Aug 132019
 

Over the years many books have been written about the beer industry.  The majority of which have dealt with the industry’s history by focusing on brands, breweries, individuals, and historic cities including  Chicago, Milwaukee, St. Louis, and Cincinnati. One such historical piece was written by Maureen Ogle, Ambitious Brew.  Other books have centered on brands and importers from a more personal perspective, including Bitter Brew, by William Knoedelseder, which told the story of the rise and fall of AB. The Beer Monopoly, written by Ina Verstl and Ernst Faltermeier delineated the history of Interbrew’s transformation into InBev and the subsequent takeover of AB and the evolution of AB-InBev. All these books dealt with historic events which have shaped the beer industry and made it what it is today.

But why are there no books written on the history of beer distributors? Outside the NBWA, which represents the middle tier, not much has been written or acknowledgement given to beer distributors. One can glean the number of employees, tax dollars, community involvement, and other key metrics that wholesalers contribute to America through the NBWA site. 

The industry has been built on the backbone of beer distributors since the repeal of prohibition. There is very little, however, on the wholesalers’ history.  The consolidation of the middle tier means much of this valuable part of the beer industry has lost something. . Wholesalers, as with breweries and brands, are losing a segment of their history. 

GLI, a successful distributor created in 1982 with the purchase of the second largest Schlitz distributor in San Antonio, just announced it was selling out to Glazer’s Beer and Beverage. GLI survived all these years without MC or AB in their house. Another longtime wholesaler in Chicago, Skokie Valley, owned by the same family for four generations, sold out last year. Skokie Valley, like GLI, did not have MC or AB brands. They survived with Modelo, Old Style and other high-end crafts and NA’s. GLI, became successful through the distribution of Shiner, Dox Equis, Boston Beers, and other high-end crafts, but the distributor was also was one of Pabst largest distributors with Lone Star. Both these distributors, along with others still around like Skokie Valley and GLI, were successful growing their business, but have at some point decided the time was right to move on.

Each time one of these distributors sells out, the industry loses a little piece of itself. These companies were family-owned and their employees were part of their family. One could say it was the “little guys” against the “big guys.”  Such a culture is not evident in today’s mega wholesalers. Someday a book will be written about the importance and history of beer distributors. It is the least the industry can do to remember how it once was.

He who refuses to learn deserves extinction. 

 Posted by at 6:00 am
Aug 062019
 

The term “disruptor” or “disruption” is the current go-to expression for many industries that want to use the vernacular to describe new products or key employees. One might even consider the word “disruptor” the business model de jour!  The key question is: how does this label, “disruptor” apply to the beer industry? From a distance one might think the industry is nothing but disruptions, while in reality, it is just the opposite.

When thinking of major product launches that created a new segment, one would certainly think of the impact the light beer introductions had in the 1970s.   Driven by the boomer generation, the introduction of lights to the market would be considered a disruptor to the status quo. In just a few years, light beers became the largest selling segment in the industry as beer drinkers left regular beers in droves. The rise of Corona, and what Modelo accomplished, could also be considered a disruptor.  And of course, the growth of crafts has definitely disrupted the industry.  What might be the biggest disruptor in years is the seltzer segment.  Seltzers could be the latest example of a disruptor in the beer industry.  Or is it too early to make such a declaration?

Both companies and individuals can be considered disruptors.  When Philip Morris bought Miller Brewing, and brought the concept of marketing to the industry, Philip Morris was a disruptor. Russell Cleary of G. Heileman had what might be considered a disruptor model by acquiring a number of breweries and assigning brands to different distributors in the same market. This business model of pitting distributor against distributor was disruptive, but the distributors ended this by changing their state franchise laws and eliminating the brewery practice. Was Paul Kalmanovitz a disruptor as he acquired many regional and national breweries and brands? Probably not. Perhaps one would think that Jim Koch of Boston Beers is a disruptor? If not, Koch’s influence on the industry has helped create the craft or better-beer segment.

In recent years, the beer industry has been faced with what could be the greatest disruptor in its history, cannabis. As the cannabis industry expands, it will have an effect on beer sales and the distribution to the consumer will be a disruptor. What is an unknown is just how much of a disruption cannabis will be. Only time will tell.

Either way, when one looks at the beer industry one could either say the industry has been in a disrupted state for decades based on the changes in brands/segments. Or one could say that the beer business is not a disruptive industry due to the structure, laws, and state franchise protections. Simply put, the structure of the industry, in itself, is the disruptor. If that is the case, we will not know for decades to come.  

This is the age of disruption.

 Posted by at 6:00 am