Beverage Trends for 2009

I am going to pull out my crystal ball and give you a quick glimpse of the top ten events that will occur in our beloved beverage industry in 2009 and beyond. In light of recent trends in our economy and the official announcement of an actual recession (a few months late I might add), next year will not be as bad as everyone thinks. There will actually be a few highs to go along with the multitude of lows:

1. AB/Inbev will still be King. Best products, image, quality, focus.

2. Sales of Energy drinks will begin a long, though not steep, decline. The pipeline of new energy drinks will start to close and the entrenched players will began a war of attrition that will have many casualties.

3. Miller/Coors will precariously hold market share through the manipulation of its distributor network. I just love the term "independent business person." MCBC's conduct over the last few years has been disgraceful and unethical. Watch your back guys and don't forget to document everything.

4. Pepsi just keeps looking better and better to me.

5. Coke should have saved a few of those billion$.

6. We still want healthy alternatives to all this sugar. I find myself drinking more and more water instead of junk.

7. The big beverage companies will make just as much money in 2009.

8. Fuel will be reasonable (if you call $2.25 diesel reasonable) and insurance will not.

9. It will be tougher to make those debt payments if you're a beer distributor, though not because of lower sales. You'll sell more and make less. Your suppliers are going to squeeze every bit they can from you in the form of more expensive POS, fuel surcharges, dunnage increases, margins, marketing co-op, advertising. You name it, they're going to take it.

10. The hot selling flavors will be coconut, cocoa/chocolate, and blueberry.

Now that you know the future, get ready those business plans...2009 will be here before you know it. I hope everyone has a Merry Christmas and Happy New Year.

Add to: Digg | del.icio.us | Technorati | Yahoo | BlinkList | Spurl | reddit | Furl

Three Tier Contemplation

Everyday I hear someone in the Beverage Industry speak about the Three Tier System. In beverage terminology, the three tier system is the arrangement carved from the repeal of prohibition that sets legal boundaries between breweries, wholesalers, and retailers. Section 2 of the 21st Amendment to the Constitution of the United States gives the actual states authority to regulate the production, importation, distribution, retail, and consumption of alcohol beverages inside their own state lines. In most states, breweries can't own distributors, distributors can't own retail establishments, retailers can't own breweries, and so on. The restrictions imposed upon each tier are in place for reasons of control, such as taxation, consumption, and licensing.

Controls and restrictions on the beverage industry were set in motion by men of vision and moderation. They knew the excesses of pre-prohibition times all too well. Every corner saloon was owned, or tied to a brewery. This made the brewer a retailer. Therefore, it is my opinion that brewers' influence upon retailers was the fatal mistake that brought about prohibition. This influence over retailers is the reason why a "middleman" or distributor tier was created. Today, I see many instances of the breweries circumventing laws enacted to prevent the abuses of alcohol:

1.Suppliers never go empty handed into a sales presentation with a convenience or grocery store representative. It is common practice for them to give a gift when starting the meeting. Guess what...these retailers now have their hand out every time we see them.
2.Breweries giving away coupons to consumers. There are laws on giving away free or reduced price product.
3.Suppliers forcing distributors to host taste challenges in local bars. It is against the law in most states to buy a consumer a beer.
4.Breweries hiring sales forces that interact with consumers in stores and bars.
5.Breweries hosting websites that any teenager can gain access to.

Face it, the big brewers are trying to sidestep the wholesale tier. Wholesalers...never, ever think that brewers or retailers are your "partners". The 21st Amendment prevents this from happening. I love to see Brewery CEO's tout the praises of the three tier system. What a load of BS. It's painful to realize our business is more about politics than how hard you actually work.

Add to: Digg | del.icio.us | Technorati | Yahoo | BlinkList | Spurl | reddit | Furl

Miller Coors JV: Great Taste for the Brewery, Less Filing for the Distributor

Let's face it boys and girls, any happy thoughts you have about the joint venture between Miller Brewing Company and Coors Brewing Company you can forget them. The only positive outcomes of this merger will be for the breweries involved and the large mega-wholesalers. Believe me, this new company will become "Millerized". That means less margins, no supplier supplemented POS (thanks to a wonderful program called Service 2000), higher freight, and more bureaucracy. That also means the supposed worst nightmare for small to medium sized wholesalers....consolidation. I say supposed because many think of consolidation as bad. It's not as bad as many may think. Anyway, I think the Justice Department should scrutinize every detail of the propsed merger/joint venture because it is anti-competitive and many small family-owned businesses will be pushed (read shoved) out. I would welcome that "shove" because I believe the valuations for smaller beer distributorships are as high as they will ever be. Think about it, margins are going to shrink even more, fuel, insurance, and salaries are escalating out of control, and the breweries are going to get more and more "influence" over your affairs. Just remember, as it says on our invoices, you are an independent business person free to conduct business as you see fit. If you believe that, I'd be willing to bet you think Miller/Coors is going to lower FOB's.

