Monday, November 20, 2006

An Unwritten Rule is Now Written.

I want you to imagine something, and just bear with me because I got angry about this all over again ( and its been over a year).....
You are the President or GM or VP (or in a Managament position) of a beverage company. Nearly all Beverage Companies are locally owned and operated. The folks running them are your neighbors, your friends. The men and women that manage the local Miller Distributor, Bud Distributor, Pepsi Bottler, Coke Bottler, etc., whether they like or not, are well known (think celebrities) in their respective communities. We donate our time and money so that our businesses are respected in these communites. We also pay our employees very well. Many hours are spent training these employees and these employees are given great benefits that rival any Fortune 500 company. We expect these employees to respect us, respect the job, and respect the products that we sell.
When I reread the article about the guy in Wisconsin getting fired for drinking a competitors product, I got pissed all over again. There is no excuse, whatsoever, for an employee of your company to support a competitor. You don't owe that employee any reason, he has disrepected the company and you. I like how the guy tried to make himself look like a victim to the paper. The brewery, obviously, was trying its best to be politically correct. Following is the Rule, feel free to put it in your employee handbook and call it the Heileman Rule for the Ignorant:

  • Any employee caught consuming a competing product will be terminated on the spot.

Monday, November 13, 2006

Lunchtime Beverage Break

Hope this quenches your thirst for a little news:

  • First reported by WBAY in Wisconsin:
A union representing office workers at Miller will vote on authorizing a strike in case a contract agreement can't be reached. The Office and Professional Employees International Union Local 35 represents more than 120 clerical workers at the Milwaukee headquarters and brewery. The union's business manager, Judy Burnick, says Miller's parent company, SABMiller, has proposed a pension freeze and health insurance concessions. The union authorized a strike six years ago, but ending up reaching an agreement.
  • Illinois bids farewell to Bell's beers (according to the Chicagoist):
"The current owner of Bell's distribution rights is Jim LaCrosse, who's the CEO of Union Beverage Company. According to Bell's brewery reps, LaCrosse was close to selling his Bell's distribution rights to Chicago Beverage Systems, a national beer wholesaler which distributes Miller, Coors, Heineken/Amstel, most of the popular Mexican beer brands, Newcastle, Stella Artois, Guinness/Bass, and countless other beer brands (they just added Sierra Nevada and Paulaner this week).
Anyway, rather than do business with Chicago Beverage, when Bell got word of the impending sale, he opted instead to stop shipping his beer to Illinois as a form of protest, effectively killing the sale.
The loss of Bell's in Illinois sheds light on the little-known details of "franchise rights" among liquor wholesalers. Thanks in large part to the lobbying efforts of the state's beer and spirits distributors, the distribution rights for beer brands are open-ended and weighted in favor of the distributors. By pulling his beers from Illinois in protest, Bell is hoping to shed some light on this, as craft brewers, in particular, often have to make these agreements in order to market their product. Before Goose Island entered their distribution deal with Anheuser Busch, they had similar problems with Union Beverage. There have been rumblings that Bell's can be gone from the market for a year, but the reality is, unless they come to an agreement with LaCrosse, LaCrosse sells his rights to a distributor that Bell respects, or Bell's sues to extricate themselves from their deal, they could be gone for much longer than that. It hurts Union more than it does Bell's; Chicago is Bell's fourth-largest market, but the brewery is extending its reach into other states and feel they can withstand the hit."
  • Hansen's option-granting practices reveiwed by SEC (from Motley Fool):
Hansen Natural finds itself in a precarious situation these days, despite having a lot going for it. The stock price is prone to 6% swings in either direction on the slightest bit of news, as nervous investors try to figure out what to do with the embattled market darling.
On the one hand, Hansen is undergoing one of those accounting reviews of options-granting practices dating as far back as 1996. Two weeks ago, a letter came in from the SEC, informing Hansen's management of an informal inquiry on the subject, and the company promptly set up its own internal investigation.

Saturday, November 11, 2006

Niche Brands That Will Add Value to your Distributorship.

Niche Brands That Will Add Value to your Distributorship.

I have compiled a list of my favorite brands that could add value to your beverage distributorship business. These brands might be old or they might be brand new. They are actively pursuing distributors and the territories may be available in your area or they may not be available. Hopefully, this list will give you some ideas to help grow your business.

