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Wednesday, July 29, 2015

Pushing and Pulling with the Clydesdales

Our old friends Anheuser-Busch have been in the news lately. Many have been wondering when the next big buyouts will happen. A lot of industry experts expect the big fellas to buy another craft brewery before the year is out. Perish the thought.

Most assume the next acquisition will happen outside the Northwest, where the buyouts of 10 Barrel and Elysian jolted craft beer fans in the area like a subduction zone quake. Those acquisitions happened for a very good reason, which is that AB brands struggle in the Northwest. Bringing (previously) popular craft brands into the AB fold was/is an effort to stop the bleeding.

California appears to be the next logical target. The Clydesdales once owned a 50 share of the lucrative Cali market. That number slipped to just over 36 percent last year, according to a recent CNBC story, and AB is desperate to reverse the negative momentum. They're probably flashing bundles of cash to prospective sellouts as we speak.

Arguably the more interesting part of the AB saga is initiatives underway with its distributors. What they want to do, as I've mentioned in past posts, is force distributors to align more fully with AB brands. They do not want these folks selling brands that aren't in the family.

Indeed, part of the reason they've brought craft brands into the mix is they want to be able to go into accounts with a book that has something for everyone. "Yellow beer not your thing? Well, we've got some decent craft brands you might like."

By the way, the suits in St. Louis are particularly aggravated by the situation in California. Why? Because more than a few AB distributors in the Golden State sell Constellation brands. That infuriates the brass, which regards Constellation as a mortal enemy. They want changes.

The way this situation translates in day-to-day life is that AB is making it clear to distributors, even anchor distributors in big markets, that their ongoing relationship will require them to divest brands that aren't part of the AB family. The suits want distributors focused on AB products. Period.

Here in Portland, AB-independent, Maletis, owns one of the best craft books in the country. If AB's alignment strategy were firmly applied, Maletis would have to sell profitable brands and replace them with brands that are, quite frankly, flat-liners here. That isn't happening. But never mind.

What's wrong with the Clydesdales? Well, the horses are fine. Trust me. But the suits in St. Louis have become paranoid. They look at eroding market share and see distributors who are failing to push their products because they're distracted and mesmerized by non-AB craft brands. The brass wants these turncoats brought into line. It's an 18th century thing.

The problem, confirmed by industry experts in various places, is that AB does not have a push problem. What they have is a pull problem. In plain terms, AB's brands have little pull with consumers, which makes them a lot harder to sell regardless of how hard you push them.

How will they work through this confusion? Stay tuned.

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