May 222018
 

In less than one month, the world’s largest sporting event, The World Cup, will begin.  The World Cup, which takes place every four years, perhaps is only rivaled by the Olympic games.  The teams, represented by 32 countries, play their way into the event with the host country’s team getting a bye into the event.  It is the most watched and anticipated sporting event in the world estimated audience is 3.5B.

There is a hand full of sponsors and partners for the World Cup, one of which is ABI and Budweiser.  While ABI is much maligned where its marketing is concerned, the World Cup sponsorship has to be a real win for ABI.  There may not be any better format than the World Cup to fit ABI’s global strategy.

A number of years ago, on a trip to Peru with Crystal beer, I visited a bar in Lima when a televised soccer game Peru was playing in America’s cup was on.  With one minute to play, Peru scored, tying the game.  The bar exploded with excitement and every piece of furniture not nailed to the ground was flying around the bar!  The place was crazy with excitement.

During the 2010 playing of the World Cup, while in Germany for Warsteiner we watched the game between Germany and Britain.  We were watching in a hotel bar in a small northern town with a large screen projected TV and all the customers were painted from head to toe, Germany colors with Germany hats and flags.  The party really did not start until the end of the game when Germany defeated Britain, 1-0.  The partying ended around 4 AM when the sun began to come up!

These two examples of just how much passion these countries have for their teams will play into ABI’s strategy.  One can just see ABI’s country-specific marketing plans around the World Cup focusing on Budweiser and supported by all the TV and social media support.

Unfortunately for ABI, the United States did not qualify a team for this year’s World Cup.  How this will play out in the TV and overall media ratings will be interesting giving the declining ratings of most major sports.  This includes professional football and now, even the recent Olympic games ratings were way down.  The question is, will the American fans watch the other countries games in the upcoming event?  No doubt the die-hard World Cup fans will, and many sports bars will be featuring the games and you can bet they will do well, but not well if it was a US team playing.

At Warsteiner our sales flew during Germany’s games no matter the time of the day when the game was on TV.  Will Budweiser sales do the same this year?  ABI has a global strategy for their three key brands and the World Cup is the best platform for ABI to develop these brands without a doubt.

It will be interesting to see how the ratings come in after the event is over but more so, just what Budweiser looks like in four years globally from today.

Brands must become architects of community..

 

 

 Posted by at 6:00 am
May 152018
 

If one were to earmark the date of Warsteiner’s slow decline it would be August 2008.  In the third quarter of 2008, Warsteiner Importers Agency of the U.S. set a record in STWs, STRs, and profit.  At the same time, in Germany, Albert Cramer, the eighth generation Cramer family member to lead the brewery, fired his longtime CEO.   Albert had learned of multiple questionable and illegal transactions that were taking place in South America and Africa.

At the same time, Albert faced several personal tragedies, including the loss of his longtime spouse who had been thrown by a horse spooked during a summer storm, followed shortly thereafter by the announcement of his incurable cancer.  These tragedies resulted in Albert’s decision to turn over the leadership of Warsteiner to his daughter, Catherine Cramer.  Catherina at this time was in her early 30s.

Catherina, with the support of the lead accounting staff, instituted what is referred to as the four-eyes business model. Warsteiner company-owned importers implemented a policy requiring each department head to report directly to the corresponding department head in Germany.   Simply put, accounting in the various countries reported to accounting in Germany, and likewise with the sales and marketing departments.  This resulted in countries across the world having no direct leadership.

The consequences of Warsteiner’s actions are best illustrated by the downturn in the U.S. sales.  Within six months of implementation of the four-eyed leadership model, the U.S. operation lost almost 40% of its total volume with countries around the world experiencing similar results.

After 10 years, Warsteiner has not altered this model.  The volume loss continues today, however, the industry has recently learned of another unfortunate result of this model.  In the last several weeks, the TTB announced that it had fined Warsteiner Importers Agency $900,000 for violating FAA acts.  These violations include an exclusive outlet, tied house, commercial bribery, and consignment sales.  The violations occurred between January 2015 and continued into 2018.