  1. Vitaminwater -- Huge investment by Tata Group insures independence from Coke/Pepsi.
  2. Fat Tire -- Newest cult beer out of Colorado. Must have beverage of any beer distributor east of the Mississippi
  3. Beer Nuts -- Talk about an easy sell in the on premise.
  4. Fuze -- Has aesthetically beautiful packaging, healthy flavors, and very nice margins.
  5. Cocio -- Two year shelf stability and unbelievably delicious.
  6. Wild Joe's Beef Jerky -- Voted #1 Jerky on Food Network.
  7. Fiji Water -- Packaging is everything.
  8. Jolly Rancher Sodas -- Don't know much about the company and fairly expensive for kids drinks, but very cachy packaging.
  9. Sol Mate -- It's organic, high in antioxidants, and profitable.
  10. Green's Beers -- Gluten-free beer, 100% natural, suitable for vegetarians.

Hope these products will add extra cases and dollars to your routes. Tell them you heard about it at Wholesale Beverage Distributor. I will add other products as they come available. Enjoy.

Wednesday, November 08, 2006

To the Breweries and Ad Agencies about Beer Advertising.

To the Breweries and Ad Agencies about Beer Advertising.
Yes, I can do it better. No, I'm no genius by any means, I'm just a guy who loves selling beer. I sell beer locally and I know my retailers and customers personally. I know what the consumer wants from beer advertising and it reaches out to all demographics---tell the story of how the beer gets to the store or bar. Promote the message of "support" for your local beer man (or woman). Use of route trucks, temperamental convenience store clerks, overturned product, peculiarities that arise daily on a route, etc. I know of no other job in our country that affords a man or woman the sights they will see during a day of calling on 20-25 beer accounts. It's unpredictable, somtimes frustrating, often fulfilling, and can be downright hilarious. Remember, you have all the ideas in the world right here with me....and you heard it here first.

Uncovering a Niche in Beverage and Beer Distribution.

Uncovering a Niche in Beverage and Beer Distribution.
To be a success in any business you must understand that while everything around us changes, everything somehow remains the same. We have to study the past to comprehend the present, which in turn will help us try to predict the future. Products (in any industry) that were popular years ago seem to always come back in style. Just like the world is round, what goes around comes around. Ideas that have been successful; whether they be price driven, in advertising, in new packaging or branding, in innovation, or by sheer luck, that worked historically can be adapted to work today. I have never been smart enough to invent or design anything, but I have always been able to take something that already exists, tinker with it, and make it better. Uncovering niches in beverage and beer distribution is important to all wholesalers. I will keep up the following list and make sure it is updated on a timely basis. Your input is very important, feel free to leave comments.

  • As a wholesaler, don't limit your horizons. Compete in as many segments as possible. In other words, your truck is already stopping at an account, try to sell the account more. Drop size equals more dollars. Examples:
  1. Small soft drink bottler adding energy drinks and malternatives, maybe some craft beers.
  2. Beer Wholesaler with heavy on premise clientele adding salty snacks.
  3. Grocery Wholesaler considering regional wines and spirits.
  4. Becoming a Mega-Wholesaler competing in all segments: Soft Drinks, beer, wine, spirits, energy, milk, coffee, tea, juice, water, isotonics.
  • If you want to compete against Red Bull in the on premise and you don't have a major label, forget trying other energy drinks, do it with water, mixers, cups, juices, even salty snacks. While spirits are booming on premise, beer is declining (as of the present). Offer your bars and restaurants something new.
  • Use nostalgic marketing with older brands that have small points of distribution. Entice the consumer with the feelings of yesteryear. We have seen a resurgence of PBR, High Life, and Schlitz. My favorite is a 2 for $10 pick a pack deal we do in neighborhood grocery stores. Your choice of two Schlitz, High Life, Old Mil, PBR, Keystone, Best, Schaefer, Old Style, or Olympia 12 packs for $10. Bundle some older graphics on a sign with your sign machine and there you go. It's an easy sell, easy display, and the retailers love it.
These are just a few ideas, I will update more in the coming days. Enjoy!

Tuesday, November 07, 2006

Open Letter to Pabst Brewing Company and Distributors Concerning Champale.

Open Letter to Pabst Brewing Company and Distributors Concerning Champale.

