Mar 132018

The upcoming CBC convention is expected to host more than 10,000 people.  This year a participant has the choice of attending an industry convention, seminars, classes or other training sessions most months of the year.  In addition to the CBC, there is the annual NBWA convention, along with similar events hosted by Beer Marketer’s Insights, Beer Business Daily, Beverage Importers Association, and the list goes one.  The aforementioned does not even include all the schools which offer various beer classes or the multitude of online tutorials now available.  Does anyone have any time to actually sell beer anymore?

When Coors expanded into South Texas in the mid-1970s, San Antonio had a local beer wholesaler’s organization.  At this time, the only annual conventions were offered by one’s supplier and the NBWA, the latter of which had a spring and fall meeting.  Remember, this is before the NBWA had exhibition halls full of vendors and new products, all in search of distributors.  The spring event was politically focused, whereas the fall event was industry and supplier focused.  It was that simple.

Local medium-sized and major markets, along with the state, all had beer wholesaler organizations.  All four Coors of San Antonio wholesalers were invited to join the local beer organization.  Attending these monthly meetings was comparable to today’s reality TV.  The meeting consisted of: the local AB wholesaler, Bill Crain, who was seated at one end of the table and John Monfrey, the local Falstaff wholesaler (Falstaff sold over two million cases) who was seated at the other end of the table. In the middle of the table was Jack Williams, the 800 lb. gorilla in the room, and the second largest Schlitz wholesaler in the country with over five million cases. Other attending members included: the Pearl and Lone Star wholesalers, two breweries that were still functioning in the city, and four new Coors wholesalers.

In addition to the fact that John and Bill were typically quite confrontational with each other, the meetings focused on local and state issues, including which political issue and legal issues needed to be supported.  The group also assembled with the intent to aid local charities and events.  As a young sales manager, one could learn a great deal about the industry and one’s competition during such meetings.

I attended the Wichita Beer Wholesalers group while in Kansas as well as the Portland group while in Oregon.  Kansas hosted a state Coors organization and, of course, the state had the Kansas wholesalers’ organization as did the states of Oregon, Utah, Louisiana, and Washington.

As wholesalers began to consolidate throughout the years, the local organizations began to disappear.  Many markets now only have two or three wholesalers, not counting the self-distributing crafts and the independent craft distributors.  Very few, if any, local beer groups exist anymore. Why should they with the myriad of other groups now in existence?  Even at the state level, some states not only have their statewide group of wholesalers; but in addition, they have craft brewers and even state groups of wholesalers with different agendas than the established groups. Many suppliers have wholesaler advisory panels from each state or region.  In reality, a wholesaler could spend all of his or her time just attending meetings.

Those local wholesaler groups have served a purpose for decades and the industry has not been the same without them.

The art of communication is the language of leadership…


 Posted by at 6:00 am
Mar 062018

It goes without saying that the purchase of the Miller Brewing Company by Philip Morris in the early 1970s was a major transformation in the beer industry.  Philip Morris used its marketing muscle, which had been so instrumental in growing their cigarette business, on their newly purchased beer company.  And the rest is, as they say, history.

The lasting effect of Miller’s sellout went far beyond the marketing prowess of Philip Morris.  This moment marked the transformation from breweries being family owned to breweries being owned by corporations and shareholders.  This business model changed the overall picture of how the industry functioned.

Prior to 1970, breweries and wholesalers were family owned.  Both tiers were on the same page with the same interests and same goals.  Philip Morris initiated that shift away from family ownership, but the full effect of corporate/shareholder ownership would take decades to manifest itself.  Even up until 2008, AB was run by the Busch family as a publicly traded company.  While the Busch family today is gone from AB, Pete Coors is still active at MolsonCoors keeping some of the family traditions alive.

These large corporate breweries today have a different agenda than the family-owned distributors of past years.  Even multi-state mega distributorships like Reyes, are still owned by a family.  Only Columbia in the northwest parallels the corporate ownership model.  Publicly held breweries have to answer to their shareholders and Wall Street.  Distributors only need answer to the family.

Executives at these corporate breweries are measured on their ability to increase shareholder value and dividends.  And often, these same executives are receiving their bonuses based upon the value they impart to the brewery.  If the value is not delivered; these executives do not realize their annual bonus, a figure which can be as much or more than their annual salary.

In a distributorship, as long as the family’s lifestyle is maintained, things remain status quo and all move forward.  Sure there is pressure to increase the profitability of the company, but to the family, there is always the next year.

President Trump’s announcement last week regarding his intent to establish tariffs for both steel and aluminum imports, as expected, has created concern in the beer industry.  If these tariffs go into law, then the industry can expect higher costs for cans, kegs, trucks and other equipment used in the beer industry.  This is not good news for the consumer as many of the increases will be passed on to the consumer.  When Bush the elder, broke his “no new taxes” promise and raised taxes on beer, the industry came to an abrupt halt and remained that way for years.

The corporately owned breweries will, without hesitation, raise prices; whereas the craft family-owned brewers must decide whether to raise prices and suffer the pushback, or eat the increased costs, and make less money.   Distributors see the situation differently, but ultimately it will have a negative impact upon their volume as well.  Just ask wholesalers from the early 90s. With the exception of the Modelo wholesalers, all had an increase in price.

Family owned distributors and craft brewers would rather wait, take a step back and see what will happen.   The corporate environment, on the other hand, will most likely rush to ensure their breweries hit their corporate goals.  Welcome to the corporate world!

The beer industry is one big family…


 Posted by at 7:00 am