expr:class='"loading" + data:blog.mobileClass'>

Wednesday, January 31, 2018

All That Glitters...GDI Sells to Columbia

After you spend a few years around the beer industry, you get to know people. For me, it somehow came to pass that a lot of people I know and talk to regularly are part of General Distributing. But not for long.

The news that General is being sold to Columbia Distributing came as a bit of a shock. I didn't get word from inside GDI. Nope. A friend alerted me Monday afternoon. I quickly texted Jim Fick (part of the owning family), who verified that the company is, indeed, being sold.

Maybe I shouldn't have been shocked. It's been common knowledge for at least several years that Columbia, which is huge and has a presence in several states, wanted to purchase much smaller General. Until now, the price simply hadn't been right. Finally, it evidently was.

Not that long ago, GDI was a laughing stock in beer circles. A large part of its territory is rural, where it sells loads of yellow beer. Perhaps that explains why ownership was slow to respond to the craft beer wave. When I first met Jim Fick in 2013, GDI had a pathetic craft portfolio of mostly second and third tier brands.

That began to change when Steve "Tiny" Irwin was named General Manager in 2015. Irwin's background in craft beer is strong. He immediately began to build a savvy team of craft aficionados. His relationships around the industry helped GDI sign of a handful of vibrant brands...Sunriver, Melvin, Modern Times, Left Hand, Founders, etc.

The sale to Columbia means all GDI brands are free to go wherever they wish. They are not tied to Columbia. That's the law in Oregon. When a distributor sells, the contracts it has with beer suppliers (breweries) are null and void. Feel free to move on.

The irony is the brands in question chose General for a reason. Irwin may have been part of that reason. But any of those brands could have chosen Maletis or Columbia, the area's biggest players. They chose General because they felt they would get more attention and have a greater chance of success by being part of a smaller book of brands.

With General out of the picture, those brands will have to decide where to go. Consolidation in distribution means limited choices. Will GDI's brands go to Columbia or Maletis, both of which have huge books? Will they roll the dice and go with Point Blank or one of the smaller distributors that have small books, but limited retail penetration?

Of course, this isn't just about brands. Most GDI employees will be out of work when the sale closes at the end of March. It hardly matters that Columbia says it will give these folks a chance to interview for open positions. This is a business and you don't need duplication. A few GDI folks will probably transition to Columbia. Most won't. That's the nature of the buyout beast.

When I spoke to Irwin Tuesday evening, I asked him what was next for him. He nimbly dodged the question, saying his first priority was finding jobs for his people and the right homes for the brands he so diligently signed over the past few years. I honestly hope he succeeds.

If you step back and look at this sale, you may be tempted to believe the Fick family planned for several years to sell the business. They hired Irwin because they figured he would build a respectable craft portfolio that might increase the overall value of the business. If you think that, you aren't alone. Several people who know the industry have suggested it to me.

The alternative narrative, and one I am forced to consider after talking to Irwin and other reliable industry sources, is that the Ficks simply lost faith. They invested heavily in craft when the industry was growing like a weed several years ago. In 2017, growth slowed dramatically. They saw the business changing in crazy ways. They decided it was time to get out.

I don't know which version of the story I believe or want you to believe. But I don't think we're better off with General Distributing out of the picture. All that glitters isn't gold.

No comments:

Post a Comment

Keep it civil, please.