Add to: Digg | del.icio.us | Technorati | Yahoo | BlinkList | Spurl | reddit | Furl

Miller Brewing Company’s new Anti – Man Laws

Let’s face it Miller Brewing Company has a problem with identity in its message to consumers. The underlying core of advertising is to find the distinctive traits of a product and promote its unique characteristics. That’s simple for most, not for Miller. Let me explain:

The wrong people are making the decisions for the direction of the company. Career longevity is not a word that can be used to describe Miller’s corporate sales force or advertising department. We even have a name to distinguish our Miller reps…Fast Larry. Some examples, “Why didn’t Fast Larry go out in the market today?” or “What did Fast Larry want on the phone?” We see a revolving door of Larry’s and I forget their names nowadays. Miller reps have become telemarketers with an in and out attitude. A quick call or a drive by the warehouse is what I get. This attitude will not sell more product, period. To increase sales and build product awareness you must learn the intricacies of the distributor’s business, understand market or territorial differences and habits, and build relationships with customers. I guess a short stint at Miller looks good on a resume. Let me clarify that I am not talking about the people that actually make the beer and work in the breweries. The brewery employees that work in Miller’s numerous plants are the backbone of the company. The longtime, career brewery employees should make the decisions or have a say in initiatives that comprise or affect the brewery’s core values and beliefs in regard to the message of the product in advertising. Finally, the Miller Distributors who have a long term, vested interest in Miller and the message that Miller delivers to the consumer should be allowed to voice their opinions about the advertising. I mean, what distributor in his right mind would have shelved "Taste great, Less filling" for "It's it and that's that" or the "Dick" fiasco.

As far as the direction of the new advertising of Miller Lite, I think we’ve missed badly with the More Taste League. Though I personally like his acting, John C. McGinley can’t stand up to manly men George Clooney's Bud voiceover commercials and Sam Elliot’s Coors voiceovers. When I think of McGinley, I think of his roles in Platoon, Office Space, and Wild Hogs. These were great character roles, but not ones that should be associated with Miller Lite, especially after Man Laws. Also, watch for A/B to start gaining share again. The new Bud Light creative "Dude" is hilarious and delivers its message simply, with one word that resonates perfectly in the lifestyle of our faithful, beercentric consumers.

Look for another downward spiral in Miller sales while the marketing and adverising geniuses search for a "new" identity and hit and miss philosphy of provoking Anheuser-Busch. Why not use the time-tested justification of the virtues of the product....Miller Lite has less calories than regular beer and it tastes wonderful. The distributors and brewers will make sure the product is in the hands of the consumer and the quality is exceptional.

Add to: Digg | del.icio.us | Technorati | Yahoo | BlinkList | Spurl | reddit | Furl

Adios Norman Adami, Thanks for the Cigarette...

Let's face it. Norman Adami was good for Miller Brewing Company. Accessable and full of energy his tenure marked a complete turnaround for the brewery. When he got there in 2003, Miller was a joke. Miller was a revolving door of white collar MBA's, purveyors of wholesale changes in a world that is dominated by blue collar beliefs. Many men before him tried to turn the company's fortunes around and all of them failed. Now they didn't fail as miserably as Jack McDonough did, but none really garnished much success. I remember having to abruptly go to Milwaukee in the late 90's to sign a new distributor agreement (under duress, of course) and overhearing some older distributors talk about his new Miller Red and where he could put it. That was too funny. I also remember hearing accusations about McDonough receiving two paychecks...one from Milwaukee and another from St. Louis. Oh, the good ole' days.

Anyway, thanks Norman. You have been the only decent CEO at Miller since Lenny Goldstein was running the show. The best I can say is that you did what you said you were going to do and your distributor network followed your lead.

Now for the next guys in line for the CEO at Miller or anyone that is in management at Miller and conducts business with Distributors, here is the secret for success....the business is built by RELATIONSHIPS.

Add to: Digg | del.icio.us | Technorati | Yahoo | BlinkList | Spurl | reddit | Furl