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Life in the big city.

Life in the Big City

New York City may be a nice place to visit, but you might not want to sell beer there for a living - just ask Simon Bergson. Bergson has worked his way up through the byzantine New York beer market, starting as a small-scale home distributor, and building his business into one of the premier specialty beer houses in the region. The journey has not been without its difficult spots - attested to by the Walther PPKS .380 automatic that Bergson carries on his hip.

The city is a morass of crime and cut-throat competition, and either might be enough to drive one to take up arms. In addition to established distributorships, numbers of small "home distributors" flourish between the cracks, and the lack of any territorial restrictions ensures that any enterprising soul with a station wagon can swing in and get a piece of the market.

Nonetheless, for distributors like Bergson, willing to immerse themselves in the roiling boil of New York's melting pot, the city can offer extraordinary opportunities.

New York City is home to seven million people from every corner of the globe, making it far the largest urban concentration in the country - twice as large as Los Angeles. In addition to numbers, the staggering diversity of the population makes it the most lively market this side of the Istanbul bazaar.

Specialty Distributor

Bergson got his first break in 1978, when Rheingold closed out their New York distributing operation, and he picked up the Carling Black Label and Tuborg brands.

"Since then we have moved our location five different times as we've outgrown our facilities," Bergson reports, "and we remain the specialty distributor in New York City - without a major brand unless you count Rolling Rock or Corona."

Nonetheless, Manhattan Distributing's portfolio continues to grow, now standing at 25 brands. "We're a small wholesaler," Bergson observes, "so importers know we'll pay attention to their brands. For us the only way to be successful is to build the recognition of the brands we've got."

The Wild West

According to Bergson, while the New York market is fraught with irritants, all pale beside transhipping. "The New York state attorney general thinks that transhipping is in the best interests of the consumer," he says, "so it's actually illegal to try and prevent it.

"Although most other states have territorial restrictions," Bergson notes, "every supplier that does business here in N.Y. should be concerned about this problem. It's like the Wild West out there. People unload beer from the trunks of their cars, just like they sell crack from the alleys.

"Many suppliers don't want to do anything about transhipping," Bergson observes, "but I think the suppliers who concern themselves with market integrity are the successful ones. Anheuser-Busch is a good example. They are spending $100 million to try and maintain market integrity. They're saying, 'we'd better go in and save the most important market in the country.'

"Unfortunately," Bergson points out, "Anheuser-Busch's attitude isn't common. I think that some suppliers may even encourage people to tranship. They'll tell me slyly, 'Our brand is being transhipped, I guess we've made it.' I maintain that eventually it will work to their detriment.

"As an example," Bergson says, "I only sell 60 percent of the Rolling Rock in this city. The other 40 percent is transhipped. When I talk to my suppliers they'll agree with me, but they seem to look the other way when it happens.

"What it comes down to," Bergson says, "is that suppliers don't care if I survive. I was taught that the supplier was a partner, but over the last few years, I've realized they don't really give a damn. If I go out of business tomorrow," he says, "they couldn't care less. It's every man for himself.

"If I had listened to the suppliers and done everything they told me to do," Bergson continues, "I'd be out of business now. As a result, from here on I'm forced to run my business according to what's best for Manhattan Distributors."

Crumbs on his Shirt

According to Bergson, the rabidly competitive atmosphere promoted by transhipment makes strong salesmanship more important than ever. "I think there are problems with the industry's conception of marketing today," Bergson says. "People are too conscious of their numbers and demographics, and a lot of them have yet to get out into the streets. They're stuck in their ivory towers.

"Jim Koch [of the Boston Beer Company] once said that a good beer salesman should have crumbs on his shirt," Bergson says, "and I agree. I'm proud to have crumbs on my shirt.

"When most people get to the executive level they hire people to do street-level sales for them," Bergson points out, "and I think that acts to their detriment. Of course, there have been a few beer guys who kept in touch. Walter Driskill of Beck's was always a street man - walking around, going into restaurants and bars and talking to people.

"The marketers can put together as many demographics studies as they want," Bergson says. "Somebody has to push paper, just so long as it's not me. I think the way to be successful in this business is to lead from the front. You can listen to all the reports you want," he says, "but eventually you have to go out and see the market for yourself."

Demographics by any Other Name

Although quick to knock ivory tower concepts like 'demographics,' Bergson is very conscious of the part that population diversity plays in his business. With accounts ranging from the trendy bars of the Upper East Side to the bodegas of Spanish Harlem, Bergson's trucks cross many boundaries, where the only common denominator is beer.

In some areas, retailers are looking to offer trendy brands for their upscale consumers. In other areas, retailers are looking to to make a statement - they're looking for the taste of home. And, in a city where one-third of the population is foreign born, the taste of home can include beer from some far-flung locales.

