What would you do for a billion dollars?
First some geology (trust me)… a massive earthquake in
On a geologic time frame, they zip around the planet at an astonishing pace… for us mere humans, they move a few centimeters a year. Sea floor is created in the centers of the oceans, races across the ocean floor and grinds under continents. Continents float around like a bit of flotsam, all over the planet. Earthquakes… volcanoes… mountain ranges… they are all driven by these moving plates. Like a lot of science it is often difficult to get your mind around the actual workings of the world and the universe. But one thing is certain, the only constant is change… a continual flow… a continual movement.
What the heck does this have to do with beer wholesaling? Wait.
For those who don’t know, I actually have an undergraduate degree in geology. My focus then was hard rock exploration… we’re the ones who find mineral deposits. I always enjoyed geology for a number of reasons. First the science is a meld of earth sciences with almost very other field of hard science; chemistry, physics, biology, astronomy, cosmology, mathematics and engineering… you have to be a well-rounded generalist to become a geologist. Second, especially in hard rock exploration, you have to be a master of deductive reasoning. Generally you don’t have the benefit of actually seeing things as they occur… instead you are presented with a jumbled mish-mash of major events which span millions and millions of years. It’s up to you to figure how that all occurred to get where we are today. These personal traits are what makes me such a wiz-bang consultant… if I do say so myself ;-)
Just as the tectonic plates of the earth continue to move, sometimes fast and sometimes slow, so do the tectonic plates of the beer and beverage industry. Is this a time of rapid movement or slow movement? In the end, does it really matter?
The best we can do is to influence what we can and forecast and adjust to our advantage for those things that we can’t.
What we don’t want to do is to follow the classic military advice:
When in trouble, when in doubt… run in circles, scream and shout
So a tip of the hat to all those state associations and NBWA for attempting to influence what we can. From strengthening state laws to the ever going battles at the federal level, we don’t just need to remain vigilant, we need to always be pro-active… moving ahead of the curve and shaping the curve, not simply responding to it. Responding to it is generally a loser’s game. And shaping it for beer distributors… no one else.
The biggest tectonic plates in our world are Mr. Brito and ABI, MillerCoors, and of course our friendly governments, at all levels. But there are plenty of smaller plates too, and they can wreck just as much havoc as the big ones. MillerCoors took their beating over their recent contract… although that one is far from over and I’m not certain they didn’t in the end win most of those rounds. Right now MillerCoors is sitting back and letting ABI get all the attention… and they are getting some attention.
Read what this major tectonic plate is saying in an interesting cover article from a Brazilian magazine, EXAME titled:
Budweiser. Brazilian style at the largest brewer in the world. Aggressive goals. Cost cuts. Tough negotiations. Promises of millionaire bonuses. Behind the scenes at InBev’s Brazilian management of Anheuser-Busch, an American icon. Not even they expected so much capitalism.
It can be found by clicking here. It is a must read.
Most of you have a family business where you think in terms of generations… ABI is a public company where their top-dogs think in terms of quarters… and they are focused on cutting debt. A few years down the road none of them might even remain in this industry. Heck, they might pocket this bonus in the next year and be on the beach after that! Do you think they are overly concerned about the state of their business or brands five or ten years down the road? Of course they are to some degree but right now the big prize is on one thing and only one thing. Answer the following question honestly… if you were in their shoes with that sole goal and that potential payoff, would you care about all those other things? Or would you be very short-sighted with your eyes on the prize? I think we all know the answer to that… these aren’t moral issues, just the realities we each face.
And remember the big dogs in this industry are all now international
in scope. We might think of the good ol’
US of A as the center of the universe, they most certainly do not. Nor in fact should they. Who knows, a few years down the road ABI might
spin off their
The author of the Brazilian piece has these thoughts towards the end of the article…
“In face of the drop in sales, ABInBev executives will have to find new ways to achieve their performance goals… From now on, no one doubts that cutting costs will be an even more difficult task than last year… One possible source of savings is an attack on the enormous and powerful network of Anheuser-Busch's independent distributors. The company can try to increase the amount of beer it sells directly to retail.”
Something to think about.
Also note those last two sentences are not discussing the same thing…
they are two separate possible courses of action. In an earlier press conference when asked
about ABI’s plans to purchase the remaining shares of a distributor in
I think I’d be heading to my state capital to ENSURE the “for now” becomes when hell freezes over. And just because you’re a MillerCoors guy don’t think this doesn’t affect you. If ABI would be successful, MillerCoors will be right behind them. I would be… wouldn’t you? Let ABI be the spear catcher and if it works, race to follow them.
The tectonic plates of the beer and beverage business (this is MUCH larger than just the beer business) continue their inexorable journey. Fortunes will be made… and fortunes will be lost… some quickly, some over time. I repeat my wise counsel one more time – a bad habit my wife regularly points out ;-) either take your chips off the table and run to the door (if so, let me and Steve help) – this year - or prepare your business and your industry for long-term survival (again, if so let me and Steve help... we are experts at both… that’s what makes our expertise so unique) Either one is acceptable… nothing else is.
Those plates are going to move… either use it to your advantage or get out of their way. As I noted in previous post, here… “was ain’t is”. Quit hoping and start acting. This is far from bad news… it is simply news. Use your knowledge of these plate shifts to be the one who makes a fortune, rather than the one who loses it.