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« The Slaughterhouse – A Modern Fable | Main | What would you do for a billion dollars? »

The Slaughterhouse – A Follow-Up

First, my strategic partnership with Steve Cook continues to provide growth opportunities in wholesale mergers.  Steve and I would like to recognize and thank our clients for which we provided consulting support services in yet another successful merger


Congratulations to  CAROLINA PREMIUM BEVERAGE LLC


Stephen Cook of Great Lakes Consulting Associates, LLC and John Conlin of Conlin Beverage Consulting, Inc. want to thank each of the new merger partners, namely  I. H. Caffey Distributing Co., Cunningham Wholesale and Rudisill Enterprises for the opportunity to provide our pre-merger valuation services and financial analyses in support of your newly formed MillerCoors operations, Carolina Premium Beverage LLC in the Charlotte, NC area.  Thank you for your consideration and best wishes. 

 

John and Steve

 

Second a very public tip-of-the-hat to Dave Peacock for being a stand-up guy.  To say that my last post got a little attention is a slight understatement… for those who missed it you can find it by clicking here.  I have a feeling that goats and slaughterhouses have just become a permanent piece of beer wholesaling lingo.  100% of the wholesalers I talked to (both ABI and MillerCoors) backed me up on the piece.  Many went out of their way to express their support and gave me high marks for relevancy.

 

For those who are not yet aware, at the recent NBWA Legislative Conference ABI put on a 2 hour meeting with their wholesalers.  About halfway through Dave’s talk, he moved to the next slide and lo and behold it was a picture of a goat.  I hear it was a good looking goat as far as goats go.  I also heard (no pun intended) it was quite easy to see who reads my stuff and who doesn’t.  At the meeting those in the know let out a hearty chuckle when the goat appeared, those in the dark wondered what the commotion was about.

 

Dave made his comments about my piece and where ABI stands on a number of issues… including ABI needing to do a better job communicating their vision to the distributor network… his points were not surprising.  I think he noted I’m some type of attention-seeking consultant… or some such thing.  Who I am to argue?  ;-)  But I will note that I very publically state my opinions and beliefs on many subjects… and I live by them.

 

After the goat-scapade, I introduced myself and got a chance to speak to Dave – he didn’t even take a swing at me ;-) and I offered Dave a chance to respond on this blog, but he declined.  Dave that is an open invitation anytime you want to take it.  In fact if any of you beer/beverage folks (brewers/suppliers, distributors or even retailers) have something you need to get off your chests or wisdom you want to share, give me a call or email and I’ll post your wit and wisdom too. With attribution or anonymously… your call. 

 

Also if you are a new reader to this blog, send me an email and I’ll put you on my email list.  I always send out an email letting folks know when a new article has been posted.  That is all your email address will be used for.

 

But back to business… first we need to understand that a lot of this is nicely captured by the classic mob line, “it’s nothing personal, just business.”  Keep that in mind.  Of course when it’s your legs that are being broken this is a lot easier said than done!  Kind of depends on which side of that quote you are on… the giving side or the receiving side… on the receiving side it is quite personal.

 

But being happily uniformed (or ill-informed) is the most certain way to be headed in the slaughterhouse before you even know what has hit.  The continuation of a full-scale independent beer distribution industry is far from a certainty – you have no god-given right to exist… there are many other models which would work (we’ll talk about ABI and their on-going dance with Pepsi in future articles).    

 

So a number of distributors have asked me, “OK Mr. Smart-Guy, what should I do”.   I’ll repeat my wise counsel one more time… either take your chips off the table and run to the door – this year - or prepare your business (and your industry) for long-term survival.  Either one is acceptable… nothing else is.

 

Some might mistakenly see these as contradictory positions.  Nothing could be farther from the truth.  They are very much symbiotic.  First, some of you are in the game regardless of your desires.  So be it.  Some of you are in the game because you choose to be, i.e. you think it is the best financial and personal choice you have.  Again, so be it.  If that’s the case prepare your company for long-term survival… a high-performance and high-demand organization which brings substantial value to your suppliers and retailers while at the same time maximizing the cash-flow to the bottom-line.  These are not mutually exclusive goals. 

 

As a note on the service side, there are A LOT of folks out there who deliver things… we need to keep our eye on continuing to add substantial value… but remember this is not the same as defining service by how many times a week your truck is parked at a store. Quality service is MUCH more than just delivery frequency, quality service is an operating philosophy and process that holds wholesalers accountable for best-in-class retailer satisfaction while growing market share and increasing profitability.  Never forget, the first step in being a high financial performer is control of your service policy.  From this you balance all of the functional aspects of your operation including sales, merchandising, warehousing, delivery and admin. 

 

Everything flows from your service policy. 

 

In most situations, being larger helps accomplish these goals and gives one a stronger strategic foothold by leveraging economies of scale, thus becoming more efficient and more effective.  Much like war, controlling real estate (especially in a world of exclusive territories) is of utmost importance.  Thus the inherent drive to grow through consolidation – either outright purchases or mergers – either one works. 

 

In most situations acquisition of additional real estate sure looks to be a requirement for continuing in this industry.  And with the upcoming changes in tax law, this is the year when futures will be made or lost.  If you want out this sure looks like the year to do it, at least for the near-term

 

This reality fits perfectly with those who think now is a good time to cash out their chips… whatever their reason for doing so.  So we have one group of folks who in all likelihood need to grow their real estate and another who for whatever reason want to sell their real estate.  That’s how deals get done.  Decide which one you are and get moving… remember a great quote “Change is the law of life.  And those who look only to the past or the present are certain to miss the future”.  As I have said repeatedly, work to make certain it is a future you desire.

 

 

PS –  As my wife will freely tell you, I’m ALWAYS on my soapbox.  To read a couple published pieces on how I would start to solve the health insurance crisis, other than the road to socialism, click here and here

 

 

 

 

 

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