Last fall, Warsteiner lost or replaced a number of U.S. employees whose positions have now been filled.  It appears that the managers in the U.S. retained their jobs, the brewery, however, the export director is no longer employed.  More than likely his leaving is a direct result of this fine.

There is little doubt that Warsteiner Importers cannot pay the required fine. The brewery will have to step in and pony up.  Rest assured once the fine is paid, there will be a new long-term liability on Warsteiner’s balance sheet in the amount of $900,000.  This will certainly handcuff the next individual who will lead the U.S. operation.

So the other question is: how do the U.S. Warsteiner distributors and retailers view this penalty and fine?  Is this the beginning of the end of what little is remaining of the Warsteiner U.S. business, and if so, could Warsteiner close down the agency and assign importing rights elsewhere?

It is quite clear that this four-eyed model does not work and needs to change immediately. Only Catherina can make that decision.  Her legacy is tied to the success of the brewery and there is still time for her to make the necessary changes.

Be prepared for more fines and penalties coming from the TTB.  Mistakes are always forgivable if one has the courage to admit them…

 

 

 Posted by at 6:00 am
May 082018
 

Texas had the highest US volume sales for Schlitz when Stroh took over the brand, an action which created excitement among the wholesalers.  For the first time in a number of years, the wholesalers finally felt they had a chance to right the ship with the Schlitz brand, while at the same time obtaining a major brand in Stroh’s.

In a very short time, however, it became apparent that not only was there no improvement, business, in fact, was getting worst.  There were numerous statewide Schlitz/Stroh meetings that provided the wholesales ample opportunities to meet with Peter Stroh to discuss the issues.  The wholesalers, however, were never allowed to express their concerns as most of the Stroh management was composed of left-over Schlitz leaders who did not want Peter Stroh to be available to the wholesalers.

Not that it would have made any difference in the outcome, but after all these years, one wonders what the results might have been if the wholesalers could have made an impact with Peter Stroh.

This year’s Craft Brewers Conference in Nashville welcomed about 14,000 attendees.  It was once again, a tremendous turnout!

The CBC, and to a great degree, the NBWA, have consistently had the same program, the same speakers and the same schedule year after year with only industry statistics changing.  So, annually, attendees hear the same message with the only new input coming from the touting of changes in the industry trends.  While the craft segment is shifting, one would not be aware of such movement simply by listening to the speakers.

As with most companies, if one wanted to learn the real trends and happenings, one must listen to the employees, or in this case, to the craft vendors.  This year the vendors were very happy with the overall turnout and the number of leads they acquired, however, several trends were quite apparent.

With the overall slowing of the craft segment, one could not help but notice the absence of PE firms, banks, lawyers and accountants who in the past were there with the intent of securing a craft beer presence.  This is not to say that all from said group were absent, but their presence was noticeably less than in past years.

The one area that was almost totally absent this year, after a major presence in previous years, was the college-taught craft programs.  The usual brewing schools were present and focused on brewing skills, including Cal-Davis and Middle Tennessee State, however, no schools that focused on the business aspect of the craft industry were at the conference.

So the question is, does the absence of those institutes of high learning that focused on the business aspect of the industry indicate that either: one, the schools are so full they do not need to market such programs; or two, does it mean that with the slowing of the craft brewing segment there are fewer students enrolling?  Many of the schools at the conference had a representative present, but the effort was greatly reduced from that at past conferences.

If as recently reported, the real growth in crafts is with those brewers who started after 2014, it would then seem that the schools should be more into marketing than before.  Without the skill-set needed, those new brewers will not be around for long.

If one wants to know what is really happening in crafts, just go to the exhibition floor, the vendors will tell you.

Don’t find fault, find a remedy.

 Posted by at 6:00 am