Beer Business Unplugged

Before the 1970s, it was rare for a wholesaler to roll out new beer products.  It was not until light beers, Miller Lite, Coors Light and Bud Light, became popular that line extensions came on the scene.  Of course times have changed, and now not only rolling new products, but, introducing new vendors, has become a wholesaler’s key function.

With a small portfolio, wholesalers worked on growing their business by gaining market share.  They focused on execution at the retail level, driving both new and existing distribution, developing off-premise domination at the shelf and display levels, increasing ad activity, and, of course, targeting on-premise key accounts with draft beer.  It seemed simple, and it really was when compared to what is expected of today’s wholesaler.

Wholesalers today are swamped with new products, many from existing suppliers, some products even from their main supplier AB, MC, or Constellation.  These suppliers are looking for successful roll-outs, while wholesalers are looking for help for the supplier with feet-on-the-street, chain authorizations, support dollars and, when possible, above the line media.  Without all of these parts, the supplier is not, in most cases, going to achieve their desired result.  This lack of result is due to other brands or products, also being being rolled out at the same time, which have their act together.

The same is true for seasonal beers, too. Seasonal products, however, require extensive inventory management to ensure the wholesaler does not get stuck with out-of-date product.  Again, such a situation as knowing the proper amount of product to buy or sell, can put the wholesaler at odds with the supplier.  One can make a case that perhaps the most important role of a wholesaler is to be the new product filter for the retailer and consumer.

It is easy to refuse your main supplier when a new product does not meet the required quality or taste specifications need to sell said product.  Consider the original Coors Extra Gold, a beer the Coors wholesalers in Washington refused to carry.  As it turned out, refusing to sell the product saved these wholesalers a fortune, as Coors Extra Gold was an immediate disaster.  Another poor quality product was Captain Morgan’s Gold.  A product not fit for consumption.

This attention to detail and filtering of products is important when a wholesaler looks at a new craft supplier who is expanding into their footprint.  Smart wholesalers take the time to look at any supplier who is hoping to expand in their market.  Most wholesalers have their own filters they use in determining if the craft brewer is a long term player, and if so, determining if the supplier’s product fits within their organization.

Again, these filters should have all the above areas of support including, but not limited to, feet- on-the-street if the market can so support.  Craft brewers complain about focus and access to market; major suppliers are dancing around their declining sales; and wholesalers are working to define their role now and what it will be in the future.  But at this time, providing the role of the beer industry filter is a role much needed by all tiers.

Great companies are built on great products…..

Last week’s NBWA convention was once again held at Caesar’s Palace in Vegas and hosted approximately 4,000 attendees, including 250 vendors who took up three massive halls in Caesar’s convention center.  AB, MC, Diageo, and Pabst had their large hospitality display booths open, as did a number of other suppliers.  The craft brewers had their own row of booths displaying all, or a majority of their products.  There were also the multitudes of vendors that sell their products to the wholesaler. Vendors who sold trucks, software, specialty items, uniforms, glassware, warehouse equipment, and many other industry- related items.  To see all the booths and visit everyone, it would have taken both afternoons of the convention.

A comparison of the NBWA of today, to that of four decades ago, is a study in contrast. The NBWA at Caesars in the late 1970s was much smaller, despite the fact that there were many more wholesalers in operation.  At that time, the middle tier consolidation was just beginning and the various topics of conversation between the wholesalers and the industry executives were strikingly different.

In the late 70s, the hot topic, by far, was the eastward expansion of Coors.  Since I was running one of Coors’ largest wholesalers, many hopeful wholesalers were looking for information and direction as they were preparing their RFPs for Coors.  A number of wholesalers, and even some non-wholesalers, were anticipating the opportunity to visit our operation, and many did visit.

By contrast, at the NBWA convention of 2017, Heineken had a huge Mexican booth behind their Heineken front, and of course, Constellation Brands had their usual blast across the street, taking over a large popular roof-top venue, complete with bands and entertainment.  These two brands were not even around in the late 70s.  At that time, imports were just beginning to catch the wholesaler’s attention, just like the crafts that have recently caught the attention of the wholesale market.

The main issue this year, as in recent years, was the topic of what ails the beer industry and why the industry is struggling to maintain volume.  The principle speakers from Heineken and AB, along with others brewers, had their ideas as to why the industry is struggling, and in upcoming weeks, these pages will address those issues.  That said there was one vendor at the NBWA who traveled a different path.

Many longtime European brewers, who have actively participated at the NBWA over the past decades, were not in attendance.  It seemed that these breweries have either given up, or just walked away from the industry.  After investing for years, they have quit, leaving wholesalers to fin for themselves.  This abandonment was befuddling to many in the industry.

This issue of abandonment, however, was not true for the Japanese brewer, Sapporo, who has, in recent years, invested heavily in North America.  Their last acquisition was the iconic brewer, Anchor Steam.  Sapporo began their upsurge in investing some years ago with the purchase of the Canadian Brewer, Sleeman, and subsequently Unibroue. Sapporo is definitely bullish on North America.

It is a fact that attendees at the NBWA have a good time every year.  Seeing old friends and making new ones is what this industry is about.  Until next year in San Diego, all the best to the NBWA!

Remember the most valuable antiques are dear old friends…