Oct 292019
 

The SMU football team is currently undefeated and ranked 16th in the nation. As college football fans know, the SMU program was given the death penalty during the mid-1980s for numerous NCAA violations. For over 39 years, the SMU football program suffered severely from that penalty and each year brought the school another losing season. Due to this fact, the NCAA has never given another school the death penalty. It is somewhat surprising that SMU just did not abandon its football program all together, but they did not and remained persistent.

Recently the NCAA revised their transfer rules for athletes. Prior to the revision, an athlete could not transfer and play without first sitting out a year. The exception applied to athletes who had already graduated and remained eligible.  The newly revised regulation now allows the athlete to enter the transfer portal and move to another school where he or she can immediately play. If a top athlete is not playing at their desired school, for whatever reason, they can enter the portal, transfer to their school of choice, and receive immediate playing time. Perhaps no other school has benefitted more from this new rule than SMU’s football team, which has received more than 30 transfers. Most of the players relocated from top schools, including the University of Alabama and the University of Texas.  All wanted an improved opportunity to play and showcase their talents. The new ruling is certainly a win-win for SMU and other schools, including the University of Oklahoma,  which is now potentially hosting a third consecutive Heisman Trophy quarterback.

So, the question is, if the NCAA can modify their “pigeonholed” rules, is it possible that wholesalers can/will create a transfer portal for brands who want out? Unless a state has a buyout provision in their franchise statues, a vendor cannot leave under any circumstance. Even when a distributor decides to sell their business, there can be numerous restrictions for a vendor who desired to pass the buyer on to another distributor.  A wholesaler has the right to obtain fair market value for their efforts in developing a brewery; however, a vendor should also have the right to choose its preferred wholesaler. All parties should be able to work through such issues without threatening letters or correspondence from lawyers. In many instances such letters only serve to aggravate progress and potentially cause undo delays.

Is the college transfer portal changing the landscape of athletics? Probably not yet, but it has given many athletes the opportunity for another chance. Perhaps brands and breweries should be given this same opportunity?

Every team feels they are better after the transfer. 

 Posted by at 6:00 am
Oct 222019
 

From the 1960s until the early 1980s, when a brewery team announced an upcoming crew drive, it typically meant one thing: the brewery was out to get the wholesaler. The brewery team’s purpose was to document deficiencies within the wholesaler, including out of date beer, out of stock beer, and distribution gaps. Depending upon the state of where the wholesaler was located, the timing for termination could have been drawn out for several months, supported by performance letters to the distributor. These crew drives were not fun.

The other type of crew drive during this time frame involved a three-day event with the wholesaler being graded on their performance. This was typically the result of the wholesaler’s nomination for that brewery’s “Wholesaler of the Year” category. These crew drives, of course, were fun and interesting because of their involvement with high performing operations.  With the arrival of the 1980s, however, crew drives shifted focus to QA performances. Brewers wanted fresh beer and incentivized the wholesalers with dollars and awards. These crew drives could have swung to the positive or the negative, but all in all, they typically went well.

Fast forward to today’s crew drives that deal with rollouts of either a new vendor or a new product.  When a wholesaler launches a new breweries’ product, a team of brewery people come to the wholesaler’s market and for one week, team up with a salesperson from that wholesaler’s team. The teams’ focus will be on the on-premise side of the account and will deal with draft handles and package placements. The overall success of these rollouts usually boils down to planning and pre-selling by the wholesaler. The wholesaler, with the brewery’s input, understands the brewer’s overall marketing and strategy.  Based upon the brewer’s communications of their vision, the wholesaler can drill down and target the right channels to provide the new brands with the best opportunity for growth.

The highest performing wholesalers are the ones who make the effort to send not only management, but also key sales and marketing staff to the new vendors’ breweries. When the wholesaler makes this commitment, the payoff can be tremendous for both companies. Wholesalers who do not visit the brewery will initially fall short of their rollout goals and the subsequent effort by the brewery to educate the team can be difficult. 

