Dear Client:

A-B is now announcing its own keg returns program for distributors.  

BBD readers know that, in the previous weeks, most large brewers have promised some type of credit/coverage for returned kegs (due to on-premise closures), with Molson Coors having promised to eat half the cost of kegs (and reimbursement for distributors decanting) while Constellation later announced they’d cover returned kegs at 70%, directing all logistics/decanting through MicroStar. 

Now, the largest brewer of them all outlines their plan.  The details: 

A-B OFFERS 50/50 SPLIT ON KEGS, WILL COVER RETURNS LOGISTICS. A-B sales chief Brendan Whitworth outlined the plan to BBD:

“We will be announcing a 50/50 split on all of draft.” 

Beyond the splits, “We’re going to be handling all of the costs and all of the logistics relative to the disposal of the kegs,” covering “the ‘reverse supply chain,'” as that’s been a bit of “a point of frustration for the wholesalers. There’s no need for them to deal with that, we’re going to handle all of that.” 

(Brendan stresses that the keg returns program is part of a multi-pronged approach to help their three-tier partners, especially the ailing on premise and its employees. They’re donating in excess of $2 million to local and regional organizations to help displaced bar and restaurant workers, including the US Bartenders Guild’s Bartender Emergency Assistance Program. Read more on that approach below.) 

ALSO: CENTS PER CASE COMMITMENTS CAN GO TOWARD THE DISTRIBUTORS’ HALF. “We have a cents-per-case commitment with our wholesalers as part of our annual joint business plans,” Brendan said. “Unlike other suppliers, we don’t sweep that off of invoice; that’s something we work with the wholesalers [on].”

And so they’ve decided that distributors can utilize that cents per case commitment for their half of the keg cost. 

How? “That’ll be a structured discussion with our commercial directors; but it’s a sizable annual commitment across the system, a sizable amount of dollars,” says Brendan.  

And those funds “can be applied to any on-premise specific packages — besides draft — that we have not been able to resell or redeploy.”  

WHY ANNOUNCE NOW? Some weren’t sure A-B would announce any such program, as it’s been weeks since their largest competitors have. 

“We didn’t want to ‘knee jerk’ [react] … we wanted to assess everything more broadly, and more strategically, on behalf of the channel. We wanted to put in as many mitigation plans as we could; and ultimately come with the announcement of the 50/50, plus fully handling costs and admin of inventory.” 

Indeed there are a “lot of different things we’re working with our system to mitigate, for both of us, the size of costs,” he said. “”We have been working very diligently on putting incremental promotions in the system so we can take our on premise bottle/packages out of the channel and into other channels.” 

It’s part of A-B’s holistic approach to aid the shuttered on-premise industry and ensure continuity in the existing business: 

“We wanted to make sure we addressed the broader issue – the health of the on-premise industry — in a way that is thoughtful, methodical and takes into consideration the near, medium and longer term. So we have been in active dialogue with several national associations to see how — with the capabilities, resources and reach we have — we can help galvanize all of the efforts on behalf of the channel, to make sure they benefit from any and all stimulus packages coming out.”

A-B has also been focusing on “making sure there is as much continuity as possible on the existing business,” he said. “We’ve put our brands against that, with Bud Light’s ‘Open for Takeout’ effort; Stella Artois [spotlighting HelpMainStreet.com‘s Tables for Tomorrow restaurant gift certificate program]; even our craft brands playing a role to make sure that where there’s business, we are an active partner and participant.” 

If you haven’t heard of Bud Light’s “Open For Take Out” portal, it’s a consumer resource that helps identify local restaurants and bars that are #OpenForTakeout. Check it out here. More on A-B craft entities efforts in CBD. 

More on A-B relief efforts and COVID-time considerations tomorrow. 

Until tomorrow,

Harry, Jenn and Jordan

“Nothing is as simple as we hope it will be.”

– Jim Horning

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