years or so we have moved to “eignevectors,” which is the concept of finding out how the consumer interlates in their buying. My friend stated with “demand shaping” or how do you shape consumer behavior, vectors shape such things as pricing, social networking, promotions, etc. So the question becomes these days, how does a vector move a brand? New technology is moving to understanding consumer behavior by videoing and tracking consumers (imaging) in stores and recording what the consumer purchases and how long they spend doing so. The top two products which the consumer spends time with? Ice cream and beer!! No surprise.

Relationships to shipments to fact based selling…. to todays observed behavior at the “zero moment of truth” in our industry over hamburgers and beer with the man who change it all…six degrees of separation.

 Posted by at 8:17 am
Nov 202012



One of the great advantages of working for a German brewery is that the quality of the beer is never, ever questioned. As most of you know, all beer brewed in Germany comes under the basic law of 1516 called the “German Purity Law,” or the “Reinheitsgebot.” The beer does not have any additives or preservatives. While our marketing at Warsteiner wasn’t dedicated to this USP, we based everything “around” this concept using soft water, natural ingredients, and no additives, etc. Quality was not an issue. When speaking at sales meetings, I almost always had this idea of quality on my agenda.

The other day, while enjoying a beer with some the guys I grew up with, the topic of ingredients came up when I showed them the new Becks label with “Product of the US” imprinted at the bottom. My friends started to read the labels on their beers and one, who was drinking a Miller Lite, noticed the label had the words “no additives or preservatives” written in a small font. We starting looking for this on all the labels and not one other brands had this disclaimer written on the label! I recall my years at Coors Brewing and spending time with the chemists. They almost always discussed the quality of Coors. These chemists analyzed all brands and noted that only Budweiser came close to Coors’ quality (mid 1980’s), however, there is nothing about additives or preservatives on the Coors cans of today.

Several decades ago, Coors ran full-page ads in both the St. Louis and Milwaukee newspapers announcing that their Schlitz and Budweiser brands contained Fusel Oil (fusel is German for bad liquor), which is created during fermentation. Obviously this caused quite a stir within the industry. A call was made from St. Louis to Golden, and for the sake of the industry, the ads were dropped. I often wonder what would have happened if things were reversed? Would St. Louis have pulled the ads “doing the right thing?”

When Miller Lite (and Miller Brewing Co.) were growing like crazy and giving AB fits, AB created a poster which showed a glass of Miller Lite. The ad pointed out all the various chemicals in Miller beer such as “seaweed extract” a hydrocolloid.    Luckily, most of those posters never got out of the AB warehouses.

Today, everyone agrees that the new crafts being created must first focus on quality, for without quality no brand will survive. We can all recall breweries in recent years who went under due to poor brewing and bad beer. Overall, the crafts of today are much better then those of 10 years ago. But take a look at the craft labels out there and see what’s on them. Do they have additives? Preservatives? Chemicals? Maybe Miller is on to something? If so, why don’t they announce this in their marketing? Is the question then, does Coors have preservatives and Miller now doesn’t want to have that out there? Or is it a question of:  if it’s for the “good of the industry,” don’t focus on the quality of the beer?

I guess we should all thank the Germans, not just for the Reinheitsgebot, but for not using their German Purity Law as a marketing tool. Just read the labels.



 Posted by at 8:22 am
Nov 132012



In the summer of 1973, a good friend of mine and I decided to apply for a brewery job at AB and Schlitz. By this time I had worked as a helper at Coors during college summer breaks, then as a route salesman for Falstaff in Austin. AB wasn’t hiring at the time but, Schlitz was. My friend and I both got thru the local interview process and were sent to Milwaukee to meet with James Haire, Schlitz’s trainer and head of “Haire U,” which was at that time, considered the best training in the industry. My friend got hired as a District Sales Manager, but I wasn’t offered a job. I did, however, land a job at a local beer distributor as a route supervisor in Dallas. About a year later, I learned that the Jos. Schlitz Brewing Co. had a policy of not hiring anyone under the age of 25. When I interviewed for the position with Schlitz, I was only 23, thus too young to be hired.

At the end of 1980, I had a letter of intent to buy the seventh largest Schlitz wholesaler in the US and had to travel to Milwaukee for purchase approval. Jim Haire was still employeed there and he invited me out to dinner. As much as I wanted to bring up the fact that I was now qualified to buy the distributorship but, apparently was not qualified to even work for them just a few years prior, but I didn’t. Jim retired shortly after that and I never heard from him again.

