Aug 292017
 

By 1980, after years of market dominance by Coors in both Kansas and Oklahoma, it was clear that those states had been targeted by AB.  At Coors of Kansas in Wichita, the largest distributor in Kansas, we had a market share of 61+%.  There were markets in Oklahoma and western Kansas where Coors had a share at, or near, 70%.

During this time, Coors Brewing Co. was battling the beginning boycotts of their beer in California, while simultaneously ramping up national expansion.  The expansion was to offset volume losses coming from the west coast.  Being concerned about AB’s push in Kansas, I flew to Denver to meet with Coors’ senior management.  As I laid out my concerns about AB, it was clear that Coors was preparing to increase efforts in both California and Texas, not in Kansas or Oklahoma.

A one percent volume of market share increase in Texas or California provided a volume increase that I could only achieve with a 10% increase which, when sitting on a 60+% share, was impossible to accomplish.  My position for Coors was to protect its backyard.  Coors’ management went the other way, and as a result, within the decade, AB and Coors had reversed market share in both states.

The Coors distributors in these states felt betrayed and abandoned.  Many sold out, some bought existing brands and wholesalers, but all had to make major changes to continue.  It was a difficult time and many people lost their jobs.

Recently, in Bump Williams’ conference, the topic, the industry’s lack of leadership, was in part, a conference on what is wrong with the beer industry today.  Former industry executives, Tom Carmella, Bob Lachky, and Luis Duran, all agreed that breweries need to either focus on brand stories or efficiency.  Breweries cannot be both at the same time.

Another major point which was highlighted during the conference included the rapid price increase for economy and premium brands, an increase which is much more rapid than that of wines or spirits.

It is very clear, after 10 years, that ABI, focusing on ROI and efficiency in the U.S. market, is using their monetary success to develop their global brands, Budweiser, Corona and Stella, in other countries.  There are over a billion people in China and India, so why not develop those markets?  Throw in South America and Africa, both underdeveloped, and which do NOT have a three tier system, and all ABI sees is the upside.

MolsonCoors, for the most part, has just followed ABI’s lead in the U.S. by not jumping on the opportunity provided by ABI to increase volume and share.  Tammarron’s recent survey results, indicate the lack of confidence MC distributors have in MC’s leadership.  “You are what your record says you are,” Bill Parcels.

New Belgium’s recent hire of a new CEO also indicates which direction they intend to head, more of a global or international path instead of focusing on the US market.  The question is: how do New Belgium’s wholesalers feel about this hire?

As Bump’s conference stated, wholesalers should focus on efficiency which seems highly likely given that the leadership void in the industry which will leave wholesalers with no other option if they want to survive.  Similar to what happened to the Coors wholesalers’ in the 1980s in Kansas and Oklahoma; these wholesalers today are feeling abandonment and frustration.  Ask the former Schlitz wholesalers about this from the 1970s.

The definition of leadership is about taking responsibility, not making excuses.

 

 

 Posted by at 6:00 am

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