Jan 312017

Red BullThe numbers for 2016 are now being released.  In 2016, we once again saw the industry produce similar results very similar to the last 10 years.  Since 2010, domestics have lost 16.5 million bbls. or 9% in volume, crafts have gained +13.2 million bbls., and imports +5.9 million bbls.  Therein lies the issue with wholesalers.  AB, MC, and even established crafts such as Boston are losing ground   As a wholesaler do you stay or expand?

In recent years, many wholesalers have expanded into non-beer products.  Even importers have done the same.  In the late 1980s, Warsteiner took on Nestles, albeit for a short time as this experiment did not work.  A number of these expansions do not work, but there are some that are very good, such as the energy drinks Red Bull and Monster.

Monster is now leaving the beer network, predominantly AB houses, by exercising provisions in their agreement with the wholesalers to buy out their rights.  Monster, like Red Bull, is a very profitable product and a key part of anyone’s business, and because of this, many of AB wholesalers are fighting back. Yet, at the first of January, Andrews Distributing, which has MC houses in both north and south Texas, and is a long time Red Bull distributor, announced that they were getting out of the Red Bull business in Texas.  Andrews’ annual volume is around 1.5 million cases of Red Bull. “This was a tough and thorough decision-making process, but the decision allows us to move forward with 100 percent focus on our core beer business,” per notes from Mike McGuire.  He states they will continue adding “new and powerful brands, territories, and customers to the company’s portfolio.”

So the question is, why would Andrews go this direction when most other wholesalers are doing just the opposite?  Could this decision be based on retiring debt?  Andrews has bought both the Miller and the Coors distributor in Ft. Worth in recent years with the goal to consolidate both in a new super facility which is under construction.  Makes sense?

Maybe there is another reason why Andrews is making this move.  Andrews’ markets, DFW and Corpus Christi, are connected by Interstate 35, which goes through San Antonio, Austin and Waco.  Two of these markets, San Antonio and Waco, are owned by Glazer’s.  Now that Glazer’s has merged with Southern with their wine and spirits business, and spun off their beer division, the question arises: will Glazer’s continue to retain just the beer operations?  No doubt Andrews would love to have Waco and San Antonio in their operations. Add in the Rio Grande Valley, which also is Glazer’s, and you pretty much have it covered, omitting only Austin.  Divesting Red Bull should put Andrews in a much better position should they become available.

2017 will be the year when we learn more behind this decision to get rid of 1.5 million cases of Red Bull.   Maybe there is another reason why Andrews is making this business decision.

A tree is a tree.  How many more do you need to look at?

Beer Fodder; https://www.youtube.com/watch?v=vQusMl8aNmg

 Posted by at 6:00 am

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