{"id":1945,"date":"2014-08-12T06:00:32","date_gmt":"2014-08-12T11:00:32","guid":{"rendered":"http:\/\/www.beerbusinessunplugged.com\/?p=1945"},"modified":"2014-08-03T11:00:07","modified_gmt":"2014-08-03T16:00:07","slug":"the-essence-of-strategy-is-choosing-what-not-to-do","status":"publish","type":"post","link":"http:\/\/www.beerbusinessunplugged.com\/?p=1945","title":{"rendered":"The essence of strategy is choosing what not to do…"},"content":{"rendered":"

 <\/p>\n

\"Mid<\/a>In the late 1940s, Coors entered Texas by opening El Paso and Amarillo.\u00a0 Further expansion did not take place until the mid-1960s when Coors moved into the remainder of West Texas and the DFW market.\u00a0 The success of the two original markets, El Paso holding a 60%+ share, allowed Coors to appoint new exclusive operations.\u00a0 No doubt some of Coors high share came from customers buying the beer and carrying it back to their homes outside of Coors markets.<\/span><\/p>\n

A number of the new operations in these markets were composed of owners who had been distributors of other beers, but divested themselves of these brands in order to acquire Coors.\u00a0 This was a wise decision on their part, as all of these operations became hugely successful as exclusive Coors houses.\u00a0 Given that successful track record, 10 years later Coors moved to open central and south Texas and used the same strategy in appointing new wholesalers.<\/span><\/p>\n

This time though, most of the new wholesalers did not have beer backgrounds.\u00a0 There were politicians, baseball and football stars, astronauts, businessmen, and even some school teachers.\u00a0 There were a couple of beer guys, one a former Jax wholesaler in Houston, and another was the Miller wholesaler in Corpus Christi.\u00a0 Remember, in the mid-1970s, Schlitz was the market leader.\u00a0 Miller had just introduced Lite but its growth was years away.<\/span><\/p>\n

Coors never got more than a five percent share, unlike north Texas, and all of the operations sold or merged with other houses over the years.\u00a0 In fact, some operations sold out within two years of getting in business.\u00a0 In Corpus, the new Coors guy could not make it but Miller took off like a rocket.\u00a0 The new owner, Barry Andrews, now owns one of the largest beer houses in the US.\u00a0 Coors soon realized that the stand-alone Coors house in new markets could not work as in the past.\u00a0 Future expansion targeted other beer houses across the country.<\/span><\/p>\n

Prior to that time, exclusive houses were the industry standard.\u00a0 As the regional brands began to slip, Schlitz and AB kept pressure on their houses to remain exclusive.\u00a0 This pressure had much to do with franchise protection laws instigated by the wholesalers.\u00a0 As an example as a Schlitz house, you had a national brand, a strong popular beer (Old Milwaukee), the #1 malt liquor (Schlitz), and if you were lucky, had either or Heineken and Femsa.\u00a0 Logically, the breweries\u2019 argument was that as a wholesaler, you had all the bases covered and did not need other brands.<\/span><\/p>\n

AB began to incentivize their houses by providing monetary payments and extended credit terms if the distributor remained exclusive.\u00a0 Their program was tiered based on the operation.\u00a0 You got the top level if you were exclusive AB; the next tier consisted of AB approved brands like Modelo.\u00a0 Finally, if you were in a multi brand house, you were at the bottom.\u00a0 This program worked well for AB.<\/span><\/p>\n

In 2008, when InBev purchased AB, one of the very first decisions made by InBev was to discontinue incenting AB houses for exclusivity.\u00a0 In addition, InBev also discontinued paying for truck paints.\u00a0 Just recently an AB wholesaler mentioned he had lost hundreds of thousands of dollars when this business model was discontinued.<\/span><\/p>\n

What would have happened if InBev had not only continued these incentives but increased them?\u00a0 What if MC had jumped in also to incent their wholesalers?\u00a0 The question might be: would AB and MC have lost all those millions of cases?\u00a0 Would craft beers be growing as fast if they struggled for distributors?<\/span><\/p>\n

Obviously ending these incentives was the InBev strategy, but maybe the essence of strategy is choosing what not<\/span><\/em> to do!<\/span><\/p>\n

\u00a0<\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

  In the late 1940s, Coors entered Texas by opening El Paso and Amarillo.\u00a0 Further expansion did not take place until the mid-1960s when Coors moved into the remainder of West Texas and the DFW market.\u00a0 The success of the two original markets, El Paso holding a 60%+ share, allowed Coors to appoint new exclusive […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_s2mail":"yes","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[1],"tags":[],"jetpack_publicize_connections":[],"aioseo_notices":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2xRTi-vn","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/1945"}],"collection":[{"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1945"}],"version-history":[{"count":12,"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/1945\/revisions"}],"predecessor-version":[{"id":2002,"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=\/wp\/v2\/posts\/1945\/revisions\/2002"}],"wp:attachment":[{"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1945"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1945"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.beerbusinessunplugged.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1945"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}