CAN BEER DISTRIBUTORS HANDLE WINE & SPIRITS?
A Reprint from our sister publication Beer Business Daily:
Dear Client:
With A-B and perhaps other brewers considering a move into spirits (presumably), and many beer distributors looking longingly at the margins in the wine and spirits business, we decided to go straight to the man who perhaps has among the most beverage alcohol experience in more segments, more tiers, and more geography than any man alive today.
I'm talking about Bill Goldring. To give you some background, the Goldring family empire began with beer wholesaling in 1898 in Florida. Bill and his partners are currently the number three beer wholesaler in the country doing business as Crescent Crown in Louisiana and Arizona (in partnership with Bubba Moffett) and Goldring Gulf Distributing in Florida (in partnership with Elliot Maisel).
In addition, his son Jeffrey leads Republic Beverage, the nation’s second largest liquor and wine wholesaler doing business in 24 states. Bill also remains as chairman of the Sazerac Company and the Buffalo Trace Distillery in Kentucky, which was recently awarded by the Malt Advocate and Wine Enthusiast as the best distiller of 2006.
I spoke with Bill last week on a variety of topics, but in particular I wished to learn more about the possibility of beer distributors delivering spirits in the wake of the possibility of A-B taking over Absolut vodka or otherwise getting more into wine and spirits.
Bill said that while high-end crafts and imported beers lend themselves to being sold and delivered alongside wine and spirits, he contends that high-volume (and low-margin) mainstream domestic beers are difficult to make work. The reason?
Two reasons, actually: the sales process is different between the two, and the delivery economics can prove to be mutually exclusive. Let’s explore these in more detail.
THE SALES PROCESS. Selling techniques, skill sets, and most importantly the time to sell are different between mainstream beers and wine and spirits. Says Bill:
"In the on-premise, wine and liquor houses can go in and sell a bottle of vodka, a bottle of Cognac, a few bottles of wine, taking the time with the bartender or manager. Not just quickly creating an order, but taking the time to educate the account about creating a beverage list. They wear coat and ties. High-end beer, crafts and imports, fit in nicely with this sort of sale. They can sell it in……it's hand selling and taking time. With domestic premium beer margins, you can't afford to do that, so it's got to be in a separate team.
“In the off-premise, the wine and liquor salesman can sell a 50 case display of Fat Tire beer or Heineken just as he sells a 20 case display of a premium Australian wine. So sales and distribution aligns itself along margins and the image of the brands."
THE DELIVERY PROCESS. Bill also says the delivery economics also don't easily lend themselves to delivering wine, spirits, and high-volume beer off the same trucks. The reason, besides that in some states the accounts are different: high volume, low margin beer diminishes the ability of the truck to profitably travel long distances. Says Bill:
"The high volume beers fill up the trucks [pushing out the spirits and wine] and so it's hard to make a profit delivering more than 30 or 40 miles from the warehouse….. that's why, even in the same market, we usually sell our liquor and beer separately."
And what about A-B getting into wine and spirits, like buying Absolut? “Harry, I think they would have to create a parallel distribution system which could cost hundreds of millions of dollars since they could not have the critical mass with just one brand, and therefore doesn’t make economic sense. It is far easier for a premium wine and spirit distributor to be successful in the premium beer business than vice versa.”
A-B disagrees. I communicated briefly with an A-B exec who says that they have a model that would work. We’ll see what happens. As Bill said to me at the conclusion of our talk, “These are interesting times in this business, but I guess it’s always interesting in our business.” Yes, that’s why my sales are brisk.
Dear Client:
With A-B and perhaps other brewers considering a move into spirits (presumably), and many beer distributors looking longingly at the margins in the wine and spirits business, we decided to go straight to the man who perhaps has among the most beverage alcohol experience in more segments, more tiers, and more geography than any man alive today.
I'm talking about Bill Goldring. To give you some background, the Goldring family empire began with beer wholesaling in 1898 in Florida. Bill and his partners are currently the number three beer wholesaler in the country doing business as Crescent Crown in Louisiana and Arizona (in partnership with Bubba Moffett) and Goldring Gulf Distributing in Florida (in partnership with Elliot Maisel).
In addition, his son Jeffrey leads Republic Beverage, the nation’s second largest liquor and wine wholesaler doing business in 24 states. Bill also remains as chairman of the Sazerac Company and the Buffalo Trace Distillery in Kentucky, which was recently awarded by the Malt Advocate and Wine Enthusiast as the best distiller of 2006.
I spoke with Bill last week on a variety of topics, but in particular I wished to learn more about the possibility of beer distributors delivering spirits in the wake of the possibility of A-B taking over Absolut vodka or otherwise getting more into wine and spirits.
Bill said that while high-end crafts and imported beers lend themselves to being sold and delivered alongside wine and spirits, he contends that high-volume (and low-margin) mainstream domestic beers are difficult to make work. The reason?
Two reasons, actually: the sales process is different between the two, and the delivery economics can prove to be mutually exclusive. Let’s explore these in more detail.
THE SALES PROCESS. Selling techniques, skill sets, and most importantly the time to sell are different between mainstream beers and wine and spirits. Says Bill:
"In the on-premise, wine and liquor houses can go in and sell a bottle of vodka, a bottle of Cognac, a few bottles of wine, taking the time with the bartender or manager. Not just quickly creating an order, but taking the time to educate the account about creating a beverage list. They wear coat and ties. High-end beer, crafts and imports, fit in nicely with this sort of sale. They can sell it in……it's hand selling and taking time. With domestic premium beer margins, you can't afford to do that, so it's got to be in a separate team.
“In the off-premise, the wine and liquor salesman can sell a 50 case display of Fat Tire beer or Heineken just as he sells a 20 case display of a premium Australian wine. So sales and distribution aligns itself along margins and the image of the brands."
THE DELIVERY PROCESS. Bill also says the delivery economics also don't easily lend themselves to delivering wine, spirits, and high-volume beer off the same trucks. The reason, besides that in some states the accounts are different: high volume, low margin beer diminishes the ability of the truck to profitably travel long distances. Says Bill:
"The high volume beers fill up the trucks [pushing out the spirits and wine] and so it's hard to make a profit delivering more than 30 or 40 miles from the warehouse….. that's why, even in the same market, we usually sell our liquor and beer separately."
And what about A-B getting into wine and spirits, like buying Absolut? “Harry, I think they would have to create a parallel distribution system which could cost hundreds of millions of dollars since they could not have the critical mass with just one brand, and therefore doesn’t make economic sense. It is far easier for a premium wine and spirit distributor to be successful in the premium beer business than vice versa.”
A-B disagrees. I communicated briefly with an A-B exec who says that they have a model that would work. We’ll see what happens. As Bill said to me at the conclusion of our talk, “These are interesting times in this business, but I guess it’s always interesting in our business.” Yes, that’s why my sales are brisk.
posted at 3:09 PM
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