Beer distributors emphasize local presence amid beer industry consolidation at national convention

 

Participants at all levels of the National Beer Wholesalers Association (NBWA) annual convention, held Sept. 25-28 in Chicago, affirmed over and again the importance of local knowledge and relationships in their businesses.

The NBWA exists to support America’s independent beer distributors through advocacy and education, and AB InBev’s move to acquire SABMiller loomed large in many of the seminars and presentations. In his remarks to the general session, departing chairman of the board Travis Markstein praised the work done by NBWA’s board and its members to communicate before the Department of Justice “the story we believe in: the story of the American three-tier system and its benefits to competition and innovation.”

NBWA President and CEO Craig Purser repeated that message and pointed additionally to the importance of wholesalers inviting their state and local legislators to see their warehouses and operations and to hear their concerns.

A silver lining around “The Acquisition”

Purser was eager to affirm that the conditions placed on the merger in the DOJ’s Consent Decree were a win for independent distributors and for consumer choice. Purser, Markstein and incoming Chairman Paul J. Bertucci repeatedly intoned the value of personal and business relationships in keeping the three-tier system strong through lines of communication and creative partnerships.

Benj Steinman of Beer Marketer’s Insights agreed on the significance of the Consent Decree in a seminar on the changing landscape of distribution. One positive fallout of the acquisition, he noted, was that the DOJ had become better educated about the beer industry and showed signs that their regulators were watching the right things.

Steinman’s conclusion after reviewing the many changes in the industry in just the last year or two was that “Volatility may be the new normal.” On a similar note, Purser encouraged members not to shrink from the challenges of acquisitions on the one hand and market fragmentation on the other: “When the world changes around you, lean in. […] With disruption comes opportunity.”

The local difference

That opportunity may lie in the case made by Danny Brager of the Nielsen Co., namely that local knowledge makes a big difference in this fragmented marketplace.

Brager characterized fragmentation as increasing diversity, a shrinking middle class and corollary growth in both discount and premium retail channels, and greater experimentation and adventurousness among millennials.

He illustrated this powerfully with a look at three retailers within a couple miles of each other in the 60640 ZIP code on Chicago’s north side. The store with the youngest and most white, educated, affluent and single clientele far outsold the other two in craft and FMBs, while the store with the most African American and lower income customers led in economy brands and the most Hispanic-serving store led in imports.

In an environment like this, Brager said, “there is no one size fits all solution.” Rather, he suggested that successful wholesalers will adjust to changes in their market and find the right beers for the right stores.

Even if craft has seen its golden age in 2016, as Steinman thought possible, distributors still use the term “SKU-maggedon.” Yet the Nielsen numbers show that over one third of craft drinkers thrive on all these choices.

The numbers also show that just over one-half prefer locally produced beers. If Brager’s analysis is right, then those bursting portfolios could become powerful tools for wholesalers to fine-tune their sales at an increasingly local level.