Wholesaler Best Practices During Times of Crisis
This is an important issue of BBD, particularly if you are a distributor. These are extraordinary times for the beer business, but if we plan well and make strategic moves, the beer industry as a whole can emerge from this horrible crisis as strong — or stronger — than before.
Yes, we all know about using on-premise reps to help with off-premise selling and merchandising. But now what? Even the off-premise is stalling. Well, there’s another great way to utilize those on-premise reps, and several more ideas to stay strong. Keep reading.
I had the opportunity to speak with my old colleague Joe Verno, formerly of Denver Management many moons ago, now with Verno Consulting along with his son Wes Verno. Joe and Wes were kind enough to share their observations and recommendations of what wholesalers should be doing right now.
GOV. BAILOUT. If you qualify, and if you don’t lay off anybody until June, you may want to look into the federal government’s Payroll Protection loan program. Says Joe: Wholesalers I speak to are “going to take advantage of the government bail-out and apply for the small business loan in order to keep their people. Well, one of the qualifications is to keep your people employed and not lay anybody off and keep their pay whole and also pay their benefits. So a number of wholesalers I spoke to are applying for those loans as we speak, knowing that if they go through this and those loans will turn into grants. So some wholesalers based on that will choose not to lay off people.”
THE FOUR DAY WORK WEEK. But….. ” Other wholesalers are already taking action. They’ve gone to four day work weeks, where everybody works a four day work week, takes a 20% pay cut and they work different days of the week. The wholesaler’s still operating five days, and that seems to be one of the more popular things that we see talking to wholesalers.”
CUT SKUs. As Joe has been saying for years, “SKUs add complexity and costs to your business.” Wes said that he knows of one wholesaler who aggressively “cut 400 or 500 SKUs two weeks ago, and just said, ‘Hey, we’re not ordering more of these.’ And then they fire sold just about every single one of them just to get it off the books, get it out of the warehouse. So that they didn’t have to worry about it for the next two, three, four months, whatever it may be. Then what they told their suppliers essentially is we’ll revisit the portfolio when this is all said and done and start over essentially outside of four flagships.”
CALL YOUR KEY ACCOUNTS. Key accounts, particularly on-premise accounts, need to hear from you right now. And a simple phone call or even a text or email goes a long way. Says Joe: “I talked to a number of owners and GMs who actually got on the phone calling their key accounts… just letting them know that they’re there, and there’s some compassion there and they believe that the clients are glad to hear from them. That’s going to pay dividends I think when this thing picks up. I mean, I’m a retailer and I have two or three suppliers and one’s paying attention to me even if he can’t come out or she can’t come out to give me a call and actually give me some love and actually find out what’s going on with me is going to pay dividends I think when this thing picks back up.” I couldn’t agree more. Reach out to your struggling accounts.
NOW IS THE TIME TO PUSH ONLINE ORDERING. Tel-Sell is so 1990s. It is time for the beer industry to man-up and do what the liquor guys did a long time ago, and push your accounts to order beer online. “We’ve heard this from probably four or five wholesalers, they’re using their on-premise people to push online ordering. Harry, when we go around the country and we work all over the country — just this year alone, I’ve probably been in 10 or 12 states working with clients — no one’s picked up any traction with online ordering.
“We know [of only] three or four wholesalers that have hundreds, if not thousands of accounts on online ordering. We don’t know anybody else who’s got any traction more than 50 or 100 or 200 accounts which is really nothing in the grand scheme of things.
“With the social distancing and no one wanting to be in contact with each other and just the whole situation that we’re in, we have a few clients that are out there pushing heavy on online ordering and they’re getting hundreds of accounts to sign up for online ordering either through VIP or Encompass or eoStar or whatever. And so they’re taking advantage of it. They’re doing it for the sake of their own people. But at the same time, they’re thinking about when they come out of this those accounts will already be set up for the online ordering and it would just be more efficient.”
ONLINE ORDERING NEEDS TO BE MANDATED. I asked Joe why beer distributors are so behind the wine & liquor wholesalers on online ordering. The answer is simple: beer distributors are too nice.
“The people that we know that are successful didn’t give the retailer a choice. They just said as of this day, if you want beer from us, you will have to order it online. The liquor companies did that. They didn’t give them a choice. See, the beer industry is still soft-peddling and trying to sell it one at a time, hand sell it and by the time you sell your hundredth account onto online ordering, the first 10 that you sold have already switched jobs and the online ordering isn’t happening in those accounts anyway.
“So the liquor industry mandated it where the beer industry is trying to sell it one at a time and it just doesn’t work. It’s never worked. We’ve never seen it work. The only places that we’ve seen it work is where wholesalers have mandated and given the retailer a certain date that says as of this date you must be online.”
