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« Time Bandits – Managing Corporate Time - Part 4 | Main | How to Build Better Managers »

Beer and Beer Wholesaling

Rather than just throw stones, here is my argument for both - and I’m not even a beer wholesaler – just a black-hearted, mercenary management consultant ;-)

A quote from the prohibition days….

Tell us Senator, what is your opinion of alcohol?  Well, if by alcohol you mean that hearty spirit which brings laughter and livelihood to social gatherings, which lubricates the gears of business transactions, which makes life’s hardships easier to bear, then I say hurrah for it and I support its legal sales and consumption.  However, if by alcohol you mean that evil essence which robs the family budget, which is a toxin to the body and mind, which causes men to assault one another and fail in their professions, then I say fie on it, and I will work with all my power to prevent its sale and consumption.

This industry has made a mistake by focusing on the last part of this quote rather than the first.  We sell and distribute enjoyment, a minor pleasure of life.  If we are going to win the long-term battle we need to start it on the emotional side.  The sad reality is that many (most?) Americans respond to their emotions rather than facts and logic.  We need to accept this and take charge of the emotional message. 

Beer is a wonderful product.  So are wine and spirits.  We don’t need to have any apology following that with  “…but of course it can be abused or use in moderation”.  Do you say that when you state your grandma’s cookies are good?  Yeah and if you eat 20 lbs of them per day you’ll get very fat and most definitely damage your health. Does this need to be said?

We don’t need to apologize and there is nothing to apologize for.  But over the past 30 or so years we have let our enemies define the argument.  A handful of single issue zealots have almost completely controlled the emotional message and they have done a very good job of it.  Now much of this thinking is ingrained in the general media’s and general population’s mind – see Phil’s comments on our “dangerous and addictive” product.  Even those on our side use these terms.

But truth is on our side.  We sell light-hearted enjoyment, we sell fun.  When my 72 year old mother enjoys a couple of glasses of wine or a gin and tonic she does not turn into a dangerous raving lunatic and she does not need to be controlled.  When my 80 year old father drinks a few cold beers or a couple scotch and waters, neither does he.  They have nothing to apologize for.  And we need to start saying it loud and clear.

Our enemies talk about how bad our products are and I think they have some of us brainwashed too.  Lots of products can be misused.  Almost every product or activity can be destructive if done to excess (even sex! – or so I’m told).  Everything can be abused – we don’t need to keep apologizing and restating that our product can be abused (of course in advertisements this may be necessary since all business actions must be viewed with a fear of tort lawyers and their lawsuits anymore, or so it seems – but that’s a rant for another day).

Go back to the quote I started with; sex, chocolate, exercise, everything could be framed in the same manner.

Ultimately our argument is about freedom.  Do people have the freedom to choose?  Do they have the common sense (and right) to make these choices for themselves?  Or do a handful of individuals (both unelected and elected) reserve for themselves the power to determine our rights… our choices… our freedoms? 

If we continue to let our enemies define the argument we will continue to go backwards, we will continue to see attacks and losses – we will continue to see falsehoods become ingrained in everyday thinking – we will continue to see brainwashing that defies logic, but is real just the same.

A handful of single issue emotional zealots are driving this discussion and long-term, if we want to win we had better start to take control of the battle – pointing out the hypocrisy, pointing out the illogic.

This is not just something for beer wholesalers to do. Brewers, wine, spirits, retailers – all need to join in this battle.  And yes this requires the wine and liquor folks to stop pushing for equivalency – it is the most divisive issue the industry confronts.  The competitive landscape has already adjusted to the present tax situation – which in most cases has been in effect since prohibition.  To change it now, to be “fair”, is only an attempt to enact a short-term pricing gain on their products versus beer.  The market is where the market is – this is not an attempt to build the market, the wine and spirits folks are simply attempting to attack a market member.  And to then think you are going to get cooperation from the group you are attacking is simply stupid.  It forces beer people to respond.  The wine and liquor people need to think about this.  What is more important?  Defending the entire industry against an assault which is well under way – and the other side is winning! – or attempting to change a 73 year old tax policy as an assault on an industry member.  If one of us goes down, we all go down.  We truly are in the same boat – if it sinks we all drown, it doesn’t matter who is drilling holes in the boat or who’s bailing – if the boat sinks we go down.  This silliness should stop. 

