By the late 1970s, Coors had a market share of well over 50% in Kansas. In fact, Coors had close to 70% share in some rural markets in western Kansas. In Wichita, where I was, Coors had a share of 60%. Remember, during this time in the beer industry, Coors’ houses were exclusive, and the policy was not to split draft handles, meaning the account had to be exclusively Coors’ to get any draft.
Wichita was the largest volume market in the state and our operation ranked in the top five in volume for Coors in their limited US marketing area. Kansas City, Kansas had for years enjoyed being the eastern most market for Coors, meaning they benefited from consumers buying Coors and carrying it back east. Now, however, Coors had expanded into Missouri ending those additional sales.
Hutchinson, Kansas, was the state’s fourth largest market and geographically backed up to Wichita’s territory. While the state enjoyed market dominance in Hutch, Coors only had a 44% share of market. At this point, the owner of Hutchinson decided to leave the industry and sold his operation to Wichita. Once the deal was closed we quickly drove the Hutchinson market share well back into the 50% range. Obviously, this was a good investment for Wichita.
So the question is: is the brand made by the brewery, or is the brand made by the wholesaler? In the Hutch case, the demand for Coors was there, but for many reasons, the distributor did not follow through.
Prior to 2008, people in the industry outside the AB network marveled at the success of the AB network. If AB did not dominate a market, they were, at worst, a strong second. We all wished we had the tools that AB possessed.
An associate who once worked national accounts with me was fortunate to land a position with AB after years with Stroh, Glazers, and Labatt’s. He called me shortly after starting at AB and told me how happy and amazed he was to have all the resources AB provide for him. These ample resources continued until the InBev take over. Then things began to go south.
Even with the strength of the outstanding AB distributor system, AB’s volume continues to drop and has since 2008. Some of the volume losses can be attributed to the recession, but as one AB distributor just wrote, he is making more money now than ever.
That being said, given the changes ABI has made, just how much volume has been propped up by their outstanding distributor network? With the growth of the crafts, and once the craft segment growth slows, will the brands carry the segment, or will the distributors? Boston Beers’ dramatic growth can be attributed to their resources and adding people to their sales teams, or is their growth due to distributors’ efforts? Could it be that the distributors are reacting to the increased support Boston is making available?
The smart craft breweries will take notice of what is making these breweries grow and plan accordingly. If they do not, they could easily become another Schlitz. Just remember, if they have to brag about just how good they are, they are probably not that good!