In 1989, as the GM of Coast Distributors in Portland (now Columbia), I was over eight Coors operations, six of which had won the top award for performance that year, and the other two were runners-up. The company sold to Dick Lytle the next year, and I went back to Texas. Soon after I returned, I interviewed with Coors to run their Oklahoma City Branch. Now figure this, having been named outstanding wholesaler by Coors in 1989, instead they hired a Pepsi person for the OC operation! Really? Does anyone think you lose those skill sets?

Lately, I have been getting one or two vendors contact me each weekly to see if I know of anyone they can interview for specific positions that they have open. In most cases, I been able to provide a name(s) of qualified individuals.  I always ask the vendors, “Are you looking for quality or just someone for a location?” So far, to my knowledge, no one has been hired! Myself? I have probably applied for close to 75 positions this summer and so far no interviews. In fact, only three companies have even bothered to respond to my applications, and one was Warsteiner where I was the former President. The headhunter told me these companies “want to go younger.” I guess the Germans are not into age discrimination. One company, the Craft Brewers Alliance, said I wasn’t qualified. Really? Wonder what I’m missing?

My former National Account Manager at Krombacher was one of, if not the hardest working professionals I have had the honor of working with. His home market distributor said the same, and yet he, too, is unemployed. Likewise, my former market director, with 30 years of experience, is also unemployed. So what am I missing here?

This past summer, an industry headhunter told me that in over 20 years he had only placed one person over the age of 52. Now when I’m contacted to help a company find someone, I will always help and I will always recommend someone whom I would hire without reservation. I’ve always felt that the biggest disappointment in the industry is that people don’t get the chance to fail. So the question becomes, how do you know they will fail if they don’t get the chance? I was too young to work for Schlitz, but good enough to buy the seventh largest distributorship.  Now I am “too old” for many of these industry positions. I guess I know nothing, except the fact of my ignorance!


 Posted by at 8:09 am
Nov 062012




At the end of WWII and the fall of Germany, the allies, looking for beer, allowed only one brewery to reopen during that time.  The brewery was Becks. While the original intention was to have beer for the soldiers, it turned out to be a great marketing tool for the brand. When Becks was imported into the US several years after the war, it already had a “consumer base and awareness” due to the war. There weren’t many imports in those days, much less many German imports, so Becks quickly established itself and grew. They were by far the number #1 import from Germany, I know, as we compared all our Warsteiner programs against them.

In the past year, ABI took Becks and Bass (England) from their European breweries and began brewing both products in St. Louis, Missouri. Sales for both brands are now down double digits. As an industry analyst said, “this is not about brand building, it’s about costs!” As I mentioned in the blog “You are What Your Record Says you Are,” ABI continues with their cost cutting. Now they don’t have to deal with exchange rates, ocean freight, and other extraordinary costs. It’s now much cheaper to produce the beer in the States and AB doesn’t expect to see the consumer benefit at the shelf. Two losers with this scenario: the consumer who thinks they are buying a German produced beer which is truly imported from Germany, and the wholesaler who sees their volume and distribution drop as the consumer discovers other “real imports.” And there are plenty of real German imports: Warsteiner, Hofbrau, Paulaner, Veltins, and Bitburger to name a few. Beck’s packaging now states “Product of the USA, St. Louis” printed on the bottom of the label!

KPS just announced their sale to Cerveceria Costa Rica for $388 million. Now I know I have CRS (can’t remember stuff), but somehow, when NAB was created, I think I recall KPS saying they were going to build the company and not sell it. Now is there really anyone out there who believed them? Everything they did was to position NAB for a sale, updating the brewery, getting craft brands, staffing up, marketing spend, and slamming inventory into the system. Well, it obviously worked!

Over the years I’ve spoken to a number of college marketing/business classes about the beer industry, and I always told them that, in my opinion, beer is the most identifiable consumer product available. I explain that beer is personal, more so than any other product, because it is affordable. Not everyone can buy a Mercedes, Rolex, or Brooks Brother suit, but most people can afford a bottle of beer, which, through marketing, the consumer comes to identify with. Don’t believe for a minute that in todays social media, word about Beck’s/Bass won’t be flying around. Then let’s see how much ABI saves. It will be interesting to see what their strategy will be when they take over Spaten next year.

The question becomes: can any wholesaler support a brewery/brand that may or may not be around or will change materially? How does that work? Wouldn’t it be a welcoming change if companies like KPS were honest and told us just what their intentions were up front? Can ABI be honest to the consumer and retailers, or are they more like politicians; lies, more lies, and damn lies.


 Posted by at 8:07 am