By the late 1980s, Coors Brewing Co. had almost filled their U.S. footprint with the brewery’s eastern expansion. At the time, Coors’ field sales were managed by two U.S. regions: one eastern, and one western. Coors chose an executive from Pepsi, a man with no beer experience, to manage the western division. He conducted his first regional meeting in California, during which he outlined his 10 key “turn around” points for Coors. At the end of the presentation, the executive asked for questions. A young woman in the back raised her hand and explained that of the 10 points mentioned, a majority of them violated either federal or state statutes. Within two years, that executive from Pepsi was gone.
In recent posts, we have discussed the fact that the major suppliers require that their wholesalers employ an experienced beer executive in the day-to-day management position. This has been the status quo for decades, while many wine & spirit houses had attempted to break into the beer side of the alcoholic business without an experienced beer leadership team. The requirement for experience in the beer industry has been mandatory.
Tammarron Consulting annually conducts a reverse survey allowing wholesalers to rate their major suppliers in a number of categories. Suppliers now take the results of this survey seriously. It is one of the best measurement tools delineating wholesalers’ input when it comes to a vendor’s performance.
Perhaps this alone is the main reason franchise statutes continued to exist. Wholesalers do not have any input as to who leads their suppliers; however, the suppliers have a great deal of input over their wholesalers’ senior leadership. Unfortunately, the industry has repeatedly seen a negative outcome when a brand’s senior leadership is not capable of leading (e.g., many craft breweries).
Franchise laws protect the wholesaler from vendors who are unfamiliar with the beer industry’s rules of operation. Portfolio diversification by wholesalers adds to that protection, however, when a major vendor changes its executive leadership, the wholesale’s business may be negatively impacted.
This week Warsteiner announced new leadership for its U.S. market. Given Warsteiner’s recent troubles/fines with the TTB, the company has put themselves in a most difficult position. Warsteiner has made a number of personnel changes in an effort to correct past leadership decisions that did not follow federal laws. The company needs a highly experienced and respected industry leader. That said Warsteiner has named an outsider whose background is in German vacuum cleaners. Since both companies are German-based, there must be a relationship, otherwise, why would Warsteiner have made this hire?
Larger beer companies have followed this route in the past and it typically takes three to five years for new outside leadership to establish relationships and learn the U.S. beer industry’s functions. So the question is: does Warsteiner have the time to wait for this leadership change to work? Obviously, Warsteiner believes they do but do the Warsteiner wholesalers believer they do? Once again, time will tell.
My slogan is: I’m the least qualified guy for the job, but I’d probably do the best job.