Now if this law had been passed in the last couple of years, one could make the argument that it was wrong and needed to be changed, disrupted the market etc.  But that is not the case.  This is just a frontal assault on the beer industry – and how do they think Congress would respond if their argument won the day?  Will their tax rate be lowered or beer’s raised?  Of course beer’s would be raised substantially.  And then you want to be friends?  Please.  It is divisive and it needs to end.  The wine and spirits people have to give up on this one since they’re the only ones bringing it up.  And at the same time the beer people don’t need to be pushing the message that a drink is not a drink – although as any drinker knows from experience – drinking beer is different than drinking shots.  It simply is.  But is this the message we want to spend our time and energy on?  There is only so much “message space” we will get.  This is the message that we and our industry partners want to waste resources on?  All while our real enemies are laughing all the way to the bank?  Beer, wine and spirits people need to fight, but fight for consumers, for retailers, not fight with each other through the powers of Congress and state legislatures.

And how about those various rules and regulations that apply to beer and alcohol products?  Wholesalers don’t need to apologize for anything – either in the generation of these laws or seeking to maintain them.  A great deal of what happens in Congress and state legislatures around the country is this or that group either trying to get something out of government, or using government to help them and hurt their competitors.  We are unique in that often when we go to DC we just ask to be left alone.

Right now banks and credit unions are rushing to the bulwarks to stop Wal-Mart from entering the banking business.  Does anyone really think this is some altruistic call to arms to help protect the poor consumer? 

Milk, much more important to families and kids than beer, “is marketed and sold under a highly complex system of federal and state rules and regulations. These programs were created in the early 1930s when milk prices fell in half as a result on the Great Depression. It was believed that only government intervention could settle the milk strikes and confusion that ensued. Congress intervened and created programs aimed to enhance milk prices by setting minimum prices and temporarily suspending competition.”  All milk prices around the country are set by a crazed set of rules depending on how far you are located from Eau Claire, WI ! This costs the average family many dollars a year, yet it is still in place – and vigorously defended.

Or how about agriculture subsidies?  The Heritage Foundation notes that “farm subsidies are America’s largest and most expensive corporate welfare program.”  And the VAST majority goes to corporate farming operations, not the family farmer.  These subsidies cost the average family hundreds of dollars a year, yet they are still in place.  Does the 3-tier system cost families hundreds of dollars a year?  Not remotely. 

No, the problem is not in defending this or that law or regulation.  If I were in your shoes I’d defend them too.  The problem comes about when in the defense of this or that law, our very industry sides with our enemies!  I won’t get into the wisdom of the respective laws, but when in defense of distribution or pricing laws we actually attack our very industry something is wrong.  Damaging the entire beverage alcohol industry as part of a legal defense to support sometimes questionable laws and regulations is short-sighted and does permanent and long-term damage.  This I cannot sit back and silently observe.  Change is the law of life – wholesalers are not immune.  Fight like heck to keep these laws but don’t throw out the baby with the bath water.  Some you will lose, so lick your wounds, adapt your business and move on.  But keep the industry alive and vibrant – not huddled behind a wall waiting for our next loss – fighting with ourselves while our enemies control the message.

Yell out to all that will hear, working for a beer distributor (or a brewer) is one of the best jobs you can have.  A typical sales rep makes anywhere from $35K - $65K, a driver can make $30K to $60K – and they earn every penny. ALL employees are well paid, generally with great benefits. And Costco pays $9/hour with no benefits?!  Costco wants a short-term price advantage over their competitors, nothing more, nothing less.  Wholesalers are one of the strongest and most loyal employers in any community.  I’ll put a beer wholesaler up against ANY employer – and I have worked in every industry imaginable.  No one provides the service levels of a beer wholesaler.  How many beers are consumed in this country each and every day?  And how many of them are “bad” or out of date? Most consumers have NEVER had a bad beer! Wholesalers do an incredible job – let’s tell people.

