Brief consulting advice for the Coors/Miller/multi-brand wholesaler
Most of you are Coors/Miller/multi-brand houses (unless you are in a major metropolitan area, those who aren’t should either quickly sell or purchase). You most likely already have the experience of running relatively lean organizations. Your present operating environment is one of:
· Decreasing margins (although increased sales of imports and crafts are helping cushion, and in some cases mask the true margin erosion. Be aware or this can come back to bite you)
· Skyrocketing operating costs led by fuel and fuel surcharges (although fuel prices will come down some, I don’t think there will be any tremendous change here for the next few years – and it always can get worse!)
· Tough selling environment – difficult to grow overall sales volumes
If you are looking to cut expenses (and it’s either that or the resignation that you will be making A LOT less money for the rest of your business existence), there is generally only one area to look.
Generally there is not a lot of cost savings available in the warehouse (although there may be some). In fact in many cases warehousing costs are increasing as more and more wholesalers load by the account rather than for the route. This makes perfect sense, especially since trucks and class-A drivers are far more expensive than warehousing personnel. I think the future for many wholesaler’s delivery system is a straight truck with lift gate and a cart system supplemented by bulk where possible and side-loaders where necessary.
Nor is a lot of cash wasted in office operations. Most of you don’t have excessive managerial or staff positions (but some do). Often the only place where considerable cost savings is possible is in the sales, merchandising, and delivery areas. I don’t say this with any joy; it is simply the way it is.
You need to completely re-examine the market you serve. What are its demands today? We don’t need to worry about yesterday. What is desired? What opportunities present themselves? Then, thinking outside the box as much as is possible, consider every possible method that you can use to effectively meet the needs (not necessarily the wants) of your retailers.
The world of the beer wholesaler has changed dramatically in the past few years. Your major suppliers have taken away many of your selling functions – I believe to the detriment of all but that’s another piece.
Wholesalers used to be true sales and marketing organizations, this is not as true as it once was. In many cases you are now order taking, merchandising, and delivery organizations. Especially in chain-driven markets, you must examine your sales and merchandising organization. Perhaps it would be better to have fewer (and better) true sales reps while increasing the number of merchandisers (or driving additional money to the bottom-line).
Look at both the type and frequency of service you are providing to retailers. Now, under the cover of higher fuel prices – which everyone can understand – is the perfect time to make adjustments. Less frequent service does not necessarily equate to poorer service. This either/or thinking is a false choice. It requires better planning and performance from all – that is your managerial challenge.
The combined Coors/Miller/multi-brand distributor has many advantages over your A-B competitor. You are supported by many world-class suppliers. Your market shares are much closer than in the past. You have many, many more weapons in your sales arsenal – use them to your advantage. A-B has no possible response for this. Although many thought it would never happen, you have higher percent margins.
Now is the time to ensure you use this opportunity – start with clear strategic planning, put the right organization on the street, maximize your various competitive advantages, and most importantly, execute. You have the opportunity to forever change the competitive landscape. Do it and do it wisely.