The success of the rollout dictates the immediate success of the brewer, the brand, and the wholesaler.  A poorly planned rollout makes it difficult for the brand to grow. Even with a strong and well-planned rollout the long term result is still not guaranteed, but why should any of the players take a chance?

Yesterday is not ours to recover, but tomorrow is ours to win or lose.

 Posted by at 6:00 am
Oct 152019
 

While at the NBWA convention, wholesalers are offered the opportunity to attend a multitude of seminars on Monday and Tuesday mornings from 8 to 9:30.   Distributors can sign up to go to the seminar of their choice, unfortunately however, due to time constraints; it is possible that one cannot attend all the desired discussions. This year’s convention was no exception. 

One workshop offered was led by Joe Verno, one of the founders of The Denver Management consulting group. Denver Management has been in existence for a long time and in the 70s and 80s, their focus was on converting wholesaler driver sales to pre-sales for many distributors. At this year’s NBWA Joe and his son, now consultants in the family business, Verno Consulting, discussed what they believe are 40 things wholesalers should stop doing. Last week Beer Business Daily highlighted these same 40 issues outlined by the Vernos. The subject matter covered all segments of a wholesaler’s operation including, but not limited to: training, delivering, sales, talent, and vendor relations.  The top 40 areas that wholesalers should avoid outlined by the Vernos should be eye- opening to many wholesalers, although many may bypass these important points saying, “It’s not my operation, we are a step ahead of all of these points, my business is doing very well.” 

The wholesalers who are fortunate to have White Claw, Truly, Constellation, or Ultra in their house only have to look at their bottom line and smile. Using technology, almost all wholesalers have improved their overall operations and logistics while adding a number of new vendors and now, many carry non-alcoholic products.

It is clear that the Vernos are saying to wholesalers: While you are growing, are you sacrificing the long-term for the short-term? It was also clear that the Vernos see obvious wholesaler short comings including: internal structure, lack of talent, bench depth, and training. There are good odds that when questioned, almost all vendors would agree with that position.

On the reverse, wholesalers see the same issues with many new or recent vendors. Both parts of the industry hire to fill a void, not for leadership, experience, and growth. Both sides will make a point of not being able to find the right talent which is only an excuse. Talent is out there, but to obtain the best, both parties have to step up. The talent gap between wine and spirit companies and beer companies can be eye-awaking, especially when dealing with mid-management areas.

Expect to see more on the 40 key metrics outlined by the Vernos in the coming weeks. Or, one can always contact the Vernos directly for more information on this topic, for a fee, or course. 

Thank you, Captain Obvious.

 Posted by at 6:00 am
Oct 082019
 

The beer industry has an old adage that holds true even today:  A full truck is a happy truck! In the days when the deliveries were all driver-sales and the wholesalers represented only one supplier, it was the driver who loaded out the truck. An experienced driver would typically return to the warehouse with an empty truck. He knew when, and how, to load the truck according to the day and/or the promotion. Of course, during these times, the industry was using eight bay trucks to deliver beer, and reloads were not uncommon on big drop days. The advent of 16 bays and bigger trucks put an end to the reloads.

Fast forward to today and the technology on beer delivery has totally changed. Wholesalers have learned to maximize their delivery; however, what still remains relevant is what the industry calls, golden cases. The true definition of a golden case is dollars floating to the bottom line on high margin crafts or imports (maybe seltzers) with little or no investment from the wholesaler. This model works well for wholesalers. If a brewery closes its doors, for any reason, the wholesaler only loses those golden dollars.  And as we know, closings are becoming more and more common today. On the other hand, if a golden case grows and the vendor begins investing behind their brands, at what point does a golden case become a golden brand? What metrics must a wholesaler identify when this transition happens? How much does the wholesaler subsequently increase their commitment?

