Aug 212018
 

The Pabst Brewing Co., the Jos. Schlitz Brewing Co., the G. Heileman Brewing Co., and perhaps ABI all seem to have one key metric in common:  leadership.

Once Paul Kalmanovitz took control of the Pabst Brewing Co. in a hostile takeover, he immediately began slashing overheard from the company, with cuts predominantly made in sales and marketing departments.  Kalmanovitz subsequently made similar cuts with the other brands he acquired and consequently each company experienced massive sales losses.  It was not until after Kalmanovitz passed away and the Pabst holding company, S&F, acquired different leadership, did a sales resurgence occur.

Despite Frank Sellinger’s attempts to revive Schlitz, the company never survived after finance and accounting took control.  Once Stroh acquired Schlitz, the heavy debt and leadership voids sealed the future for both companies.  G. Heileman was so far in debt, there was no way it could survive and they too, soon succumbed.

AB, once the envy of the beer industry, has lost millions of barrels in volume. The company is, however, the darling of Wall Street and shareholders alike as AB continues to build a financial powerhouse.  ABI and its distributors are fortunate because Michelob Ultra remains on fire, something the others brewers never experienced.

Shareholder equity, ROI, ROA, and other financial metrics are the keys to the health of any company, including breweries, but without brand building, the financial measurements will be meaningless if the company dies as referenced by Pabst Brewing Schlitz, G. Heileman, and others.

Craft brewers, many of whom are undercapitalized, cannot take advantage of any growth opportunities because they are cash-strapped.  The beer industry is now experiencing this phenomenon as a number of breweries are either cutting staff, shrinking their footprint, or making other dramatic changes.

A major reason the above mentioned companies are failing is that while they all had, of have had, in-house talent that could overcome challenges and build successful companies; either ownership or senior leadership did not allow them to do so. They have all paid the price.  The question is: why hire this talent if one does not allow them to perform?

What is even worse is when control is turned over to someone internally who has no ability or experience to run the company.  This is typically the worst possible situation as the company’s moral dies and unless ownership quickly addresses that problem, the end result is devastating.

History has shown time and time again that when decisions are in the hands of people who are not qualified to make such decisions, the results are disastrous.  When history looks back on the craft industry, it might well be the personification of such a model.

It does not make sense to hire smart people and then tell them what to do; we hire smart people so that they can tell us what to do.

 

 

 

 Posted by at 6:00 am

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