And let’s talk about kids drinking beer or any alcoholic product.  NO ONE wants their business.  Even the most morally deficient business person wouldn’t want their business.  Why?  Because it doesn’t make business sense.  Marketing and advertising dollars are precious commodities, why waste them on people who 1) can’t legally purchase your product  2) don’t have the disposal income to make the effort worthwhile.  There are much better places to spend your limited sales and marketing efforts.  This is a disingenuous argument that has never stood up to any type of rational analysis.

Let’s take a real look at highway deaths and the issue of alcohol.  As most of us already know, the 40% - 50% figure is an illusion.  Generally most state the true number is around 25%, but some make a good case the real number is closer to 12 – 14%.  Drunk driving deaths are a terrible, terrible thing.  You know what?  ANY accidental death on our highways is a terrible thing.  For the deceased, for those family members and loved ones, whether alcohol was involved does not matter.  The death or injury is what matters.  Although the media acts as though alcohol is the only thing that matters.  And many in the general public swallow this hook line and sinker.

That’s the first thing if there is a fatal accident, was there alcohol involved?  No, then fine and no story.  If there is alcohol involved it is a huge deal.  Not to be crass, but the people are just as dead.  What about the 75%+ of the fatalities that ARE NOT caused by drunk drivers?  What do we hear about those?  Are these deaths somehow acceptable?   Where are the cries for doing something?

I’m certain each of you have seen it too but about a year ago there was a terrible accident here in Colorado.  Four sixteen year olds RAN a stop sign and were broadsided.  All died. Terrible collision, terrible tragedy.  A rather big deal for a media whose moral motto is “it if bleeds, it leads”.  Of course evil alcohol was suspected.  When it was discovered that there was none involved the story died almost instantly.  But gee, they ignored the FACT that drug paraphernalia littered the car.  This was treated as almost a throw-away fact.  The kids were stoned to the gills but that didn’t get anyone excited.  No new calls for stricter laws.  No calls for more roadside checkpoints.  No knee jerk reaction, in fact no reaction of any sort.  Nope, just a sigh of relief that evil alcohol wasn’t involved and the story ended.  We all know how the story would have proceeded if an empty 6 pack was found in the wreckage.

A while before that two 20 somethings were doing 95 mph in a 45 mph zone at night.  But their lane is closed due to construction – car careens through the barricades and goes airborne, flips in the air and both die.  The driver’s blood alcohol level was .0015%  Yes that’s right, not .015% but .0015%.  What is this?  Perhaps one beer, maybe an orange juice?  Yet the media portrayed it as a drunk driver death and the regular characters jumped in with calls for stricter DUI enforcement, more road side sobriety check points, etc.  Guess what?  Having one beer (or quite a few for that matter) does not make you into a crazed loon.  This driver was simply an idiot who made what for him was a fatal mistake.  I don’t celebrate his death but it had nothing to do with alcohol.

And a comment on road side sobriety check points – I won’t bother getting on my conservative/libertarian soapbox about how the whole concept of check points goes against the ideals this country was founded on.  They are simply a lousy way to catch drunken drivers.  Most police forces have stopped publishing the number of vehicles stopped and alcohol arrests made since the number of arrests is generally below .5% of the vehicles checked!  And very, very few of even those are drunk, but rather have simply been drinking and are not intoxicated.  But police forces have discovered they are great ways to raise money.   They ticket lots of people, and arrest a few – just not for drunk driving, all while filling their coffers.  This is now the dirty little secret of road side check points.

I say the following somewhat with tongue in cheek, but if the goal is to save people’s lives let’s do something about caffeine related accidents.  Let’s test after the accident.  Were you driving while wired?  Anyone who drinks caffeinated products has over-consumed – we’re talking about almost a 100% “abuse” rate!  We all know the symptoms and they are VERY real.  Yet I don’t hear, nor do I believe there should be, calls for stricter regulations of caffeinated products.