Nearly fifty years ago my company acquired the rights to distribute Champale in the territory we were servicing with Falstaff. As Falstaff sales declined (almost overnight in the mid 60's), Champale and cups kept us afloat (you laugh, but its true). Anyway, I have seen this wonderful product go through change after change in its packaging, more changes than gasoline prices around the 4th of July. One certainty has been the liquid...Extra Dry, Golden, and Pink. Champale is categorized as a Malt Liquor, but it should be labeled as a Malt Elixir and put it in a segment all its own.

On a national level, Champale has a very limited distribution. Distribution is very spotty and concentrated more heavily in the South. The first Champ Ale recipe dates to the 1880's and was brewed by the Metropolis Brewery. The name was changed to Champale during World War II. In the 70's, Champale was sold to Iroqouis Brands. In the 80's, Alan Bond added it to G. Heileman Brewing Company. Later it was part of the Stroh Brewery and finally, Pabst. It is now produced once a month at the Lion Brewery in Wilkes Barre, PA for the Pabst Brewing Company. There are many Pabst wholesalers that have a contract for the brand, but don't even bother carrying it. These wholesalers are definetely leaving money on the table and really don't realize it. Would you believe that with Champale the margins are higher than any import or craft beer? Better than any wine cooler or malternative, too.

Now for the reason I am writing this piece: Hey Pabst would you like to sell the Champale brand to me? I don't have much money, but I do have lots of ideas. Would you like a partner in the Champale brand? I would work for free if you took care of my expenses. Do you need someone to counsel you on how to market and distribute Champale? My services are fairly inexpensive.

Just as Budweiser does with an A/B wholesaler, Miller High Life with a Miller wholesaler, and Coors Banquet with a Coors wholesaler, Champale will always hold a special place in my heart. By acquiring the rights to Champale, a beverage wholesaler will get an exceptional product that has its very own unique niche in the marketplace, a brand with 125 years of history, and the best margins in the beer industry.

Monday, November 06, 2006

Beverage Company Philosophy with Respect to Sports

Let’s face it we love sports. We love our favorite teams, heroes, and legends of different sporting events. Our devotion to these pastimes transcends into every facet of the beverage business world. Consideration of the intricacies of different sports will help you discover how your company compares to the rest of the field. The following ten key elements will help you discover how your organization stacks up, not only against the competition, against the business community itself. Remember, there is no right way or wrong way, winning comes to you in the form of your bank statement. Let’s take a look:

