Nov 262013

Thanksgiving beerAfter World War II, Van Munching, the US importer for Heineken, used wine and spirit houses for their distributor of choice.  Since imports were not very big at the time, this strategy of using wine and spirits houses made sense.  The model worked because beer was sold mostly through package stores.  Coupled with the fact that Heineken was sold primarily in restaurants and bars where liquor and wine were also available, made for successful distribution.

As other importers came into the US, they too started following Heineken’s business model and appointed the wine and spirit houses as their distributors.  In almost every case, the wine and spirit house operated on a statewide basis, making pricing and logistics easy for the vendor.  In some cases, the vendor only had one call point and from that call handled all distributor communications.  Many imports preferred this model.

Then came craft beers, and most saw the wine and spirit model as the best distribution option for them.  In fact, throughout the 90s New Belgium employed the wine and spirit model.  Glazer’s was awarded New Belgium in Texas, Arkansas and Kansas.  RNDC had New Belgium for all of Arizona.  In 2005, Glazer’s, counting the Chicago JV with Union, represented 22% of Warsteiner’s total US business.  Oddly, the commitment to beer varied from state to state by the same wine and spirit company.  For example, RNDC had beer in Arizona and Florida, but no beer brands in Texas.  Southern Wine and Spirits was strong in some states, like Nevada and South Carolina, but not in California.

Once Heineken created its own importing company, they started to systematically change from wine and spirit houses to beer distributors.  The rapid growth of Corona forced Heineken into the beer distributor house because getting the distribution they wanted was only possible through the beer distributors.

While at Gambrinus in the late 90s, I received a call from the largest c-store chain in El Paso.  They had 34 stores and the buyer was upset because he could not get Corona from Glazer’s.  I made all 34 stores with the Glazer’s branch manager and found almost no Corona in any stores.  Glazer’s did not have the Gallo brands in that market; therefore they did not service the c-stores on a regular basis.  When they did, there was no merchandising or rotating.  Needless to say, after an intense meeting with Glazer’s management, 10 beer salesmen were hired and sales doubled.

As the consumer began to discover the craft beers, these craft breweries realized that getting their products to the shelf and expanding distribution was necessary for their continued growth.  In many cases, the wine and spirit houses either would not, or were unwilling to build the infrastructure needed to service the retail market to the same quality level as the beer distributors.  Over time and out of necessity, the craft breweries began leaving the wine and spirit houses for beer houses.  Most of these departures were amicable, but in some cases, the courts became involved.  Even today, these departures continue.

Wine and spirit houses are led by wine and spirit professionals while beer houses are run by beer people.  By the end of 2015, the craft beer industry should be 10% of the US total domestic beer volume.  The question is, if the crafts’ continued growth reaches a market share of 35%+ in the US, then this Thanksgiving the beer distributors should have much for which to be thankful.  The MC and ABI distributors should thank Southern, RNDC, Glazer’s, Charmer, and others W&S companies for not investing and building the infrastructure needed to grow crafts and imports.  They should hope that the CEOs of these companies continue to ignore this opportunity.  This Thanksgiving, the beer distributors are the thankful receivers that will bear a fruitful harvest!

 Posted by at 6:50 am

  One Response to “The thankful receiver bears a plentiful harvest…..”

  1. Funny, I recall Scarpelli and West from Southwest Convenience hammering y’all on this. I was in Midland /Odessa and had the Shiner brands and 63 of their stores

    Nice historical and good take away from you . I’m sure the Wine and Spirits boys do not like hearing the truth . Happy Thanksgiving and I enjoy your posts.
    Kind Regards , Travis

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