Inbev's new distro incentives

Interestingly, this is also why you're seeing the push in certain states for higher self distribution caps. Not to tear down the system, but to make it so by the time breweries want to go third party distribution, they are strong enough to realistically compete in the distributors' book.

 

Maybe a few adjustments to the quote are needed to be a correct statement:

We are focused on improving the availability of our offerings for consumers, and our new voluntary incentive program better convinces wholesalers to sell only our products in the future," said Ricardo Melo, Anheuser-Busch vice president of sales strategy and wholesaler development, in a statement.

On one hand, I find it to be a rather disturbing agenda that they have set forth, but from a business angle you cannot blame them one bit. They look at their indie distros pumping out brands that compete against and routinely bury most of their craft offerings. As much as this move burns "us" imagine watching their indies drive around trucks with Bud Light branding only to roll Bell's, Stone, Deschutes (but not Grey Eagle any longer....) and thousands of local beers while the orders for Shocktop and GI regulars, not to mention core brands like Bud heavy languish. If anything, this move may raise opportunity for more craft centric distros like Sheehan families to step in, take over the dropped rights and flourish.

 

Does anyone have a list of beer distributors that ONLY carry Craft beers (Craft as defined by the BA)? I know Maui/Stone and Stone do in Hawaii and in Southern California...but outside of that I have no clue. I know most carry the BMC brands as well...but a list of Craft-only distributors would be welcomed, especially in the Midwest.

 

I think it’ll have an impact on any AB distributor who is slightly below the 95% or above. And I would guess there are a lot of them or else they wouldn’t have done this. Those slightly below will definitely look at their portfolio and consider cutting a few brands to get them to 95%. Article said average incentive would be $200k. That's a lot of bottom line cash for doing less work. If they are close and cut a few brands I would guess that, unless they’re a huge distributor, that $200k is more than the craft brands are bringing to the bottom line. Simplifies their operations too. For those already above it’ll have them second guess going after new brands or further developing the brands it has.

 

I don't care about this. In my city there are 7 major distributing companies. Legally, they cannot overlap brands. Which means, 1 out of 7 would (theoretically) carry 95% InBev products. So friggin' what??? Boo Hoo, I don't like InBev's business practices. Get over it.

 

It sure has!

 

Where is that quote from, or did you invent it? I love it!

 

That quote is from 300.

And, a company is incentivizing their sales people (albeit indirect sales people) to sell the products that are most profitable. I don't love it, but it happens in, you know, EVERY industry.

 

This happens in every industry in some form or fashion. The consumer will still rule the marketplace. AB can run all the incentives it wants. Im still not drinking bud light.

 

There are two ways to look at reaching 98%. One is discontinue brands and, in theory, lose revenue from them. The other is buy more ABInBev product lines so your ratio calibrates to 98% or above. Either way, ABInBev is happy with the distributors that choose to meet this mark.

 

I'm getting to the point of boycotting BCBS and the variants entirely. Even though it's great beer, I can't buy off on their increasingly aggressive tactics as discussed in this thread. I recently went to one of my local stores and they had cases and cases of "Goose IPA" and Honkers right in the prime viewing area...and when I asked if they had any of the variants, the owner said they would get a bigger allocation in the future if I would "support Goose Island" and buy a 12 pack. He even went so far as to say that he would put me on the wait list only if I bought a 12 pack. He also had a "Support Goose Island" sign posted in the store. The distributor had clearly put the pressure on and likely threatened to not deliver any more BCBS if they didn't sell more of the others. When I finally called him on his game, he admitted that Goose IPA was "crap beer" and this was the only way he could sell it (however misinformed he may be).

I believe that ABInBev has come to realize they have to compete in the "craft" beer market, so they're trying to force consumers to drink their standard GI offerings by using BCBS and the likes as a tease - especially now towards the end of the year in a fruitless effort to help boost revenues. And while these other GI beers are usually decent when fresh, all too often they're not fresh because ABInBev is pushing more into the retail and restaurant channels than they can handle. In those instances when I go to a bar or restaurant that only had Budweiser products in the past, now it has Budweiser and the newly rebranded "Goose IPA" on the menu. It's often skunked, or past its prime - and this is now what I think of when I think of Goose Island. So much for the Budweiser "born on" campaign - right campaign, wrong beer! Goose IPA, Honkers and all the rest have become for me "crap" craft beers that I now avoid. In addition - the Bud Light billboard on the Fleet Center in Boston has now been replaced with a Goose IPA billboard, symbolically occupying the former spot of mass market beer.

