22 November 2011

AB-InBev Pushes Distributors to Focus on Their Brands

The three tier system is supposed to put a buffer between the manufacturer and the consumer and prevent monopolies. That isn't to say that the manufacturers can't dictate what is sold on our store shelves, however.

On November 15, in Dallas at ABI National Distributors meeting, representatives from Anheuser Busch-InBev told their distributors that they need to focus on the AB-InBev products.  It won't have much impact on the market as it stands, but AB-InBev wholesalers will be picking up fewer new craft beers, while MillerCoors will pick them up all day long and laugh their way to the bank as AB-InBev share of market continues to fall.

Imagine a Big Bud Distributor with a 45% share of market, where the MillerCoors distributor has 45% and independents have 10%.  BBD sells his 20% of non AB-InBev product so he can polish a few apples at corporate headquarters.  His SOM falls instantly to 25%. And if MillerCoors and the independents which buy half of BBD's brands, their SOM goes to 55% and 20%, respectively. And with only 25% of the market, your really have to focus on Bud and Bud Light.

Now imagine a small craft brewer who want's a distributor. He can't go with BBD, so he chooses to go with one of the others. As more and more new breweries enter the market, BBD's share continues to fall.

Conlin Beverage Consulting, source of this little thought experiment, is encouraging MillerCoors distributors to step up and take advantage of the blunder on AB-InBev's part.

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posted by Jeff Holt at 10:06

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