The very first US Warsteiner distributor was Paul Murray in Denver. Paul, a very outgoing and engaging man, had a nice portfolio during the 1980s, including Schlitz-Strohs, Pabst, Modelo, Warsteiner and others which enabled Paul to conduct a very good business. At that time, Pabst was not the brand it is today; in fact, it was struggling to remain viable. A Denver grocery chain decided to run a holiday feature with Pabst. Being a grocery chain meant the Pabst had to be 3.2 ABW beer. The ad generated more sales then either Paul or the chain anticipated and some stores ran short. Paul did not have enough 3.2 inventory in his warehouse and could not get any from the brewery.
Not wanting to upset the chain and to lose sales, Paul, directed his warehouse manager to erase the ink on the Pabst cases that identified the liquid as strong beer, which at the time was sold only to liquor stores in Colorado. He then had the beer shipped to the 3.2 stores. The warehouse manager, sensing an opportunity to profit from Paul’s decision, went to Paul and asked for a raise. Paul turned him down and the warehouse manager decided this was his opportunity to get even. He went to the state ABC agency and turned Paul in for selling strong beer to a 3.2 account. The agency bought a case from the grocery store and had it tested. Unfortunately for Paul, it was strong beer.
The agency suspended Paul’s state license for two weeks, during which time no beer was to be sold. This license suspension caused a number of key vendors to legally terminate Paul and leave for other beer houses. With little options left, Paul sold what remained of his company and was given a job with the new owners. After being a long term owner, working for someone else was not a good fit for Paul, so he resigned, took what money he had left and invested it in a vending machine company. That venture failed and Paul lost everything. By this time, Paul felt he had endured enough and committed suicide. Not long after his death, many industry people got together for a fund raising golf tournament with the proceeds benefiting Paul’s family. To Paul, the value of his distributorship was one pallet of Pabst!
Recent IRI data shows crafts up 18%, while total beer is up only 0.6%. To say that the craft segment is hot is nothing new. A recent conversation with an AB wholesaler just confirmed these numbers and he voiced his concerns within this segment. He noted that while on a fishing/business trip with some US congressmen, at mention of the craft industry, the congressmen brought up the crafts’ constant complaining about existing beer laws and how tired, they, the congressmen are of the complaining. In addition, the AB wholesaler mentioned multiple occasions of crafts and illegal activity in his market. The illegal activity was predominantly the result of giving kegs away for taps, hiding beer production from tax authorities and selling directly to retailers. Given the severity of these activities the wholesaler has serious doubts about the craft business.
While it is easy to get into the craft business, and getting easier with models such as the coming BrewHub, succeeding is not a guarantee. As more and more brands come to fruition, the pressure to succeed will increase. The industry is seeing early indicators of what the future holds at the retail level. Just as Paul did for a pallet of Pabst, sooner or later, we sell out for money!