Mar 152016

SnowBeer26B7D28500000578-2998149-China_likes_a_beer_called_Snow_Russians_go_for_Baltika_above_eve-a-8_1426569121273About 16 years ago, while Glazers was building their craft and import business, an effort was made to gain statewide distribution rights to a small but successful craft brewery located in Blanco, Texas.  At the time, Real Ale Brewing Co., which was brewing in the basement of an old building in this small town, sold their beer only in the hill country and Austin.  Its flagship brand, Firemans4, was highly acclaimed and doing quite well.

Real Ale was beginning to expand its capacity, having purchased some used equipment from Shipyard Brewing, which also had new brewing equipment.  With this expansion, Real Ale was planning to expand its distribution into Dallas, Houston and San Antonio.   This plan fit well the Glazers’ model and when visiting Real Ale, Glazers was offered the opportunity to distribute in the entire state of Texas, with the exception of Austin.  The head of Glazers’ beer division at that time had a policy of all or nothing, meaning unless Glazers was offered the opportunity to distribute in all the counties in Texas, he would turn down the brand.

While Real Ale does not release annual volume numbers, it is estimated that the brewery now does about 60,000 bbls. a year in sales. Looking back, one must question that decision and Glazers’ policy, to turn down what has become a very attractive brand and business.

A number of statewide distributors who are specializing in crafts and imports have policies similar to that of Glazers’ when it comes to the distribution of new brands.  Obviously, this works for both parties under the assumption that the model fits the objectives of both sides.  Of course, there could be exceptions to a statewide policy depending on the size of the new brand.  As an example, if Yuengling decided to expand into Texas, would a distributor such as Glazers turn down rights to a major market because of this policy?  Probably not.

Recently, the industry has learned that ABI came to an agreement to sell the rights to Snow beer in China.  Snow is not only the largest selling brand in China, but also the largest selling brand in the world.  Obviously, this agreement by ABI is one more step to ensure that the acquisition of SAB is approved by all parties.  This action is similar to what ABI agreed to do in the US, by selling Miller brands back to MolsonCoors.

On the surface, one wonders why ABI would want to sell its interest in Snow.  With a market share just over 30% in China, the world’s largest country, is seems a bit ludicrous, but ABI is not an all-or-nothing company.  ABI wants to play in the high-end, and now they have the labels in China to do so: Budweiser, Corona and Stella.  ABI’s track record on maintaining market share is, at best, questionable, so why not divest Snow and spend their effort on the high ends?  ABI gets it… let’s get the deal for SAB done, and combining both companies is the main goal of ABI.

While ABI had hoped they could complete this acquisition with Snow, divesting Snow was also in their plans.  Once this deal is done, what next?  Carlsberg, or maybe even Heineken?  Perhaps Coke?  Whatever they go after, and they will go after others, ABI will get it done.

When you lose, you are in a no-win situation.


Beer Fodder;

 Posted by at 6:00 am