Apr 022019
 

In the early 1970s, Texas was by far the largest volume-producing state for the Jos. Schlitz Brewing Company.  Texas itself was a stand-alone division of Schlitz, and the largest division in the company. Many of the Schlitz wholesalers were ranked in the top ten in volume:  Houston, San Antonio, and Dallas were all in the top five, with Austin and the Valley rounding out the top 10.  These large distributors did not need multiple markets to obtain their high rankings, in other words, their footprints were exclusive to their respective cities.

Even the expansion of Coors into South Texas in the mid-1970s did little to dent Schlitz’s market share.  The Coors expansion, coupled with the rapid growth of Miller Lite, however, had raised eyebrows among some of the Schlitz wholesalers who began to look at their own futures.  Coors had gone with exclusive wholesalers and their initial market share was as low as two to three percent, up to 13%. It would, however, be several years before the Coors houses started selling out to other distributors.

By the early 1980s, with their volume in decline and a loss of confidence in Schlitz’s senior management, Schlitz wholesalers began to sell their companies in an effort to maximize their own investments.  The Valley was one of the first to sell, followed by San Antonio. The Alamo City still had Schlitz roots in their GLI make-up and, interestingly, the Schlitz warehouse sign still sits on top of their warehouse.  The sale of Austin, Dallas, and others key markets quickened the death of Schlitz.

So the question is, did these buyers get any return on their investment in Schlitz?  It is probably safe to say that those who sold never regretted their decision to sell. Honestly, some may have wished they had sold years earlier.  It is all about timing when selling.

Recently it was announced that Silver Eagle, the largest AB house in the U.S., had sold its Houston operation.  The selling price was rumored to be close to one billion dollars.  It is no secret that the volume losses of Bud and Bud Light have been dramatic with no turnaround in sight.  John Nau, the owner of Silver Eagle will maintain ownership over the San Antonio branch. Many of the small to medium size AB houses will most certainly be contemplating selling to large AB operations where certain synergies can be realized.  It makes sense given current trends for the AB operations.

The Schlitz operations of 30 years ago were not as diversified as today’s businesses.  Combined with the rapid decline of Schlitz, these wholesalers had no choice but to sell.  I have never had a former Schlitz wholesaler state regret at their decision to sell, while on the contrary, I have had both former Coors and AB wholesalers state their regret in selling.

The next five years will shed some light on the future of many of the AB houses.

Success is a matter of luck and timing.

 

 

 

 Posted by at 6:00 am