Jan 152013
 

Heaven

 

 

 

By the mid 90’s, Glazer’s corporate office had decided to expand their beer portfolio and to purchase beer distributorships.  In retrospect, this decision should have been well received by the industry, however, the affect was just the opposite.  For many years, Glazer’s had been the statewide distributor for Heineken in Texas, Arkansas and Louisiana.  In addition, they had some other quality imports, including the Modelo portfolio in West Texas. But since beer was a secondary focus for Glazer’s, the industry wanted them to divest these products instead of expanding.  Initially, Glazer’s efforts to expand were rebuffed. Through years of  litigation, Heineken was able to change to a beer network in Louisiana and Texas, but not in Arkansas.

In the late 90’s, Glazer’s purchased two small distributorships, Mid-State in Waco and Maxwell in Longview.  The vendors reluctantly approved the purchase after receiving assurances regarding structure and performance, along with Glazer’s agreement to add senior management with beer backgrounds.  It was the suppliers’ only option as Glazer’s had paid a high premium for both operations.  Obviously,  this was Glazer’s way to get into the beer distributing industry… a high cost of entry, but one they were willing to make.

As we all know, Glazer’s is one of the ten largest distributors in the country, having acquired a number of operation  since their initial purchases.  They have chosen this path, selling off a number of imports and crafts to other distributors where they didn’t have any beer operations to service the market.

Reyes, on the other hand, has been successful in buying and consolidating Miller/Coors operations across the country, in spite of the wishes of many imports and crafts.  Some of these vendors have even gone out of their way when expanding into a Reyes-market to not appoint them.  Even pulling out of a particular state just so they didn’t have to deal with Reyes. Bell’s, in Chicago, did this some years ago when Union Distributors sold.

When Two Brothers Brewing Co. in Chicago started, they couldn’t find a distributor to handle their brands so they self-distributed.  This eventually led to the creation of Windy City.  Soon other crafts, who also couldn’t find a distributor, asked WC to take them on.  In an effort to grow Windy City, Bob Collins joined the distributor when Union dissolved.  With a unique business model, Windy City, which serves all eight Chicago area counties, has grown to a million cases with only crafts and imports.  The distributor has become a highly respected competitor to the MC and ABI network, including Reyes.

The recent announcement that Reyes had purchased Windy City comes as no surprise, and neither does the price that Reyes paid!  Reyes intends to keep the operation as is, including management, so then the question becomes, why did Reyes even make the purchase?  Obviously, Chicago Beverage’s footprint isn’t eight counties, so keeping WC would solve that problem, but from a ROI, is it the best option.   Or could the reason be that, Reyes has a much better chance of keeping all the vendors and brands this way?  Illinois has a provision in their franchise laws enabling a vendor to opt (buy) out of a house if it’s volume is under 10% of the distributors total volume.  By keeping WC intact, and not consolidating it with Chicago Beverage, Reyes has eliminated the 10% volume option, or the “get out of jail” card!

Whatever the reason, both Glazer’s and Reyes continue to acquire operations .  Rest assured, they will continue to do so as both companies are trying to “get to heaven, but don’t want to die.”

 Posted by at 8:37 am

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