Dear Client:
BBD has dedicated a lot of keystrokes lately to industry-wide out-of-stocks, including big soft drink companies. But one giant producer has been conspicuously absent from the conversation: Anheuser-Busch.
In fact, while almost every large producer has struggled maintaining core package supplies amid the tidal wave of demand at stores, A-B distribs have written in, praising the brewer for “very few out-of-stocks.”
Their exposure in China perhaps gave them an early look into what could come. Andy McCain of huge red distributor Hensley in Arizona told BBD, “AB has known about the looming can shortage months before COVID hit, and in fact Michel [Doukeris, North America CEO] talked about the issue at SAMCOM in January. The emphasis of Michel’s comments were that by working on this problem now, we hope to avoid an issue during the summer and they have done just that.”
Later, Andy added, “AB wholesalers have a regular cadence of meetings/calls with AB to discuss inventory. The frequency of these meetings was accelerated in March when COVID hit and in fact, many wholesalers talk to their regional logistic contacts on a daily basis.”
BRENDAN WHITWORTH WALKS US THROUGH THE STRATEGY. Sales chief Brendan Whitworth gave BBD a peek behind the curtain on the supply strategy that’s helped them weather COVID.
He took a second to chat with BBD while momentarily parked on the tarmac in Illinois, the middle stop of an Oregon-Iowa-Illinois-Kentucky-South Carolina swing.
“Where it is safe, and where people feel comfortable, we haven’t hesitated to get out into the market and spend time with our wholesalers,” said Brendan.
“My week right now is one of several dedicated to market tours. Michel [Doukeris, CEO] has been out and about as well. We haven’t been sitting at our own houses, ‘just doing Zoom meetings,’” he said, referencing recent issues on wholesaler frustrations with suppliers.
“…Nor have the folks on the team. So I can speak on behalf of my sales organization, I’m really proud of how our team has been adapting and continuing to support our system.”
But we had to ask, pointedly: What’s their secret to staying in stock on everything from core packs, to 12 oz. cans (especially slims) that are in high demand?
Three things, he said: A super-juiced data and analytics program, attuned to industry outlook. Dialed-up supply chain cohesion with distributors. And hopped up logistics.
In fact, A-B put their data and analytics focus on steroids back at the start of 2018, when they revised their commercial strategy, around the time Michel took the helm.
The purpose? “To be able to look forward and understand where we thought the industry was going to go, and how it was going to go there,” said Brendan.
Even before COVID hit, he says, they were already more forecast-focused.
“Michel even got up on stage at SAMCOM and talked to our wholesalers about forecasting and our supply chain cohesion,” Brendan said. So they were already “positioning ourselves from a capacity standpoint to be able to accommodate” current demand.
Then COVID happened, and dialed all those efforts up to “a greater magnitude than it otherwise would have been.
“We definitely saw this as a major risk for the industry.” But actually, they’ve “worked well beyond 12 months” back to make sure procurement, supply, production, capacity and logistics team are well equipped to maintain supply.
“We knew it was going to be tight, and put a lot of things in place to be equipped for it.”
As a global company, their ability to see other markets was valuable. They used insights from China to “accelerate our level of preparation.”
“So we were able to see impacts and consumer behavior” very early. “That took our planning to the next level, in terms of our preparedness.”
They started daily checks on supply chain readiness back in January, Brendan says.
“So that’s really the planning process … all of that underpinned with a great degree of data and analytics.”
WORKING WITH WHOLESALERS AS ONE COHESIVE UNIT IS “PRETTY CRITICAL” Another key component to their supply chain readiness: the wholesaler end.
For “well over 2 years at this point, we have really tried to work closely with wholesalers around their forecasting processes,” along with A-B’s own, “and even our logistics fulfillment capabilities, based on our collective businesses.” Because “how we work with them as one cohesive unit is pretty critical.”
He says that measures like their freight benchmarking program, enacted at the start of last year, allows them to better “look across that supply chain.” And he thinks it’s proven to be beneficial: “Our overall supply chain footprint is much more optimized than it otherwise would have been,” he says.
The final prong of their supply readiness? A more robust field structure for logistics, wherein logistics regional VPs work alongside the sales team. They are “constantly in contact with our wholesalers making sure we are able to optimize, adjust, and close gaps,” on a daily and sometimes hourly basis.
HOW HAVE THEY NAVIGATED TIGHT SLIM/CANS? Everyone seems to be experiencing some issues procuring enough of those red-hot slim cans – or any 12 oz. cans, for that matter.
How is A-B doing it? Forecasting.
“We were well ahead of that curve,” says Brendan of package tightness.
“We like to be at much greater days of inventory … and we’re tight, but we’ve been able to accommodate [orders] and hope we’re going to be able to do that moving forward.”
NOT SHIFTING PRODUCTION FROM ANY BRANDS IN ANY “MEANINGFUL” WAY. Asked if A-B has had to shift any production away from smaller brands to keep core packs in stock, as some brewers have had to, Brendan said: not really.
“Not in a way that’s super meaningful,” anyway. Considering the industry’s “incredibly long tail,” A-B has been “very thoughtful about production cycles on those products. Every time there’s a changeover or a brewing cycle, there’s some inefficiency on throughput on lines,” he says. “But at this point in time it’s not overly impactful.” They’ll “continue to manage and adjust,” but won’t do what some competitors have done by “cutting pretty meaningful brands.”