What percentage of road rage incidents are caffeine driven?  What percentage of all accidents are caffeine fueled?  I don’t know about deaths but I’ll bet everything I own that there are many, many more accidents that are “caused” by caffeine than alcohol.  Please notice also that I put caused in parenthesis – pointing out how language has been distorted to change its very meaning.  Caffeine of course doesn’t cause accidents – people making mistakes, people not paying attention, this is what causes accidents – individuals.  Guess what, the same is true for alcohol.  It does not cause accidents – individuals do.  Following too closely, speeding, driving aggressively, driving recklessly, not taking time to look clearly – how many people do these things because they are wired on caffeine?

Or how about alcohol versus drugs?  No one wants teenagers drinking beer or doing drugs.  But let’s get real.  One is profoundly different (and more destructive than the other).  You have to be pretty hard core to go slam a six pack before school in the morning – not so with weed and many other illicit drugs.  You have to be pretty hard core to pound a couple forties over lunch break – not so with weed.  You have to be pretty hard core to be drinking from the time you get up until the time you go to bed – not so with weed.  In fact marijuana lends itself to just the type of teen and pre-teen abuse that is the most damaging to the child.  Sneaking a beer or two on a Saturday night does not do the same damage as becoming a regular dope smoker – smoking dope is so much more insidious since you can (and perhaps will) do it almost anytime – not so with ANY alcohol product.

I grew up in Colorado and back in the days of sanity, had an 18 year old drinking age for 3.2 beer.  At 21 you were legal for “real” beer, wine, and spirits.  I met a few kids from California in the 3.2 beer joints and they all said the same thing – they wished CA had the same sense.  Instead they had a 21 year old drinking age and until then, almost everyone smoked dope – it was sooooooooo much easier to get than a 12 pack of beer.  This was and is insane.  Sure we’d rather kids do neither but if they are going to be stupid, at least minimize the damage their stupidity can do.  And yes, I freely admit to being stupid as a kid – I think that is one of the definitions of being a kid and growing up.  I’m still not beyond being stupid but that’s another story.

Yet we quietly watch the world where restrictions on alcohol are becoming stricter, driven by a handful of single interest zealots, while marijuana becomes more legal each and every day.  Is something wrong with this picture? Although many wholesalers may disagree with my following point, as a matter of honesty I must admit that I favor some sort of legalization of illegal drugs.  Prohibition simply doesn’t work and the damage done by the drug wars far exceeds that done by letting folks simply live their lives – but also forcing them to live with the consequences of their actions.  People’s lives are their own – they can do with them what they will and live with the consequences of their actions. 

And guess what; almost all illicit drugs are already “semi-legal”.  ANY young adult, ANY college student, ANY high school student, and sadly many junior high students have these drugs readily available.  It is personal choices, not limited availability which stops them from using.  If they want them they can find them and without too much difficulty.  Almost any adult who wants drugs can find them with only a modest amount of effort.  Hell the media and the police regularly tell us where these “open air drug markets” are.  I travel around the country and if desired, anyone could fly into any medium to large city and purchase drugs within an hour or so.  So how freaking illegal can they be?

And as my last point on this long rant, not that I expect a huge push to change the laws but I have to point out the insanity of the national 21 drinking age.  Ignoring for a minute the quaint idea that the words in the US Constitution actually mean what they say – in which case the powers of the federal government are enumerated – they are clearly stated – with all other power reserved for the states or the people, and of course the 21st amendment… it is insane that the men and women of our armed services, individuals who put their lives on the line each and every day for OUR freedoms, individuals who leave their blood on the battle field for US, individuals who are responsible for operating multi-million dollar machines, individuals who operate and control equipment of enormous destructive capacity, individuals who are responsible for the very lives of their fellow soldiers and civilians, individuals with this amount of responsibility are not responsible enough to drink a cold beer!  Bullshit!

In states around the country, a 16 year old girl can legally have an abortion without her parents consent, yet she is still 5 years away from being able to legally enjoy a beer.  Is there something wrong with this picture?  Let us take back the message and shout it out loud – the truth IS on our side and we have nothing to apologize for.

John Conlin, President of Conlin Beverage Consulting has been providing operational and financial management consulting services to the beer and beverage distribution industries since 1986.


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