1. Do you have team players or individuals in your organization?

  • Team players will work together for the common good of the company. The whole team strives to make sure all tasks are completed, from the most menial to the most demanding. Success is attained by the achievement of goals as a company.
  • Individuals, on the other hand, keep score by their own success or failure. By setting individual goals, an employer can give the individual his own opportunity to climb up or down the company ladder. The employer will know the strong, goal-oriented workers and he will know the weak links of his organization.
  • A winning organization has a bunch of dedicated individuals working as a team to achieve goals, no matter how big or small.
2. Is your company offensive minded or do you play defense?
  • I have always thought playing offense was more fun. Following are some examples of playing offense in the beverage business: a beverage company getting the distribution rights and trying to sell any product in the market before the competition, using a proactive marketing style with pricing and merchandising, borrowing money to buy new territories and equipment, and trying new technologies to save time and money. The favorite quote of an offensive minded beverage company, “It costs money to make money.” These guys are the dreamers. Beverage companies love for you to play offense. They would much rather you spend money than make it.
  • Even though offense is more fun, defense has its proponents. Playing defense wins championships, or as far as they’re concerned, makes money. The defender concentrates on taking care of the products and the business relationships that he already has, the defender has little to no debt, the defender doesn’t try to change something that has stood the test of time, the defender builds his respective marketplace and doesn’t chase new territories. The defenders are guardians of an era in the beverage business of days gone by. I love the nostalgia that comes with conversations with these people. Their favorite quote, “If it ain’t broke don’t fix it.”
3. How do you express yourself?
  • Do you love attention, crave the drama, or quietly go about your day-to-day responsibilities. We have to understand and appreciate that we are all local personalities. Retailers, consumers, community leaders, politicians, all love (and hate) to see us. The way that you present yourself to the public has a far-reaching effect on your customers, who just so happen to be your neighbors. As a beer distributor, I have struggled all my life on where people draw the line in social situations. I have felt out of place in church, but I love and cherish God. I have had to contend with ill-timed comments and complaints at school, my kid’s activities, in a restaurant having dinner with family, in bed at eleven o’clock at night. The list could go on forever. I also am expected to be a certain party animal (this has gotten me into trouble on numerous occasions, though not with the law). In all of my social engagements, I have always taken the aw-shucks attitude and gone about my business. This has worked well for me in the past as a beer distributor and a good neighbor. The way that you present yourself to the public helps your business by more ways than you think. If someone doesn’t like you, they will not buy from you.
4. Do you play it safe or do you take chances?
  • There comes a time when all companies choose the safe route or “go all out.” I equate taking chances to spending money. Maintaining a balance of safety and risk is the only way the insure a healthy growth of your business. The choices you make everyday determine if you are winning or losing.
5. Do you train, practice, and prepare?
  • Training gives a sense of knowledge and know how to your employees. Practice instills a predisposition in their attitudes on how to win. Preparedness gives them the tools to succeed.
6. Is there a fierce, competitive rival?
  • The number one way to understand ones business is to understand ones competition. A fierce, competitive spirit is the major underlying component that drives our capitalist society. A good competitive environment makes for stronger businesses in our markets. No competition will lead to lethargy.
7. Is success rewarded?
  • Successful players are always paid well. In the beverage business we have to reward successful and productive employees in order to keep them. Employees must be given goals, must be communicated with on where they stand, must be given the tools to succeed, and must be compensated accordingly. I use the survival of the fittest technique: give the employee every reason to excel in his environment and if he can’t, cut your loses and move on. So, you can say that success should be rewarded and failure won’t be tolerated.
8. Are there to many rules and regulations?
  • This is the hardest part of the beverage business for me. As a beer distributor, there are many restrictions on us as businesspeople. As the three-tier system affords some protection, it also takes away creativity. Brewers can’t be distributors, distributors can’t be brewers, and retailers can’t be brewers or distributors. Vertically integrated the beer business will probably never be. This is why we must constantly examine the ways that our businesses are conducted. The ever-evolving wholesaler that legally, and I do mean legally, manipulates the system will grow stronger. I would compare it to NASCAR. Coming up with ingenious slotting fees and CMA programs that aren’t too costly will benefit. Providing a cheaper type of good service to the retailer would be nice. Simplifying all the reporting the beverage companies require on a daily basis would be magnificent, we are all suffocating under the load of paper. Contracts written to give brand ownership, kind of like brand real estate, in our territories. I will keep adding to this list.
9. Are the boundaries getting cloudy?
  • Everyday I get communication from other wholesalers about who is buying who, beverage companies and wholesalers squabbling about this and that, deals being made behind other’s backs. It’s just beverage politics. I compare this to two little old ladies out by the picket fence in the backyard talking about everyone in the neighborhood. We are all gossip mongers, we love to get all information good or bad. The only way to stay on top is to be approachable and attentive with all suppliers and customers.
10. Do you keep score?
  • Do you keep score? I mean really keep score. It starts with the balance sheet and ends with a salesman’s distribution on one certain package in the smallest account. It takes into effect the average dollar sale for every case of product you carry. Are you weighed down with expenses, salaries, and fixed costs. Do you know your profitability broken down by route? Do you build goals for the sales force that are tracked and the results are communicated to them effectively? Have you explored efficiencies in routing and warehouse labor. There are many ways to keep score in the business world and keeping score will definitely give you a good idea of how your company is doing. I will guarantee that you will learn some valuable information about the business and your employees.
These are just a few of the key elements that pertain to beverage companies just as they pertain to your favorite sports. I hope they will help you in your decisions and make your work in the beverage business a little more enjoyable. If you can make your business almost as fun as your leisure, well that's the American dream isn't it?

Friday, November 03, 2006

Consolidation.... Good, Bad, and Ugly for the Beverage Industry.

