In 1978, I was at Coors Northeast (The Orbit Corp.) in San Antonio. As VP of Sales, I oversaw the development of the start-up distributorship which was awarded to Charles Duke, Jr., a former astronaut and Air Force General. We opened in 1975 with great success, and by 1978, Charlie decided that being in the beer business really was not the challenge he was looking for, so he sold it to the Azar family in El Paso. The Azar’s had been Coors distributors since the late 1940s and they were very successful holding a market share in the high 50%+.
Prior to the transfer of ownership, I spent some time in El Paso, learning how the Azar’s operation. Part of my learning’s included riding routes. In those days, Coors’ standards were focused on product rotation and clean p-o-s. During one of these visits, we went to a long-time Coors account close to the Mexican border to retrieve a Coors neon. The neon had been in the same place since the late 40s and when I took it down, you could see the various colors of paint that had been applied to the walls over the years. The owner did not want the neon taken down, but understood that part of selling the product and keeping the neon, was to allow us to maintain Coors’ cleaning standards. We cleaned the neon and returned it to the owner’s wall.
Just recently MillerCoors announced new standards which will be tested between the “chosen seven,” the group which represents 17% of MC’s overall volume. Some of these new standards include: Distributor Sales Standards, Channel Blueprints, Display Reporting and Sales Improvement Process. All of these standards are reported to help the distributors compete effectively against ABI.
So the question is how do the distributors view these updated standards? A manager of one of the “chosen seven” commented that he believed these standards were designed to off-set the failure of MC to effectively market their products by pushing performance down to the wholesaler level. He cited a recent program involving a seasonal product of MC. The distributor executed against the plan and achieved the corporate goals, but in this case, as in others, there was no pull-through at the retail. The result was that MC had to destroy several thousand cases of product. The distributor had to incur the costs of picking up the beer and replacing the same. In other words, the manager is saying that standards are now designed to have the distributors “push” product, but with little to no “pull” from the brewery and little to no thought of establishing realistic goals.
Standards which were once simple guidelines to help distributors understand where and how to place products in both on and off premise accounts, have now evolved into complicated and extensive performance measures, which are included into many franchise agreements. At one time the early standards were helpful for distributors, but now they can be used against the distributor and as a shield for breweries to use to cover their own marketing failures.
Remember, it’s the beer business because if the world was perfect, it wouldn’t be……