I asked if it’s just moving tel-sell over to online. Yes, says Joe, those are the easy ones, but there’s more.
“It’s the heart of it. A lot of people are going full bore over this, the whole on-premise even the strongest accounts required to go on online.
“Our client in Kentucky … has 100% of their on-premise accounts on-premise. Online ordering and their sales are up, and from what they’re telling me, retailers are actually shopping their portfolio better than when they were dealing with a salesman because they’re doing it on their timing. They’re looking at the new products. There are other wholesalers in the Southeast, MillerCoors wholesalers that we know that have, again through the mandate to make that happen. So again, it’s a best practice for this time.”
PUSH ACCOUNTS ONTO EFT (FINTECH) PAYMENTS. “The other thing that we’re seeing is … push heavy for the EFT because this is a perfect situation,” says Joe. “No one wants to handle checks or cash … and EFT payments speeds up the driver. You haven’t got to worry about bad checks and things like that as much. So why not push for those things for the same reasons and it actually fits right into what the whole world’s doing. But the wholesale has been reluctant or slow to get all of their customers on EFT. So why not take advantage of that now?”
COMBINE THE PRE-SALESMAN AND MERCHANDISER POSITION INTO A SINGLE HYBRID POSITION. This is perhaps the most revolutionary idea yet the most cost-effective. Explains Joe: “The average time in front of a retailer is four minutes at a grocery store. The sales rep’s in there for two hours. We’re paying $70,000 a year for four minutes. And the other 116 minutes, we could be paying $40,000 a year.”
Adds Wes: “[The sales rep’s] got three or four accounts and he goes to every single one of those accounts every day. Today’s he’s writing the order, tomorrow he’s putting away the delivery, and the next day he’s filling the shelves, and the next day he’s writing the order, and the next day he’s putting away the delivery. Kind of a flashback in time a little bit. But fewer accounts per rep but a single point of accountability and it’s great. The accounts love it. You don’t have merchandising to deal with. Meanwhile, to Joe’s point, you’re not overpaying for a pretty high labor function.
“It’s a better selling system than a salesman who’s just trying to blow and go through as many accounts as possible.”
VID PODCAST: It’s worth a watch because I couldn’t cover it all, and especially to see Wes’ new stache. Take a look here >>
TRULY LAUNCHES NEW DIGITAL CAMPAIGN, “YOUR BIRTHDAY ISN’T CANCELED”
When COVID-19 started to hit the U.S. hard and lawmakers started closing down the on-premise, Boston Beer had a few key spots just about to launch for some of its top brands.
“We were ready with three big campaigns that literally were launching within that week that it hit” in the states, Boston Beer CMO Lesya Lysyj told BBD.
But “our brands in general are lighthearted and fun, and it’s just not the right moment” for that, she said.
In fact, “we were about to launch a very joyous campaign” for Truly, which “we are holding,” said Lesya. “We’re just going to find the right time to do it.”
In the meantime, they’ll continue running the bright-colored product spots they ran during the Super Bowl.
And they’ve just developed a new campaign that seems spot on in this age of quarantine.
They’re launching a new digital/social Truly program this week: “Your Birthday Isn’t Canceled.” The project went from concept to “anything produced” in less than 10 days.
Basically: “If your birthday happens while we’re quarantined, we’ll send you a gift certificate” to buy Truly for yourself and your friends, says Lesya.
The campaign consists of a website landing page, where birthday people are prompted to enter their own emails as well as those of five friends. After, “Truly will send them Amex gift cards for the cost of a 12-pack of Truly each.”
Boston will also donate to the National Restaurant Association’s Restaurant Employee Relief Fund. That’s because, on average, “people spend $300 on their birthdays with their friends in restaurants and bars.
“That’s significant,” Lesya said. “We know bars and restaurants are hurting – and this is one of the times you would have spent that money (there). So we’re trying to help with that also.”
For starters, they’re kicking off the campaign with “an initial donation of $100,000 to the Restaurant Employee Relief Fund,” the company shared.
For every “virtual party” tagged with #StayHomeAndSeltzer, they’ll donate another $300.
REDIRECTING MARKETING INVESTMENTS. Indeed, much of the investment that would have gone to their regular media, which is now on hold, is now being redirected toward Boston’s restaurant relief programs.
CBD readers know that Boston has launched their (Sam Adams specific) Restaurant Strong campaign nationally on Friday, which they’ve put at least $2 million behind to date.
“We put all our media behind that campaign… the media that was supposed to run right now across all the brands,” Lesya said. “That was something we felt was important to do.
“We pulled the media across all the brands for this next month or so, when we would have been launching. Some we pushed out, but a lot we put behind Restaurant Strong. This is the message, as a company, we felt was the most important one.”
