Aug 272013
 

cartoonMany college students have no idea what career path they want to pursue when starting college; however, by the end of my second summer as a college helper for Coors, I had decided that the beer business was my future.  I was determined to own a distributorship by the time I turned 30.  By my late 20s, I was the EVP and GM of Coors of Kansas and, I had an agreement with the owner, R. D. Hubbard, President of AFG (Safelite Auto Glass) for 25% ownership.  Unfortunately for me, Kansas had a 10 year residence statute which had to be verified by 10 consecutive years of state tax returns.  As a Texas native, I could not fulfill the verification process.  Coors Brewery was aware of my interest and presented several operations for me including three in Missouri, a new market struggling with establishing Coors.  AB’s backyard was difficult at best.

Instead, I decided that it was time to find a beer wholesaler to buy, so I retained a broker who only represented beer houses. The firm presented me with a number of distributorships across the country, but when the Schlitz operation in S. Texas became available, I knew this was the right one.  At 31, I closed on the operation.  While owning Texas Beers, I bought three additional beer operations in my territory and pursued other operations throughout the state.

While at Coast Distributors in Oregon, I purchased three additional operations and looked at others that had come to market.  In the early 90s, I again looked at the possibilities of purchasing another operation.  One in Arizona caught my eye, but I was late in getting to the table.  Some of the distributors I considered buying were AB houses.

At that time, most houses were single brand.  Some had a couple of imports, maybe a regional or two, but that was the extent of the diversification.  Many of these single brand houses decided to sell.  The Schlitz houses sold because they were at, or near the top of the market, and owners had lost confidence in brewery management.  Many distributors who carried only regional brands lacked the marketing and subsequently had little growth, and they, too sold.  I remember some operations were advertised for sale in the WSJ.  There were even times when sales were so common there was one a month.

So what happened?  Consolidation at the brewery level forced consolidation at the wholesale level which, in turn, provided the wholesaler with portfolios that were diverse enough that  if one brand started to decline, the wholesaler had enough brands to more than make up the loss.  Imports, headed by the Mexicans and Heineken, ramped up spending and caught fire; RTDs showed up; and of course, the crafts’ dramatic growth has given wholesalers the ability to survive in case one supplier heads south.  This means very few, if any, operations come up for sale on the open market.

The days of an individual buying a stand-alone operation are gone.  Now, family and tax issues are the primary reasons beer operations sell and then, usually under the direction of the major supplier, (e.g. MC or ABI).  Once a distributor informs their supplier of their intent to sell, it then becomes…show me the money!

 

 Posted by at 6:30 am

  One Response to “Show me the money………”

  1. Geoff, how did you have the money to buy these beer distributors when you first started?

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