HAS INNOVATION LIKE BUD LIGHT LEMONADE OR STELLA SOLSTICE BEEN THROTTLED? Has all their planned innovation run, even despite COVID retail disruptions?
“It’s all out in the market right now,” Brendan said. “And I think, the only thing we’ve asked our wholesalers to do is make sure they are on the ball on their forecasting. We take their forecast as major input.”
Even with that input, Bud Light Lemonade is running “a little low,” due to higher-than-forecasted demand.
Another innovation, the Peels Variety Pack, is also “a little bit tight,” because apparently they needed the system to be higher on forecasting levels.”
ALSO PROVIDING UNIQUE PACKS. He added that they’re “continuing to provide unique packs” as a solution as well.
“If a wholesaler feels like, we need to put more aluminum bottles in market, we’re happy to continue to provide those as well. Innovation hasn’t slowed down.”
HOPING THE SYSTEM HAS BEEN PLEASED. Amid the chaos that coronavirus has left in its wake, “I’d hope our system has been pleased and impressed with how we’ve been working with them,” Brendan said.
“And it goes back to us making sure we’re planning the business correctly: communicating with wholesalers correctly, and making sure we’re providing them the beer, the volume and the brands we both collectively decided we want to deliver on.
“So, I think we still have a sense of urgency. It’s a daily business and process,” but one that they’ve now been doing since early February. “Now it’s kinda a part of what we do.”
BOTTOM LINE. The bottom line is that A-B should come out of this summer stronger, if only by filling empty shelves.
MOLSON COORS NATIONAL DISTRIBUTOR COUNCIL CHAIRMAN SEES SIGNIFICANT DAILY OUT-OF-STOCKS, BUT BELIEVES MOST SUPPLIERS ARE “DOING ALL THEY CAN”
Man, did this week’s issues strike a chord. Particularly, the discourse on how well (or not) some suppliers are navigating coronavirus-era supply chain disturbances, communication, and product shortages.
One notable voice, Molson Coors’ chair of their National Distributor Council and president of Glazer’s Beer Phil Meacham, wrote to us late last night to offer up a little more perspective on the situation. After all, there is massive unemployment and scads of shuttered accounts — and yet, some industry players are still seeing growth.
Per request, we reprint Phil’s letter in full:
I have seen the numerous responses in your publication regarding the out of stock conditions that everyone is experiencing. We are also experiencing out of stocks from all of our major suppliers such that approx. 25% of our daily sales are out of stock. No one is happy about the situation, including our suppliers, as we all want to sell all we can. However, I take the position that transparent communication is the best means to inform the distributor….even if it is just to give us realistic updates that are not optimistic. Without open communication, each of us are left to come to our own conclusions. I would rather have communication of difficult situations than no communication, which is what some of our suppliers have decided to do. As it relates to chain, I am happy that our suppliers continue to push for ads and sales with our retail partners. This benefits us all as they are attempting to promote our industry, even if some of the items are ‘misguided’ or not in stock. I would rather take the heat than give the ad space to wine, spirits, or other items. Finally, if you told me that our on-premise (which makes up approx 20% of our total business) would be shut down for almost 3 months, that we would be sheltering in place for more than 2 months and that our total business would be up more than 6%, I would have said you were crazy. I will accept the out of stocks as I know our supplier partners are doing all they can to resolve the issues. Just as we like to say suppliers don’t understand ‘our world’, I don’t even pretend to know how to run a brewery and provide logistics for 400+ distributors. I like seeing the glass as half full rather than half empty. Here’s to selling all we can while providing safe jobs to our employees.
Phil Meacham
Chairman – MolsonCoors National Distributor Council
VIZZY SURPASSING MOLSON COORS’ EXPECTATIONS
Sending you into the weekend with some good news from Molson Coors…
The brewer’s big seltzer bet, Vizzy, which launched back in April, has “more than doubled expectations” over the past four weeks, according to the company citing Nielsen data.
In fact, the Vizzy Variety Pack is “now the number #3 new item that launched in 2020,” says the brewer. Plus, “data from a major national retailer shows that Vizzy VP has higher repeat rates than both Corona Seltzer and Bud Light Seltzer variety packs through Mid-May.”
NUMBER SIX SELTZER BRAND OVERALL. All in, Vizzy is already “the #6 Seltzer overall” and has cracked the top five in certain key markets, like Denver, where it ranks as the number four seltzer brand in the latest four weeks to June 13, per Nielsen data.
POSTSCRIPT: We’ve been hard on Molson Coors this week, as we should’ve given the input from reliable sources. But we do acknowledge that the issues are not due to negligence from rank and file workers. Our tweet from @beerbizdaily yesterday: “Making beer is hard. And it’s time-consuming. And even if you can make it, you have to put it into something, and cans and paperboard are hard to come by. I feel bad for @MolsonCoors production and logistics staff working overtime to get beer out. I tip my hat to you.” -Harry
Until Monday,
Harry, Jenn and Jordan
“Turbulence is life force. It is opportunity. Let’s love turbulence and use it for change.” – Ramsay Clark
———- Sell Day Calendar ———-
Today’s Sell Day: 20
Sell days this month: 22
Sell days this month last year: 20
This month ends on a: Tues.
This month last year ended on a: Fri.
YTD sell days Over/Under: +1
