Oct 132020
 

In the early 1960s, Coors began its expansion from West Texas into the North Texas area, including the Dallas/Ft. Worth market. As new distributors were appointed, they were expected to exclusively distribute Coors. This required a change of operational plans as many of the new owners had previously been wholesalers for other brands, including Jax and Falstaff. While the new houses were initially successful, they were by no means dominant during the early years. The AB strikes of 1969 and 1970 changed that trajectory, however, and immediately propelled Coors upward. By the mid, to late 1970s, Coors had become the number one brand in all Texas markets. 

The same development pattern was followed when Coors grew into South Texas, but as history has shown, this expansion failed, unlike that in other parts of Texas. The family political issues, of Coors, coupled with the increased marketing of AB, Schlitz, and Miller, had Coors on the ropes. As Coors expanded eastward, they continued their previously used stand-alone distributor plan, but the results were disastrous.  After numerous failures, Coors began to appoint established, successful beer operations.  Fortunately for Coors, under this new plan, sales began to turn upwards.  The venture with Molson, which occurred 12 years ago, coupled with the acquisition of the Miller brands, has ensured a successful future for Coors.

Just last month, Yuengling Brewing, once referred to as the “Coors of the East,” announced a JV with MC. Yuengling, America’s oldest brewery, has historically been available only in eastern states, but recent expansion has enabled the beer to be available in 22 states. Yuengling, a family-owned business, has benefitted from the long growth of crafts. In addition, the company has made some key sales and marketing decisions. Yuengling’s brands, like many crafts, skews heavily to the on-premise accounts which, as we all know, have taken a beating this year.

Again, following crafts’ trends during the past months, Yuengling’s off-premise sales have done well.  Like many other breweries, however, obtaining the right flavors and packaging have resulted in limited growth. Add in the rapid growth of the seltzers’ market, and Yuengling is now looking at a crossroads for their future.  Expanding into new states is always an option but given the infrastructure with which the brewery needs to invest, the JV with MC does make sense. Yuengling can, however, access the MC distributor network and leverage MC’s chain and marketing capacity into states that they have previously not had access to.  MC can provide the brewing capacity enabling westward movement, thus making freight and delivery more efficient and economical.

To MC’s credit, the industry knows that Yuengling will head west, so why not work with Yuengling to make the MC distributors even more competitive in their individual markets? It is fair to believe the Yuengling appointments are the MC distributors’ appointments to lose? This is not to say that some AB houses will be appointed, but one would imagine said appointments will only come if Yuengling has no other choice. One can only wonder how the AB houses in the west took this announcement, most especially those houses situated in states along the current Yuengling distribution area. If truth be told, many AB houses were probably disappointed with the announcement.

This will play out over time, but this seems to be unfolding into a perfect scenario for both companies and might be the future playbook for other viable, but regional strong breweries.

It is going to be hard, but it does not mean it is going to be impossible!

 Posted by at 6:00 am