Growing Portfolio

"We find brands that we can sell to certain markets," Bergson points out. "Dragon Stout is a good example. You won't find a Dragon Stout in midtown Manhattan, but it's everywhere in the Jamaican markets. That's the way this market works. On the upper west side, in the Dominican areas, it's Presidente. Both Dragon Stout and Presidente outsell St. Pauli Girl in New York City. There are pockets all over the city," he says, "and finding them is just a matter of knowing the marketplace. "Everyone's looking for the next Corona," Bergson points out, "and maybe it's Presidente. Heileman started importing it - put it into a fancy fake bottle - but people in this market didn't think it was the real thing. I told them, 'ugly as it might be, give me the original package,' and it's done very well. "A lot of people might say that the market for Presidente is too small," Bergson says, "but give me 15 Presidentes over one big account anyday. I think that approach would work in most of the major metro markets." Another success story has been Red Stripe, a Jamaican lager produced by Desnoes & Geddes. "When Red Stripe came into this market," Bergson recalls, "they thought they needed a typical 'import' type package. They were told they should use a green bottle, just like Heineken, and a fancy foil label. They were told wrong.

"I had seen their original bottle for their home market," Bergson says, "a brown bottle with a silk-screened label, and I said, 'why not market this package.' They agreed to test market it and sales quadrupled in the general market. Suddenly they're geniuses, and I'm just a humble distributor."

Import Glut

Despite the success of Manhattan's niche imports, Bergson notes the overall sluggishness of the category. "The import market is pretty cluttered," he says. "More and more imports are trying to come in, but we're seeing more failures than successes. They have a chance if they are sincere about this market, but it depends on how much patience they've got.

"Holsten is a good example," Bergson says. "They've been in this market 20 years, and now they see they've got to take it slow, grow in a measured way and not have outrageous goals.

"Kronenbourg is an example of the other extreme," Bergson continues. "In its heyday they were selling 150,000 cases in this market - now you don't even see it on the shelves.

"Kronenbourg targeted Heineken," Bergson recalls, "and they even attacked Heineken drinkers with their ad campaigns - 'There goes another Heineken.' They seemed to be telling Americans they were schmucks for drinking Heineken, but it backlashed. The consumer said, 'yeh, and just who the hell are you?'

"I told them at the time they ought to stop attacking the number one brand," Bergson says, "It's a case of David and Goliath. There's only one time when David won - that's why they still tell that story."

To underline the uniqueness of the market, Bergson points out Corona's continued strong performance. "Corona has been up every year over the last three years," Bergson says. "In the rest of the country it's down, but we've been running contrary to the trend." Questioned for a reason, Bergson shrugs and says, "This is New York City."

Bergson's portfolio, while strong on imports, does include a few domestic trumps as well. Witness the case of Rolling Rock, a regional brand that has found a niche in Manhattan as a super-premium. "It didn't happen overnight." Bergson says, "it took 11 years to build that brand. I think it started one day years ago when the Rolling Rock rep was down here. We happened to go out to his car to get something, and I saw this bottle in his trunk, a green long neck with a silk-screened label. I said, `that bottle is beautiful,' and he told me it was their refillable for the local area. I immediately asked him for an F.O.B. price. The first year that package did 4,000 cases." Bergson says, "and last year it was up to 350,000."

Manhattan Distributing also picked up some larger brands, including once powerful names like Schlitz, Pabst and Genesee, when Better Brands went out of business in 1980. "Those brands have their niche," Bergson says, "but together they don't represent 10 percent of our business. The popular-priced brands just don't fit in Manhattan. It's an expensive city, so it's not hard to sell high-priced goods."

The neo-prohibitionistic storm that is gathering over the country has already touched down in some New York neighborhoods, with religious and community groups beginning to attack beverage billboards with whitewash. Although Bergson is not unworried about the trend, he believes alcohol foes are exaggerating the situation.

"Drinking is a part of life, "Bergson points out, "and unfortunately some people are always going to drink to excess. It was happening long before Prohibition, and long before Billy Dee Williams started pitching malt liquor.

"The government can't control our world and our lifestyles completely." Bergson continues. "We are already regulating consumption to some degree, with the 21-year-old drinking age. I think people have to learn to be responsible in everything they indulge in.

"In terms of advertising," Bergson says, "it's probably true that most brewers target young drinkers by glamorizing the product. But it's done in the same manner that Wendy's advocates the consumption of fatty foods. Does that mean the government should ban chloresterol, even if people enjoy foods that contain it? I don't think so. It's up to each individual consumer to regulate consumption.

"If we do have an ad ban." Bergson comments, "let's do it right, and let's stop those manipulative ads for toys and bullshit cereals during children's programming.

"Neo-prohibitionism is a concern," Bergson continues, "but we've seen this kind of movement before, and hopefully the industry will respond in a more unified fashion this time. There won't be another Prohibition," he says, "but I think we're going to see more controls and increased taxes.

"These neo-prohibitionist groups have already been successful to a degree," Bergson points out, "in that many people are drinking less beer. I see that trend continuing. Consumption will keep dropping," he says, "and more people will turn to light and non-alcoholic beers."

Bergson isn't losing any sleep because of the neo-prohibitionists, however. "I'm a businessman," he says. "and if they don't let me sell beer I'll sell pencils. In New York, you can make a living selling anything."
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Title Annotation:Simon Bergson of Manhattan Beer Distributing Co.; New York City beer niche market
Author:Reid, Peter V.K.
Publication:Modern Brewery Age
Date:Sep 10, 1990
Previous Article:Serving the customer.
Next Article:Technical abstracts.

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