Call it a trend, if you like. As same-market consolidations dry up, the next trend could be more wine & spirits houses buying beer distributorships, just has Glazer’s has done here in Texas. It now owns major-brand beer distributorships in El Paso, Waco, Longview, and Western Iowa.
THE NEXT POSSIBLE DEAL. BBD has learned that Valley Beverage in McAllen, a big 5 mil case Miller/Coors distributor in South Texas owned by the Runnels family, is in the process of striking a deal with Glazer’s, the multi-state beer, wine, and spirits distributor based in Dallas, according to sources.
That far south Texas market has been beleaguered in recent times, with the one-two punch of below-premium brands taking share (especially Natty Light) and Miller/Coors trends getting hit by the red-n-whites.
IS GLAZER’S GOOD? A few beer distributors grumbled to BBD about a W&S house getting so heavy into beer (Glazer’s is expected to sell 15 mil cases of beer next year, including partial ownership companies). But in reality, a big multi-state company like Glazer’s adds another brewery-approvable cash pool for deals, typically driving company values up.
OLD MYTHS. The historical argument goes that W&S houses don’t do beer well. They can’t do draft, they don’t understand the low margin beer business, and they don’t cover the entire market, particularly c-stores. Honestly, I’m not so sure that dog hunts anymore.
The old way: A wine & spirits distributor would add a beer brand, like a low-share micro/craft or an import, and throw it on the wine trucks for delivery to typical wine and spirits accounts. Draft execution and maintenance was spotty, market penetration was low, and their huge number of SKUs meant their salesmen concentrated on high margin wine and spirits, leaving the beer brands languishing.
The new way: Now it’s different. If Glazer’s has high share brands in a market, it operates a separate sales force for the beer brands while still squeezing the synergies out of combining warehouse space. They’ve gotten their hands around draft execution from what I’ve been told, and they cover the entire market. The beer actually helps them ratchet up channel distribution for their wine, rather than wine and spirits dragging down beer distribution. The downside, of course, is that the lines between beer, wine, and spirits continue to blur.
COMMENTARY: THE PLAYSTATION FACTOR. The recent lawsuit against Coors and Heineken, alleging that they engage in underage marketing practices, can be at least partially attributable to the Playstation Factor. This is the widely held belief by aging white bearded politicians, judges, and plastic surgeons with kids, that the only people who are interested in playing video games are children. They appear completely unaware, possibly because they don’t hang out after work with many 25-year-olds, that there is a huge sub-culture of gamers out there, and most are over 21. [We have an employee at our building who is 35 years old, makes $20k a year, and has both Playstation and X-Box and every game imaginable. He also buys a case of Bud Light a week].
Recall the rage of a Senator earlier this year when Beer Institute president Jeff Becker suggested that adults actually do play video games (“Don’t insult my intelligence!” he shouted, unaware that his intelligence was faulty). It is not a coincidence that Heineken and Coors-owned Zima had TV ads showing young adults playing games, which “proved” to these white-beards that they were marketing to the underage, and subsequently both companies are being sued. Note to brewers: you’d better lay off the X-Box in ads until the white-beards catch up on their cultural cues.MTD Sell Day: 9 … Sell Days This Month: 22 … Sell Days This Month Last Year: 21
YTD Over/Under Sell Days: -1 .. This Month Ends on a: Wed .. Last Year This Month Ended on a: Tue.
