Changes in Beer Industry Have Wholesalers on Edge

Distributors Feel Squeezed by Retailers, Brewers Amid Mergers and Acquisitions

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SAN FRANCISCO ( -- The beer industry, gathered here for its annual wholesaler convention, seems to be in dire need of the relaxing properties of its product.

Since last fall's gathering of the National Beer Wholesalers Association, Anheuser-Busch, the largest U.S. brewer, agreed to sell itself to Belgium-based InBev and the No. 2 and No. 3 players in the U.S. beer business, SABMiller and Coors Brewing Co., agreed to combine forces, two seismic changes that have evidently put the entire industry on edge.

"Not since prohibition was ended 75 years ago has our industry seen so much change," distributor Dan Henry told convention-goers this morning from a stage designed to look like an upscale bar.

Middle tier
For the wholesalers who make up the industry's "middle tier" between brewers and retailers, these changes have been largely ominous: InBev has a track record of harsh cost cutting in developing markets, and MillerCoors' has stated its intention to wield greater control over its wholesalers, much as A-B does. Each brings its own anxiety for the wholesalers, who have also been warring with large retailers such as Costco of late.

"We are facing new frontiers and new questions," said the association's outgoing chairman, Aldo Madrigrano, a Milwaukee-based MillerCoors distributor. "Recent actions by our supplier problems have created real problems for many."

The association's president, Craig Purser, sounded a more defiant tone: "Retailers and suppliers are trying to control our business, and distributor independence could be a casualty. We will not let that happen."

At a panel discussion following those opening remarks, both Heineken USA President Don Blaustein and Crown Imports (Corona) President Bill Hackett -- who helm the two largest brands not controlled by A-B and MillerCoors -- sounded notes of solidarity with distributors.

Words of advice
Mr. Hackett implored distributors to take charge of their businesses, an apparent reference to an ongoing contract dispute between MillerCoors and some of its distributors, while Mr. Blaustein passed on an anecdote about working with a monopoly brewer in the Caribbean that didn't heed consumers' calls for more variety and ultimately paid the price.

A-B and MillerCoors executives are scheduled to address their own wholesalers at private events later in the convention; A-B marketing VP Dave Peacock is headlining tomorrow's schedule. No top InBev executives are scheduled to speak and none were spotted at the convention as of this afternoon.

The wholesalers also got words of wisdom from presidential historian Michael Beschloss, who tried to bring his long-view perspective to this tumultuous period. "History is a tool you can use ... to give you some sense of a way out of the confusion," he said.
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