When Truly and White Claw hit the market, one would suppose both were nice golden cases and the rapid growth of both brands quickly turned them into golden brands. Truly and White Claw are owned by major breweries with their own professional sales and marketing teams, and both products have the backing of wholesalers. Many golden cases, however, are from local or regional breweries without the support needed to become golden brands. So, the question arises: Is the transition from golden case to golden brand the result of volume or something else? Volume would be the easiest metric, but what would that number need to be? 50K cases or more? Does it include an across-the-board advertising and marketing support program? Perhaps all of the above are necessary to make the shift from golden case to golden brand.

What happens if all of those key components are in place, yet the wholesaler still looks at the brewery as nothing more than a golden case? How does a vendor view themselves with the wholesaler? Often the vendors see their brands as golden brands while the wholesaler still views the vendor’s brand only as a golden case.  Therein lies the problem.

I believe in the golden rule, the man with the gold… rules!

 Posted by at 6:00 am
Oct 012019
 

In the 1970s, it was common for most medium to large size cities to have a local beer wholesaler association, in addition to their state association. There were even some strong regional beer associations, including the Rocky Mountain Conference of Beer Wholesalers Assoc. Most wholesalers had only one supplier. Most markets would typically have an AB, Miller, Pabst, Schlitz and Coors distributors along with regional houses, like Lone Star and/or Pearl house, which was the case in Texas. In the northwest, the regionals might have included Olympia, Rainer, and Henry’s. Other parts of the country had their own regional houses, as well. There could have easily been six or seven wholesalers in any given market. All of these associations turned to the National Beer Wholesalers Association for a national presence. As the years went by, however, and the consolidation of the beer industry became a way of life, most of the local and regional beer associations disbanded, leaving only the state associations and, of course, the NBWA.

In the 70s, the national NBWA convention’s political focus was on fighting deposit legislation, while the convention show concentrated on vehicles and delivery equipment. At the time, convention conversations often centered on Coors’ eastward expansion. Interested wholesalers would locate Coors wholesalers who could provide them with information to assist with their Coors distributor applications.

By the 1980s, the convention moved to highlighting imported beers, mostly European breweries, who were interested in expanding into the U.S. Wholesaler consolidation had not yet impacted the overall attendance at the convention, the suppliers conducted wholesaler meetings during the NBWA. Because wholesalers typically had only one vendor, many major breweries hosted their national golf tournament and other events during the convention.

By the 1990s, Pabst and Schlitz were almost gone and the rise of crafts and the Corona “miracle” became a national topic of discussion. Multi-brand beer houses became the norm which resulted in more hospitality rooms and dinners, thus enabling the vendors the opportunity to entertain their wholesalers. Some vendors, like Diane Fall of Warsteiner, invited key volume wholesalers for a private limo pub crawl across Vegas. At each casino Diane handed the wholesaler a $100 chip and a Warsteiner. The evening typically lasted until sunrise. Many other vendors also had their own unique evenings.

The NBWA frequently featured a beer segment that was particularly popular during the given time frame and provided that segment with a special section on the floor during the convention. The NBWA created the craft beer sections which enabled craft breweries to feature their respective beers while, at the same time, enabling conversation with current and potential wholesalers. This style of presentation was popular for years.

This year’s recent convention was a real eye opener for those who have attended the NBWA for decades. The massive three room exhibition hall featured seltzers, ciders, CBD, Hemp, and alcoholic infused waters. It seemed as though one had to really look for the beer segment. In one seminar, the presenter graphed the number of suppliers a beer wholesaler represented. This graph illustrated that the average wholesaler had 61 vendors, but a mere 30 were beer vendors.

The question is: does this indicate the direction the industry is taking or does this indicate the reason that beer sales have been losing share of stomach to other beverages?

Perhaps it is time to call the NBWA, the National Beverage Wholesalers Assoc. and drop the word “beer.” Some people seem to think so. 

 Posted by at 6:00 am