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« Let’s Make a Deal | Main | The Concept of Value and Other Whimsical Things – Part 1 »

Bringing a knife to a gun fight

Well the convention in San Fran was a good one.  Pretty darn good attendance for a non-trade show year… the fear and concern were evident throughout the place.  So with that in mind, here is a little rough love… er, I mean tough love ;-)   Please don’t shoot the messenger.  I hate the sight of blood… especially my blood.

 

Since it seems everyone and his dog asked me about the MillerCoors contract, here’s my quick read of the situation.  You may have heard that old joke which ends with “I hate it when someone brings a knife to a gun fight”.  I hate to break the news to you but in some ways it is more like you are bringing a plastic spoon to a gun fight… OK, maybe you’ve got a plastic spork ;-)  Had to throw that in there, gotta love the spork.

 

So, being the black hearted mercenary consultant that I am, here’s what would happen if I were on the other side of the table… and thank goodness for all that I’m not.  First, of course it depends on which state you’re in.  State law is almost always going to trump those parts of the contract which are in conflict with the law.  This doesn’t impact the remainder of this contract, it’s just that generally state law wins… except perhaps in the arbitration versus federal or state court aspect.  But the bad news here is that this breaks against the wholesaler and perhaps sticks them with arbitration regardless of the state franchise statute.

 

Next, please get rid of the silly (but quaint) notion of fairness.  Of course we might talk this way but in the end why would I be concerned with fairness?  The whole concept of fair is extremely situational.  What is fair always depends on which side of the issue you are on… fair to one party might be considered getting seriously screwed by the other.  Thus, fair is determined by power and the willingness to use it… please see the plastic spoon example above.  You A-B folks will want to keep this in mind as A-B InBev begins to implement their changes.  If nothing else it prepares you for unhappy events.  Ignore the happy talk; this is ultimately about business and nothing else.

 

Some were surprised MillerCoors took the parts of their separate contracts which were more in their favor and built the contract around them.  Why would this surprise anyone?  And if I were InBev, I would be following right down the same path.  For any wholesaler who gets an attitude and chooses not to aggressively represent my products, I’d have one word… good-bye… or is that two words?

 

Obviously MillerCoors plans to take a much more active role in consolidation of “their” network.  From their perspective it makes absolute sense.  And it gives them the ability to toss some pretty nice bones to those wholesalers who earn their good graces.  Power and the willingness to use it.  I’m guessing the A-B folks will be learning this lesson too, real soon… actually I think they may already know it pretty well ;-)

 

Now a lot of folks talk about not signing the contract… again you are bringing a plastic spoon to a gun fight.  To those who refuse to sign I’d have a very simple response.  Either sign the contract and get over it and move on, or sell your business… we’ll even bring you a willing purchaser.  Two simple choices.  I just don’t see how your plastic spoon is going to win this one.  This doesn’t mean don’t fight… I’m cheering for you but betting against you. 

 

And don’t ignore the economic statement of what willing purchasers means.  I’ve had wholesalers explain that the supplier(s) can’t do this or that because it would put them out of business.  My initial black-hearted response is so what?  What does that have to do with anything (other than of course your individual business).  From a strictly economic perspective, the marketplace is telling you that this industry is still very desirable, regardless of your wants and desires.  There are still a lot more buyers than sellers… this is an economic statement.  When there are no buyers or only buyers at a steep discount, then and only then will whining about your profitability be economically justified.  Sorry, but from a solely financial viewpoint, that’s the way it is.  For those in doubt, check out the last few weeks from Wall Street… that’s what it looks like when the markets make a bad economic statement against a company or industry.

 

As I was sucking down free beer in the MillerCoors hospitality reception, I talked to many wholesalers about the recently concluded MillerCoors meeting… how it went, what was said, the general feel.  Obviously just a little tension in air, on both sides of the podium… some tap dancing.  To be expected.  But I do tip my hat to the MillerCoors folks.  The top dogs made themselves available for the entire reception… no running and hiding… a touch of class.

 

If I ran the meeting here’s how it would have went…

 

“There has been a fair amount of grumbling about the recent MillerCoors contract.  We believe it is both fair and equitable.  We have no intention of changing anything in it.  For those who don’t believe they can sign it, we hold no animosity.  For those who have no intention of signing it, please form a line to my right and we will gladly start the process of finding you buyers for your businesses.  Let us part as friends.  That, or sign the contract and get over it.  We look forward to working with our remaining distribution partners today, tomorrow and far into the future… now let’s get on with the meeting and selling beer…”

 

Sorry guys and gals, I’m on your side and everyday I work to make wholesalers stronger, better, and more successful.  I don’t just write this wisdom (this is just marketing), my real job is being the management consultant to the beer distribution industry. 

 

Remember I started this post talking about a little tough love… and I hope I’m wrong about everything I just wrote, but this black hearted mercenary doesn’t think so.  I just don’t think your plastic spoon in this gun fight is going to be enough.  Power and the willingness to use it.  And for you A-B folks, I’d have to guess the same prospects are racing your way.  And they call me Johnny Sunshine ;-) 

 

Oh but wait.  As my regular readers know, I am a strong believer in the power of connectivity… the amazing transformation which can occur by the simple act of reaching out and joining hands… from many, one… E Pluribus Unum.  Can these single plastic spoons come together and form an army of spoons?  Together can the plastic spoon battalions win the gun fight?  Can the spoons stick together or will short-term interests turn spoon against spoon?  Or will the individual spoons sit on the sidelines and just be glad (for now) it’s happening to someone else and not them?  The entire power situation can profoundly change by using this collective power… power and the willingness to use itnow it’s up to you.

 

 

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