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.

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Freight Allowances and Fuel Surcharges for Beverage Distributors

Freight Allowance or Fuel Surcharge? I find these terms going through my head twenty-four hours a day. A freight allowance is usually passed down to beverage distributors from their suppliers to alleviate the financial burden of high freight rates. Freight Allowances are also used to equalize FOB’s for beverage distributors located long distances from where the products are produced and shipped. A fuel surcharge is an incremental charge added to the total invoice from a beverage distributor to a retail establishment. If your company is not receiving freight allowances or passing on a fuel surcharge to your customers, you need to ask yourself some serious questions.

Freight Allowances

Many beverage distributors receive freight allowances from their suppliers. If you are not receiving them, you need to demand an allowance from your suppliers. I have heard and seen instances of beverage distributors in California, Texas, and Florida receiving substantial freight allowances from many well-known suppliers. If your suppliers are doing this for one distributor, they should be doing it for all.

Fuel Surcharges

Some distributors, including myself, have added $1.00 and $2.00 fuel surcharges to retail invoices. There has been some backlash from the suppliers and major chains, but overall many retailers have come to expect a fuel surcharge. I am considering changing my surcharge to a percentage of the total invoice. It will probably be 2% to 2.5% of the total invoice cost.

With rising diesel and gasoline costs to beverage distributors, make sure you start asking for freight allowances and adding fuel surcharges now. Fuel for our trucks will never be cheaper than it is now. And that causes many sleepless nights for me.

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Calculating Gross Profit per Case

An excellent, straightforward reference for checking the health of your beverage business is calculating your gross profit per case. Many route accounting systems have report functions that will give you an estimate of this figure, but route accounting systems don't take into consideration all of the outside influences; such as samples, free cases, breakage, discounts, promotions, or theft. I use a simple spreadsheet program that will give you the exact figure once you have entered the neccessary sales information. At the end of the month, I enter my individual case sales, gross dollars by individual case, any promotional dollars and then, in a flash, I get my figure. It stands at $4.65 a case at present, which is up substantially from three years ago, when it was a stagnant $3.87. In fact, my margins have also increased a nice 3 percentage points to 26.4%.

Analyzing your gross profit per case will undeniably impact your margins and profits in a positive manner. This simple report will also give you needed guidance in reducing unneccessary discounts, rationalization or elimination of unprofitable SKU's, monthly forecasting and ordering, and a wealth of data about your portfolio.

This program is built using simple excel formulas that you can develop very easily. If you want an example of mine, you can download it here.

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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.

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Around the USA with Beer Distributors....

I've found some interesting articles from around the USA written about the most popular people in town, local employees of beer distributors....

Salesman from a Minnesota Budweiser Distributor

Alabama Miller Distributor

Montana Budweiser Distributor


I hope you enjoy these interesting articles about beer distributors around the USA. I will bring you more later.

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