TRULY STILL TOPS. We shared stats weeks ago that Truly saw its biggest week ever in mid-March, up more than 270% in depletions. We wondered if it had yet come down.
“We’re seeing that that stock up phase seems to have been waning a little, but the business is still – like all our business, it’s still very strong,” said Lesya.
In fact, they just learned that Drizly’s top three sellers are now White Claw, Truly and then Bud Light.
“So I think as especially millennials are stuck at home – they’re much more apt to order online,” Lesya said. “Our business is exploding there. But in general, it continues to do extremely well.”
Part of that has to do with their new lemonade line, which offers something to the sweeter-toothed consumer. “Trial repeat numbers are very strong” for that brand,” which just launched this year.
But the Truly franchise also has a different, more diverse consumer than White Claw and Bud Light Seltzer, Lesya says.
“We have a higher income consumer, we have a more diverse consumer, and we source more from wine and spirits.”
The actual stats: “54% of our consumers have over $100,000 in income; White Claw has 42%. … We have 20% non-white consumers; they have 13%. … We’re sourcing 51% of our consumers from wine and spirits; they’re sourcing 39%.”
SAM ADAMS GETTING A BUMP, TOO. But as we’ve seen legacy brands get a boost from COVID-era pantry loading due to their tried-and-true nature, we wondered if Boston Lager and Sam seasonals were enjoying any such growth.
Indeed, Boston shared that Sam Adams is up more than 25% in the off premise, the latest 4 weeks ending 3/29 (in IRI MULC).
In fact, Sam Adams has two brands in the top 15 growth sector in the latest week: Sam Adams Boston Lager and Sam Seasonal.
Watch the whole conversation with Lesya here.
A HANDFUL OF A-B’s CRAFT PACKAGED PRODUCTS RECEIVE A NEW TEMPORARY SHELF LIFE
Late last month, Anheuser-Busch sent notice to wholesalers that they would temporarily extend the shelf life of all their core and value beer in the wake of COVID-19 [see BBD 03-24-2020].
Now, a couple weeks later they’re taking similar measures to some of their craft products.
Marcelo “Mika” Michaelis, the president of A-B’s Brewers Collective, informed wholesalers yesterday that in order to remain true to their commitment to fresh and high-quality beers, they’re “taking some additional preparatory steps so that we can effectively protect our supply chain and maintain business continuity during this time.”
Those “additional steps” include, “temporarily extending the shelf lives of four packaged products in the Brewers Collective to 180 days.
- Elysian – Space Dust 120 days 180 days
- Goose Island – IPA 120 days 180 days
- Goose Island – Next Coast 150 days 180 days
- Karbach – Crawford Bock 120 days 180 days
Note that this temporary extension is for “packaged product only” and there “will be no changes to draft beer.”
MOLSON COORS DONATES 154,000 CANS OF DRINKING WATER TO TRUCK DRIVERS
Molson Coors has donated a boatload of drinking water to truck drivers here in the states and up in Canada, “in an effort to help keep them safe by limiting the amount of stops they need to make for supplies during the COVID-19 pandemic,” reports the company’s Beer & Beyond blog.
All in the brewer donated 154,000 cans of fresh drinking water to truck drivers.
Around a third of that total (50,000 cans) went to “national trucking company, Werner Enterprises, for it to distribute across its national fleet from terminals in Florida, Georgia and Texas,” per report.
The rest (104,000 cans) were delivered to Molson Coors’ breweries in “Albany, Ga., Elkton, Va., Fort Worth, Texas, Golden, Colo., Milwaukee, Montreal and Toronto where they’ll be given to drivers from more than 100 trucking companies who arrive for pick ups.”
Prior to this generous donation of drinking water to truck drivers, Molson Coors supplied the Salvation Army Intermountain Division in Denver with 50,000 cans of water late last month to help the organization and its relief efforts.
Of course, water isn’t the only thing Molson Coors is donating to help combat the COVID-19 crisis.
In another move to help keep truck drivers safe and on the road, the brewer recently supplied them “with food and drink, and clean, sanitized bathrooms to help them limit unnecessary stops and to ensure they’re safe during pickups,” per blog.
And don’t forget the brewer made a $1 million pledge to the United States Bartenders’ Guild late last month [see BBD 03-24-2020], as well as the launch of a new Miller Lite social campaign “encouraging others to join in and support the cause with a #VirtualTipJar.”
Harry, Jenn and Jordan
“The scientific nature of the ordinary man
Is to go on out and do the best you can.”
– John Prine
———- Sell Day Calendar ———-
Today’s Sell Day: 6
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Thurs.
This month last year ended on a: Tues.
YTD sell days Over/Under: +1