While I used to buy good beer regardless of ownership, I will drink down my remaining stock of BCBS and the variants and probably won't rush to replace them, especially given all the other high quality stouts in the market. And I will not choose to buy any other GI beers because of the likelihood that it's devolved into crap beer - it's just not worth it when there's so much other good fresh stuff available. So the answer to this and some other posts - yes, I do believe that ABInBev and it's distribution and marketing tactics have ruined GI and I have no interest in supporting them.

 

The key distinction: in almost every way, beer selling is not treated like every other industry. There are many practices that are legal in selling tires, or food, whatever, that are illegal in alcohol sales.

 

The soda market is a prime example of this that operates in the same geographic locations as beer. Walk down any soft drink aisle in a super market and it is dominated by two players. Sure, you have a few high end sodas here or there, with maybe a 7-Up and some other options available. But that space is pay-to-play...and the price of admission is high. And then when you cash out, feel free to grab any soda you want from the coolers there. Wait. Nope, also pay-to-play. And those coolers can cost upwards of $10,000 a year depending on the market! So please, tell me again about how messed up this is that AB is trying to entice their primary path to market to focus more attention on them.

 

If we're going to suggest that alcohol should be under the same rules as everything else, then I'll heartily agree and happily accept that every state now has unlimited self distribution. And the ability to run a taproom.

 

This is a great post! The realities for distribution of craft is that there are going to be over 4100 breweries with something like 6000 possible in the near future and not all of them are going to be able to be distributed right off the bat. Some of these guys need to prove there is a market for their beers before a distributor sticks their necks out over taking on excessive inventory costs. Sure in a perfect world it would be great for all of them to get a shot but fact of the matter is some beer is better off being local or regional and some just aren't as good as those other beers that are already in distribution so there is no reason for a distributor to take them on. Whether craft drinkers like it or not distributors just can't carry every brand. It isn't efficient or cost effective.

 

And will be completely de-regulated, so pay to play will actually become the norm, tied houses will return, and the consumer's choice will have a pretty decent chance suppressed. Go to Europe where these conditions exist and let me know how much choice you have outside of the beer sign hanging on the outside of the building.

I was not suggesting that alcohol should be under the same rules as everything else, just pointing out a circumstance where two major players can pay to play, and do so to an extent that majorly restricts almost any outside company.

 

If brands are forced into portfolios with minimal to no market awareness, they'll never survive the lions den. It sounds like rhetoric, but it's not. And it doesn't mean distributors are bad people or a bad service; they aren't. But if a brand can come into a book after selling 50,000 BBL a year for three years, now they have the clout to push for equal representation, AND the distributor has a powerful, valuable brand.

 

I would argue that pay to play doesn't have the same power it once did, for the same reason AB-InBev is so rapidly diversifying: because the consumer is so informed, and options are so plentiful in valuable markets. Outside of the most rural markets, the days of "Well, this is my bar, so I drink whatever they offer," are over. We are even seeing it in major grocers...at some point, you can only tell your customers no so many times. Bud dominates the cold storage at my local store, but their percentage of the set is half what it was 6-7 years ago. It'll take a mighty big check to turn away all those customers, especially with grocery store chains so eager to compete with Total Wine and local bottle shops.

 

So, a bar has 8 draught lines. An AB rep walks in and goes, "Oh man, I've got these great brands for you. With Bud Light we can do a whole bunch of NFL promos, Stella is a really profitable brand around the market, Goose Island IPA is one of the most award-winning IPAs in the country, have you had this 10 Barrel Cumcumber Crush, man this Elysian seasonal is great, ciders are hot and we've got a great one in Johnny Appleseed, oh right, IPA's are on fire and Elysian has a few IPAs that might be a good fit here, and BP Toasted Lager is a great option for people who are looking to crossover into craft but aren't quite sure yet. Sound good? Oh, right, and here's $10K on top of that." Quite a few people on this site would walk into that bar and say, "F*ck this"*, whereas a less informed consumer would say, "Oh man! Look at all these options!"

*What is the official policy on swearing here?

 

I don't get it. If AB-InBev feels so threatened that they must resort to bush league tactics then why don't they just make some good beers to make up for the lost market share due to folks no longer buying the cardboard tasting crap they're peddling?