Nov 282017

The ongoing talent drain at AB, as discussed in last week’s post, has additional ramifications for other beer companies.  In a recent visit with a senior leader of a large MC distributor, this leader commented that when asked by his vendors to do a ride-with, he typically refused, under the assumption that he would not learn anything from a sales rep. After decades of leadership roles in various beer companies, he saw no upside to working with a vendor sales rep.

When InBev took over AB 10 years ago, and opened the gates for AB wholesalers to pursue new products, many of these AB houses promoted from within to handle to job of managing the new vendors.  The upside to this model was that these employees knew the market and their company.  The downside is that, as we now all know you cannot sell crafts or imports using the same techniques as selling AB products.  There was a learning curve for all of these people and beer companies, and unfortunately, it has taken much longer to learn the needed skill sets than anticipated.  Fortunately, however, the AB houses have had the resources to enable their staff the needed time to learn and grow.

That curve has now cycled through.  What the industry is currently experiencing is the next generation of craft managers who are moving into leadership roles and managing various portfolios.  At the moment, the typical career path to a vendor-manager requires promotion to a sales rep.  A number of these sales reps come from the on-premise retail, typically employed as a craft server or manager.   They have a passion for the industry and a good knowledge of craft beers which makes them desirable for the wholesalers to acquire these reps.  It makes sense.

The question becomes: are these craft-passionate young people qualified to lead a wholesaler’s portfolio?  Where the senior MC executive saw no reason to ride with an inexperienced sales rep, perhaps the reverse applies to an experienced team of successful beer people. Those working to develop a brewery’s brand could be assigned an inexperienced manager as the wholesaler.  This is a disconnect.

It is imperative that a wholesaler not only educate their young employees in regards to the dynamics of the three-tier-system, they must also assign portfolios accordingly.  In other words, putting a young inexperienced, or limited experienced, manager against a vendor whose team is highly experienced with a proven track record, is going to cause problems.  The reverse is also true.  Managing a portfolio means managing a vendor.  A vendor does not need to manage the portfolio manager.

When a vendor, at the request of the wholesaler, sets up tastings or samplings, the wholesaler must execute.  Vendors, when setting up a sampling must be in the position to also execute.  This includes carrying the right product and having ample inventory.  Many of you see this as a basic function, yet time and time again, someone drops the ball and the retailer loses.

Vendors and wholesalers need to communicate who, what, when, where, and how to manage and execute a vendor’s portfolio from the beginning.  This is not one sided, either parties must execute or both parties will lose.

Change is the end result of all true learning…

 Posted by at 7:00 am
Nov 212017

One by-product of the recent growth of crafts has been the noticeable increase in job openings across the country.  Industry pubs and websites list employment openings in the craft industry ranging from production to logistics.  The majority of jobs listed are, however, in the areas of sales and marketing, specifically district, regional or area sales.  A common title for such positions is “Brand or Beer Ambassador!”

Often we hear the same story over and over from beer companies trying to fill job openings. Universally, there is difficulty in finding individuals with the needed skill sets or qualifications for the company’s culture.  In some cases, these openings go unfilled for months.

HEB, a large Texas grocer, conducted several charitable fund raising events during the past year.  Two of these events were golf tournaments, one in the spring and one in the fall.  Last month, the fall tournament, which benefited The United Way, hosted more than 240 players.  To no one’s surprise, a majority of the participants were associated with the beer industry.

While players typically flock to such events to aid the selected charitable organization and the vendor, many view a golf tournament as a way to renew old friendships within the industry.  The night before the tournament is often viewed with great anticipation as players in the industry have the opportunity to meet over a beer and relive old memories.

At one of HEB’s most recent golf tournaments, it was interesting to see the number of former AB field people who had landed key positions with other beer companies.  Since this event was sponsored by HEB, many, if not all participants, were national or chain account pros.  This was logical, given the fact that many of the buyers for these chains were experienced and had been with their respective companies for years.  Experienced national account people are the most desirable for any company as they have developed relationships with multiple buyers over their many years in the industry.

Who better at this than AB?  For decades, AB dominated the chain business, both on-premise and off-premise, and only when InBev acquired the industry giant, did AB’s grip loosened.  This change has occurred primarily due to AB’s forced talent drain.  As fast as AB would cut employees, other competitors raced to grab the talent. This was evident at the recent HEB golf outing.  The acquisition of talent has given these companies a leg-up on their competitors.

Perhaps more than the positive results these companies have achieved are the negative results that AB has seen over the last ten years.  While last week’s post outlined a major cause of AB’s declining sales, this talent drain highlights another reason AB has continued down that same path. The definition of insanity is doing the same thing over and over again, yet expecting different results!

Last week, ABI again announced a change in U.S. leadership, this time inserting an American at the top instead of a Brazilian.  Perhaps this change will start improving the numbers for AB in the U.S.  Odds, however, say that this AB talent drain will continue regardless of management.

Again this Thanksgiving, other companies, many of them crafts, give thanks for AB’s generosity.  Have a great Thanksgiving…

Talent without working hard is nothing…

Editors note;  Brendan Whitworth, the new head of sales is from the US.