Consolidation.... Good, Bad, and Ugly for the Beverage Industry.
I hear about beverage companies buying out smaller wholesalers on a daily basis. I think we are in the beginning stages of seeing the effects that this is having on many wholesalers, especially beer wholesalers. A lot of times I think egos are to blame with large wholesalers wanting to outdo other large counterparts. The small wholesalers get caught in a game of "beverage politics" and usually are forced to sell out, even though the small wholesaler may be doing a good job. One good thing is that these businesses are trading at high "blue sky" levels, so these small wholesalers aren't neccessarily "put out on the street". Anyway, the following are some anecdotes I have heard in industry circles, starting with the good:

  • I have heard of Miller/Coors wholesalers receiving offers in the plus $8/case range. For some Corona wholesalers, a whopping $35/case. A/B distributors in the $10 to $12/case range. These multiples were based on 24/12 equivalents for sales over a 12 month period.
  • Larger wholesalers mean less expenses for breweries on POS, travel, incentives, paperwork, training, meetings, mailings, or nearly everything the brewery does. It doesn't take a rocket scientist to wonder who has really been behind consolidation.
  • We are starting to see new, Mega-wholesalers that won't be bullied into distributing one line of beverages. Share of mind is really for the birds. I am a beer wholesaler first, but I still need energy drinks, soft drinks, water, and cups to survive. Heck, I've tried everything once---beef jerky, potato chips, peanuts, etc. Very soon we will see wholesalers that have A/B, Miller, Coors, RedBull, Vitaminwater, Jack Daniels, Smirnoff Vodka, Gallo wines, RC, Seven-Up, Fiji water, and even some snack foods all under one roof. These companies will be virtual beverage monopolies in their respective territories. These are the distributors that will make money.
  • The larger a wholesaler is the more control he/she has over his/her own destiny.
And now the bad:
  • Once another wholesaler is acquired, it is difficult for the company to operate with the extra debt especially if the market is not growing at a reasonable rate. With interest rates rising it will be even more difficult to service this debt.
  • Salaries are growing. Keeping key personnel is very expensive. Training these employees is time consuming and costs a small fortune. The work is so demanding and exhaustive that many supervisors, managers, and delivery drivers are leaving for jobs that pay better with less labor and time.
  • Beverage companies have taken most of the margins in their products for themselves while taking most of the margins out for the wholeasler. 70/30 co-op on price increases leaves the beverage company with the greater part of the increase. Have you ever had an FOB reduction and got to keep your regular front line price? No, you are losing margin percentages every year.
  • Once consolidated into a multi-brand house, beverage companies expect better service and attention to their brands. Its just not going to happen. A lot of very good brands get lost in the shuffle. More brands mean more duties for salesmen, more in training, more in salaries, and more in attention to details. Our best salesmen seem to get burned out quicker because of all the "extras". We can have sales meetings all day and my guys are still confused.
  • Retailers will never be satisfied. I don't care what anyone says, a retailer will always expect more out of its vendors. It is a fact of life. It makes the retailer stronger. It is good business sense on the part of the retailer. And it is very expensive for the distributor.
Don't forget about the ugly:
  • Fuel prices are soaring. I think its ironic when we think that $1.99 unleaded is cheap, this is exactly what the oil companies want. And how in the world is diesel more expensive than unleaded?
  • Health insurance, workman's comp, life insurance, corporate umbrella's---my favorite part of doing business. Abuses have led to outrageous claims. No end in site of spiraling health care costs. Get used to it insurance costs will never go down.
  • Freight rates are rising. I love to pay fuel surcharges that have gone up even when the price of fuel goes down. Also, I've heard of breweries giving freight allowances to certain distributors, while leaving others out in the cold. Doesn't that smell.
  • Oh yeah--- refrigeration, temperature controlled warehouses, truck and car leases, psuedo-marketing fund charges on certain brands (that is one of my favorites), the beloved 50/50 co-op on everything, sign machines, constantly changing and evolving online business portals, 100 emails per day that require "immediate attention", shrinkage that never seems to go away, employees that are last to show up for work on Monday morning and first to complain about their check on Friday. Did I leave anything out?

Thursday, November 02, 2006

Welcome to the world of wholesale beverage distributors. In the posts that follow daily, I will help give insight to anyone that enjoys the sharing of our knowledge of the beverage business. I hope to help promote the following:

  • New products for immediate distribution with contact information, proposed pricing, and my thoughts on if the product will be a cash cow or a dog.
  • News and gossip within the beverage business.
  • My thoughts about the strategies and trends of the different products and companies that compete in the beverage business.
  • Just about anything that pertains to the buying and selling of beverages.