Prior to the 1980’s, Heineken, for all practical purposes, had the import market to itself. They were by far the number #1 import, and had been for years, even though their distribution system was primarily through wine and spirit houses. The growth of Corona, which took off with the change to the clear bottle, and then the move to six-packs and twelve-packs; was nothing short of amazing. It seemed like Corona passed Heineken standing still. Heineken knew something had to change.
Around 1990, Heineken approached Glazer’s in Texas. Glazer’s had statewide distribution rights, and got an agreement to duel the brand with the Miller network. Glazer’s was set up for the off premise with limited, if any, on premise (draft) support. The Miller network was to service the on premise. This situation, along with Heileman Brewing Co. assigning brands to competing wholesalers, caused the wholesalers to have the state franchise laws modified. This was done in an effort to eliminate any dueling of brands, while keeping the line extensions with the current distributor. In 1999, Heineken then ended the dueling (grandfathered in) with Glazer’s. The MC network got the distribution rights for both the on and off premise.
The recent Modern Brewery Age magazine ran a commentary called “The Road Ahead for ABI/Modelo.” It starts with the following statement: “The unstoppable force that is ABI has finally met an immovable object-the U.S. Justice Department.” Later on, Modern Brewery Age comments on their culture’s orientation to litigation. “They are combative, aggressive and they get what they want.” But perhaps the most important paragraph states: “ABI is run by investment bankers, and it’s never been about market share, it’s always been about the dollars. So the Justice complaints hit them where they live, and they are ready to fight.”
I’ve had a number of comments from wholesalers etc. regarding my previous posts on ABI, and as you would expect, they support the party lines. Those who are ABI wholesalers are in support of their actions, likewise, others are not. No surprise there. ABI is now assigning line extensions to wholesalers for brands such as Stella and Beck’s. In some states, extensions have been given to wholesalers who do not have the core brand, violating state laws by assigning brands elsewhere. So the question might be: Are these violations because of ABI wholesalers (Bud) who do not have Stella, and trying to align the brands with them? Or is it the competing wholesalers, who do have Stella, but will not sell it? Or are they just ignoring the state laws?
I would think that any wholesaler, especially the ABI wholesaler, is concerned with the overall direction of ABI and its actions. With ABI continuing to acquire distributorships in certain markets, fighting to keep ownership in some (Chicago), Anchor programs, the Modelo litigation, and, how ABI is now assigning brands, the distributor should be concerned. The ABI/Modelo transaction will now probably happen at a huge initial cost to ABI; the pending sale of the Mexico brewery to STZ and the elimination of the 10-year option; however, the “size of the prize” is the brand, not the brewery. Once this is done, and some time passes, Bill Hackett will retire. Subsequently, an announcement will be made regarding his replacement, an ABI key executive from S. America named in an effort to “align our mutual goals.” Some years later, the CEO of Constellation will announce a “strategic shift,” the focus of which will be on the global wine and spirits segment and a divestment from Crown….to…who else, remember, no one thought AB could be bought. Well, I was born at night but it just wasn’t last night.
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