 Posted by at 7:00 am
Nov 142017

At last month’s annual NBWA convention, the topic of conversation was what ails the beer industry.  The issue was addressed by wholesaler and multiple panel discussions, in addition to on-stage discussions led by the leaders of ABI and Heineken.  For the most part, both leaders listed virtually the same reasons for the industry woes: “share of throat losses” to wine and spirits consumers, along with the loss of an entire generation which prefers wine and spirits over beer.  Of course, there is the cannabis intrusion as well.  More on that in upcoming posts.

The losses in overall beer volume in the last 10 years is eye awaking as the industry struggles to determine the cause.  So the question is: what can the beer industry do to turn the tides on such great volume losses?

Why is it that some beers are continuing to not only do well, but are accelerating their growth rate?  We all know them, Michelob Ultra, Modelo, Corona, and even Yuenglng.  One major component is that these four have consistent messaging, and the effectiveness of their marketing in relaying the message to the consumer is unsurpassed.

Recent scan data also has shown, not only what is happening, but what can happen with adjustments in pricing.  In IRI multi-outlet + convenience, Founders All Day IPA is up +49% and is now the number two best-selling IPA.  All Days growth comes from the 15-pack pricing which is priced closer to the 12-packs.  Recent data has also shown pricing on All Day dipped 2%, or less than $28 per case.  The average price is down 3%, or closer to 87 cents a case.  This puts the brand in the price range of Michelob Ultra!

Is acquiring volume in the industry really that simple, or is it that All Day is revealing itself as a truly strong brand?  Recent pricing adjustments to brands in the popular segment have also shown major increases in sales of Keystone Light, in addition to a jump in share-of-segment.  There are four economy brands now in the top ten growth brands in the recent scan data: Keystone Light, Rolling Rock, Hamm’s and Bud Ice.  Anyone see a trend here?

Time and time again when we see a brand that prices its products to ensure the consumer sees the value, the brand virtually flies off the shelf.  Of course the brand’s message echoes its branding in the same way.   Over the years, by far two of the very best at price positioning and value are the Modelo brands and Yuenglng.  You can add Ultra to that list, too.

The beer industry does not want to be like the mattress or auto industry. Can you ever recall a time when a mattress or a car was not on sale?  Just watch a football game, as it seems that every other commercial is a car with incentives.

These pages have addressed this same issue numerous times, always focusing on the same solution.  For the sake of the industry, let’s hope that we are not still addressing this topic five years from now.  Is anyone in New York and Chicago listening?

A good decision is based on knowledge, not on numbers.


 Posted by at 6:00 am
Nov 072017

In December of 1917, almost 100 years ago, the US Senate proposed the infamous eighteenth amendment, an amendment, as we all know, that banned the sale of all alcoholic beverages with an ABV greater than 1.28%.  This attempt by the government to legislate morality on the citizens of the US is considered to have been a great failure.  People continued to drink and populate speak-easys, breweries continued to produce beer in many areas of the country, and beer and alcohol were shipped across borders, thereby avoiding federal agents.  Simply put, this law was ignored by the majority of the US, and prohibition soon ended.

Fast forward 30 years from the repeal of the eighteenth amendment to the 1960s and the boomer generation is experimenting with drugs.  Marijuana became the go-to drug of choice, and has remained so for decades, becoming legalized in many states during the Obama administration.  Oregon, Colorado, Washington and California legalized marijuana, with many other states making the drug legal for medicinal purposes.  Now, more and more states are studying the possibilities of legalizing marijuana, not just for their citizens’ enjoyment, but also for the benefit of the tax generation for these states.

The success of legalized marijuana from a tax standpoint, and as a business, has not gone unnoticed by big companies.  While the impact of legalized drug sales, verses that of beer sales, is yet to be determined, we have recently learned that Constellation Brands purchased 9.9% of a Canadian company, Canopy Growth Corporation.  Canopy Growth Corporation is a marijuana producing company. Consider, in the future, a cannabis-infused drink from Constellation Brands. One can rightly assume that other large beverage companies will follow Constellation’s lead.

Legality aside, how will this impact companies who drug test their employees?  How many distributors conduct pre-employment drug tests or drug test their current employees? Consider the consequences to an employee of a distributor who is found to have cannabis in their system, yet the distributor for whom this employee works sells the Constellation brands?  If the employee is fired, or disciplined, the employee could sue the distributor because they represent a company that owns and sells cannabis-laced or infused products. What if a similar situation occurred with a Constellation Brands employee?  How can the employee be disciplined for using marijuana when Constellation Brands is in the marijuana business?

Perhaps drug testing will no longer be a requirement for employment for companies? If that is the case, how does a company deal with the opioid crisis sweeping the country? Or will the use of opioids be handled differently?

Then there is, once again, the legal issue of selling or consuming a cannabis-laden drink.  States in which it is still illegal to use, or consume, marijuana might not even approve the product for sale.  Those individual who lives in Kansas would have to drive to Colorado to purchase their cannabis-infused drink.

And of course, there is the licensing issue.  Would a beer distributor have to apply, and pay, for a permit to sell the drug?  One could assume that there would be similar restraints on depositing the cash acquired from the beer sales, as is the case with cash generated from marijuana sales in Oregon and Washington?

Expect something like a cannabis drink to hit the shelves in the US at some point in the distant future. Just like prohibition, people may react to something they cannot get or have.  Perhaps Constellation Brands has taken the first step in this long journey.

For every prohibition you create, you also create an underground…



 Posted by at 5:00 am