Over the years, much has been written about InBev’s 2008 takeover of AB and the ensuing acquisitions ABI has made since this time, including their current target, SABMiller. One wonders just how this came about. Was it just something InBev had targeted or perhaps they were aiming at these particular companies as the fulfillment of a plan created years ago? Simply put, we are here today, and let’s agree to go there tomorrow.
Outside the annual planning process and cycle, just how many beer companies actually look down the road and attempt to picture what they should or could look like in ten-plus years? If they did, would they even look anything like they are today?
Rebuffed by the beer industry throughout the 90s, Glazer’s had tried on a number of occasions to break into the beer side by buying a distributorship. Finally, after agreeing to hire a team of experienced beer managers, Glazer made their way into the beer side. My focus at Glazer’s was to build and expand their beer portfolio, but I never saw or even heard, that a long term plan existed, just that the company wanted to expand.
Glazer’s had great success in getting into beer, not only by buying beer distributorships, but also by getting statewide and major market key brands including New Belgium, Sierra Nevada and Boston, and other crafts. Glazer’s even dipped into some imports including Asahi, Paulaner, Warsteiner and Crystal. The list goes on. By the mid-2000s, sales from beer were hundreds of thousands of dollars across all Glazer’s s 12 states, which then included some MC distributorships.
In early 2006, I left Glazer’s to head up Warsteiner. Glazer’s was Warsteiner’s largest distributor in the US, distributing the brand in a number of states including Illinois and Texas. In 2007, Glazer’s let me know of their intent to sell Warsteiner to Ben E. Keith and Silver Eagle, along with all their other beer brands. This process was accomplished in all their markets except where their operations were anchored by a MC house. Glazer’s was getting out of the craft/import business in their wine and spirit houses.
Congruent to this time, word was out about a pending merger between Glazer’s and Southern Wine. The merger did not take place, however, over the next seven or so years, Glazer’s continued to acquire MC operations while selling off brands they distributed outside their MC markets. This has been done in all their states, except Arkansas.
Not long ago, Glazer’s JV, along with Charmer-Sunbelt in Arizona, sold off their beer portfolio to various beer wholesalers. What was baffling was just why would a company such as Glazer’s, who had made a significant financial commitment to build a beer empire, sell off all these crafts and imports just as this segment exploded in growth, revenue and profit?
Last month’s announcement of the renewed merger between Glazer’s and Southern Wine, along with Charmer’s and Writz announcement of the same, might shed light on Glazer’s actions. Franchise contracts could be the culprit.
Consider that had the proposed merger taken place in 2008, the beer vendors would have been free to move their brands to other wholesalers of their choosing. Glazers knew this, and systematically went about selling off all these great brands, state by state, while both Southern and Glazer’s waited until the action was completed.
Glazer’s got a great multiple for these brands, the acquiring wholesalers not only got brands they never thought they could acquire, they will have them quickly paid off with the rapid expansion of the craft segment and, finally, the vendors get into beer houses which will grow their volume. The merger now takes place.
From the outside it appears Glazer’s has known for years what it wanted to look like and worked to achieve that goal. Management is all about managing in the short term, while developing plans for the long term.
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