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BEER COCKTAIL: HOW WILL THE MOLSON COORS AND MILLER DEAL AFFECT YOU?
The announced combination of U.S. operations between Molson Coors and SABMiller is still being looked at by federal agencies, but the potential effects are already being discussed in the retailing community at large.
At stake: the potential for the consolidation of operations among the 40 percent of distribution houses who carry either Miller or Coors products, but not both.
With a combination in place, distributors would likely feel pressure from the new entity
to carry both sets of products. The two say they expect to realize up to $500 million in savings through the elimination of duplicate costs.
But it could also lead to distributor consolidation, as well: with houses getting either both sets of products to sell or neither one, there could be some trucks up for sale. One side-effect of the merger could also be the loss of some non-alcoholic brands, as truck space would go over to more beer instead of NAs.
What’s the ripple effect there? Potentially, the wipeout of smaller tea, water and energy brands, all of which have found their way onto beer trucks as marketers have sought alternative distribution methods. With less space available, there’s the possibility that only the strongest will survive.
Meanwhile, who is looking stronger than ever? Would you believe Coors Banquet? The full-calorie gold can actually showed sales increases last year – one of the few premium
beers to do so in the past few years. A strong retro-marketing push drove what the company called a “high single-digit” sales increase – and Anheuser Busch has planned a similar marketing effort of its own behind Bud, which it will call “The Great American Lager.”
EXECUTIVE MOVES
› Dean Foods Company has appointed Rick Zuroweste as Chief Marketing Officer, Dairy Group.
› Heineken appointed Don Blaustein President and CEO, Heineken USA effective
October 5th. This followed the decision of Andy Thomas to leave the business. Blaustein had been Senior Vice President of Sales with Heineken USA, a job that will now be filled by Chris Steffanci. Additionally, Kheri Holland Tillman joined the company as vice president for the Amstel Light and Dos Equis brands.
› The National Beer Wholesalers Association
(NBWA) announced the following
slate of officers for 2007-2008: Aldo Madrigrano, Chairman of the Board; Phillip Terry, vice chair; Larry Del Papa, secretary.
› Molson Coors Brewing Company has named Peter Swinburn as president and CEO of Coors Brewing Company. He succeeds Frits van Paasschen.
› Mix1 beverage company hired Joelle Hoffman as vice president of sales.
INSIDER’S VIEW: PAUL RENE
In 2001, Paul Rene left behind a 23-year career at Genessee
Beer to hook up with the Geloso Beverages Group as its U.S. sales director. At 47, the veteran beverage executive
has seen a thing or two in his time: the growth of microbreweries; the creation of malternatives; the consolidation
of the distribution business.
Rene’s excited these days about a new line of beverages at Geloso, their O’Sullivan’s Irish Cream and B-52 products;
even more though, he’s fired up about the concept these products represent: the near-perfect replication of the flavors of a spirit-based cocktail in a malt-based drink that can be sold under a beer license.
“We’re going to have a liquor set on the beer shelf,” Rene says. “I find that pretty neat and intriguing.”
It’s also happening just in time, some might argue. The growth of cocktail culture and the microbrewery revolution – as well as the advent in the past 20 years of a vastly expanded portfolio of non-alcoholic drinks – has resulted in consumers who demand variety and originality.
And that can be trouble if, as with many convenience stores, you’ve just got a permit to sell beer, Rene says.
“The flavor thing, I think, has really distorted a lot of people’s views – they’re saying this isn’t just a beer world anymore. We’ve got a consumer base that believes it can have any flavor they would like. And that’s changing things.”
The changes aren’t just affecting convenience stores, however. Distributors, manufacturers, and retailers are all finding themselves having to cope with a highly specific
consumer base. The idea that a large brewer like Anheuser Busch would go into the business of acquiring brands to fill tiny niches is an about-face from the beer world Rene grew up in. But he’s noticed that at the same time that the demand for variety has gone up, so has the need to prove a product’s salability on a repeat basis.
“I laugh all the time at how many sales you have to make before a brand even has to be considered to have a chance to succeed,” he says. “The product’s been sold already four times before the consumer even sees it – if it sits in the warehouse, on the truck, it’s a bad buy. Let’s face it, if you come out with another 12-pack for a dime less, salespeople aren’t excited about it.”
In the coming year, with the number of brands clamoring
to get onto distributors’ trucks, and the hard selling that it takes to get it there, retailers should feel comfortable
with anything that’s unloaded, right? Not according to Rene. “For the retailer,
the sharp retailer, the key is going to be picking up something that’s not like anything else. The retailer now is more challenging – they’ve been inundated with new brands, and they need to be really careful.”