What Do The Beer Mergers/Buy Outs Mean To You

The recently announced supplier changes on the beer industry with the formation of Miller/Coors and InBev’s purchases of Anheuser-Bush have profound implications for the c-store industry and its retailers. For the convenience store industry to arrive at the potential for major profitable growth in the Beer Category they must identify the following.

1. Where are they from an operation’s perspective at the present time?
2. How did they get there?
3. Should they stay the course and continue to manage the category as business as usual?
4. How effective are their supplier and wholesaler partners.

1) From an operational perspective it appears as though most convenience store operators are managing the category as it was thirty (30) some years ago. It is still being macro managed in a way that in truth, long term, is detrimental. The only considerations seemingly are market share, sales volume, and sales growth.

While questioning this approach might seem ludicrous – they are the most important – there are sub-sets to each one that can, and will, alter the thought process and possibly the ultimate decisions that are never brought up. This leads to a decision maker who is ill informed to make critical decisions without the in-depth knowledge that he needs. Who benefits from this?

The guy who provides the path of least resistance with proven sales success. Large market share and sales growth – The Dominant Player! Is this good? Absolutely some of the time – never all the time.

2) They got there by listening probably to only one supplier and putting the non Anheuser-Busch system in a position to never be able to grow their business, and therefore turn their back on some thirty (30%) of all of the assets available. They (Anheuser-Busch’s competitors) have to sell their beer somewhere as they too have a payroll to make and a light bill to pay. Typically the supermarket channel absorbs that market share difference (all profitable) and receives most of this support.

3) Only if they want Anheuser-Busch to do 100% of the business at a much less than desirable profit margin.

4) Suppliers and wholesalers will be as efficient and effective as they are allowed and made to be. Each one of them has the capability of providing information in the form of new marketing and merchandising techniques that will allow for a thought-provoking consideration of past practices and allow for these profitable objective decisions to be made.

Finally, it is imperative that retailers level the playing field for all suppliers. The input from the non Anheuser-Busch system will shock you. Do you remember earlier – market share, sales volume, sales growth? Well, Anheuser-Busch still has the market share and sales volume, but the smaller player now has the growth – and a lot of the gross profit. Tune them in – get an independent validator with the experience to recognize and advise who could care less which brand you sell. Get your strategy straight in your existing situation.

At that point start to look for all of the change that is forthcoming with the Anheuser-Busch /InBev buy out and the Miller/Coors joint venture. The change will affect your wholesale structure and change your way of managing the beer category.