Crown Imports president Bill Hacker and Heineken USA president Don Blaustein urged distributors to fight back against Anheuser-Busch InBev and MillerCoors.
Many wholesalers are feeling caught in the middle as mega-breweries consolidate their distribution network to cut costs and larger wholesalers are buying smaller businesses. In addition, although specifics aren’t clear to me, A-B and MillerCoors appear to be working with retailers directly on the placement of their beers, eliminating wholesalers from the discussion.
After MillerCoors recently ended partnerships with at least 10 Ohio wholesalers, two filed lawsuits for illegal termination of their franchise agreements. According to Beer Business Daily, Anheuser-Busch has said it will uphold its distribution contracts once the InBev deal is finalized, but many wholesalers are leery of InBev’s reputation for implementing drastic cost-cutting measures.
Complicating matters further, A-B has been doling out exclusivity bonuses and incentives to distributors — as much as two cents per case of beer sold.
William Brand at What's on Tap quoted Jack Joyce —founder of Rogue Brewing of Oregon— as saying:
It’s a mess out there. The Anheuser-Busch, Coors/Miller alliances? Let’s just say this has been a well-attended session.
It's the law of unintended consequences as mergers and buyouts —such as InBev with Anheuser-Busch, SABMiller with Coors, or Pyramid with Magic Hat, Widmer with Redhook— conflict with existing networks and agreements.
But it's not only the breweries dancing the merger mambo. The distributors themselves have been accelerating their acquisitions in the last few years.
One such is Reyes Holdings. From Forbes.com:
Reyes Holdings distributes food and beverage products throughout North, Central and South America. The company's beer operations in California, Illinois, Virginia, and Washington D.C. comprise the largest beer distribution system in the United States [as of 2007].
Nationwide, Reyes sold the equivalent of 45.4 million cases of beer. Its boxes —its preferred term for beer brands— include SABMiller-Coors, Corona, Boston Beer, and Sierra Nevada. At 36.7 million cases, the next largest beer wholesaler is Ben E. Smith of Dallas, Texas, principally an Anheuser-Busch wholesaler. [Figures from BeverageWorld.com.]
In Maryland, Washington, D.C., and northern Virginia, Reyes' wholly-owned distributorship is Premium Distributing.
Wholesalers —and many breweries— determine their sales based on case equivalents, known as CEs. Thus their sales figures include keg sales but as converted to CEs. A standard keg of 15.5 gallons yields approximately 6.85 CEs. (A barrel of beer —31 gallons— yields 13.7 CEs.)
I was alerted to the NABW convention posts by a Twitter post at beernews.org.
Caveat: I work for Select Wines, a wine and beer wholesaler in northern Virginia.