Jul 032018
 

The evolution of the beer industry is quite remarkable. While the industry itself has changed a great deal, perhaps nothing has evolved more in the industry than the beer wholesaler.

From the end of WW II, until perhaps the late 60s/early 70s, the industry remained consistent.  Small wholesalers, one brand, a limited number of packages, very little discounting, simple one-bay trucks…life in the beer business was good.  Things then started to change.

First, was the push to add new or carry an increased number of brands. For example, an AB or Schlitz wholesaler would carry Bud, Michelob, and maybe Busch.  Schlitz wholesalers carried Schlitz, Schlitz Malt, and Old Milwaukee.  Bigger trucks than came next first with eight bays than on to 16 bays along with shelving in bays.  Bulk trucks still are used today.  Next came pre-selling, followed by orders that were built-by-account, and then the addition of shrink-wrapped pallets which were delivered to the retailer.  Warehouses became digital using, UPC codes, and packages are now moved thru scanning and conveyor belts. Salespeople went from handhelds, to computers, to iPads; portfolios exploded with new brands and packages; and brand management is now the title-de-jour for in-house managing of current and upcoming new vendors. All this, yet the overall beer sales in the U.S. continue to decline.

We all have heard the many assumptions from the pundits as to why beer sales continue to slide, but perhaps the statement by Bill Hackett of Constellation Brands frames it best.  When discussing the lack of brand building, Bill says “this (lack of brand building) will be the death knell of this industry, we have to focus on building brands.”  From the supplier side, no truer words have been spoken.

Lacking extensive and effective brand building, today’s distributors are looking past their suppliers to ways to survive the future, and they may have found the survival tool: cannabis.

Just like the Oklahoma land rush of the 1800s, there is a mad rush to determine who and how legalized cannabis will get to market and ultimately to the consumer.  State beer wholesaler organizations are rallying and lobbying their local legislatures to use the wholesalers’ distribution system for cannabis. On the surface, this seems to be the logical way for states to proceed since beer wholesalers are federally and state licensed.  Owners need to be approved by the TTB to obtain a federal permit. Wholesalers can even act as the tax collector for cannabis just as they do for beer.

It would seem that very little needs to be changed or added to legalized wholesalers to enable cannabis distribution to become a reality. In fact, it might even be easier for beer wholesalers to become the cannabis wholesaler than to up-end their current model in an attempt to provide a more effective sales and marketing program for beer. Perhaps beer distributors should leave it up to the suppliers to improve beer sales.

No one will know the total impact of legalized cannabis sales for years, but now is the time for beer wholesalers to act.  Truth be told, the current beer suppliers (those not tied to cannabis) are probably not very happy.  Maybe they should be spending more on the brand building then they would not have to worry.

Business is constantly changing, constantly evolving.

 

 Posted by at 6:00 am

  One Response to “Business is constantly changing, constantly evolving.”

  1. This is an excellent synopsis of the future of the business. Cannabis products will need to be distributed through the current wholesaler system or see it go to a new entry into the already served market and quite possible end up losing even more.

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