Feb 182014

download (1)My first supervisory job was in the beer division of Julius Schepps.  This was in the early 1970s and Schepps, a wine and spirit house, also represented a number of regional beers including:  Lone Star, Jax, Hamm’s, Colt 45, Champale, Right Time, and Lowenbrau.  Given the tremendous growth of the national beers, Schepps started to downsize their beer division, but still continued in the industry.

By the time I had joined Gambrinus in the mid 1990s, Schepps was representing Corona, Shiner, Guinness, Moosehead, and other fine imports.  Still, Schepps was a big wine and spirit house and their business model did not include servicing certain parts of the retail industry including c-stores.  While Modelo and Shiner were growing, the Schepps business model was holding back the potential of these brands.  By 1997, Lee Schepps, who ran the company, decided to sell.  The beer division was sold to Barry Andrews, who, at that time, only had Miller and a few other brands.

At closing, I told Lee Schepps that he did not know what he just sold and turned to Barry and told him, he did not know what he just bought!  In the first three weeks Barry had Corona, his sales team made 247 new placements in c-stores alone.  Sales flew in the first year and when we reviewed his performance, Barry had hired 33 new people to simply handle the volume and growth.  When asked if he would buy these brands all over again and he said, “Yes, without a doubt!”  Obviously, any concerns about adding additional staff were not relevant.

At the start of 2013, we learned that Reyes had purchased Windy City, an independent beer house specializing in crafts and a few imports.  In their 10 years in business, Windy City had grown from a 50,000 case operation to just under 1 million cases.  Reyes paid in excess of 70 million for this company. This shows just how much Reyes was willing to pay to gain access to these crafts.  While Windy City had done an outstanding job of building and growing the company over a 10 year period, they were still limited in resources.

In spite of the political and supplier issues in the greater Chicago market, Reyes was able to make this acquisition and kept Windy City a separate operation.  Reyes, with its army of people and almost unlimited resources, was able to apply all of their skills to Windy City.  In the first year, Windy City’s sales were 1.3 million cases, an increase of +400,000 cases!

The Reyes/Windy City success is the personification of the frustration crafts are having with wholesalers today.  Crafts are begging for focus, most know or suspect that their brand would fly if only they could get to the market.  In many cases, that is true, but state franchise laws, combined with the growing performance requirements of AB and MC, continue to handicap these vendors.

The success of Reyes, and that of other wholesales in the craft industry, has wholesalers investing more and more into this segment of the industry.  For the craft vendors, it is not fast enough.  The beer industry was been taken aback by the amount Reyes spent for Windy City; however one can look at this purchase by Reyes and say: fortune favors the bold!

 Posted by at 7:45 am

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