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NBWA members meet in New Orleans.

Over 1,300 wholesalers, brewers and suppliers recently repaired to New Orleans for the 55th Annual National Beer Wholesalers Association Convention. Attendees were treated to two full days of sessions and seminars, with a speaking program that included addresses delivered by former President Gerald R. Ford, Anheuser-Busch president Pat Stokes, NBWA president Ron Sarasin and Henry King, chairman of the Brewers Association of America. Kirby Lawlis and Kevin Forth, respectively the outgoing and incoming NBWA chairmen, also addressed the gathered wholesalers.

In his address, Kirby Lawlis recalled a challenge he had offered to beer wholesalers when he assumed the chairmanship last year. "I asked you to become more actively involved in the political and legislative process," Lawlis said, "not only at the federal level, but at the local and state level as well.

"In seeking your involvement by standing up for what we know is right," Lawlis said, "I asked you to join me at the NBWA/Brewers joint legislative conference to take our case into the halls of congress. You responded to my challenge, and you did it with gusto.

"Although we did not meet our objective of one beer wholesaler from every congressional district," Lawlis said, "we had a record 700 attendees and our voices were heard. You did make a difference. Although the issues we addressed remain as threats (further excise taxes, bottle bill legislation, and ad-ban legislation) not one of those issues made it into law."

Kevin Forth followed Lawlis at the podium, and delivered a wide-ranging speech that started by focusing on the issue of added value. "Added value is not a new buzz word at NBWA," Forth said, "we've been talking about it for a few years now in our long-range planning committee. The focus has been on what "value added" a beer wholesaler provides to the process in our industry and identifying the components that justify the wholesaler tier.

"There are four areas I'd like to talk about," Forth said. "How we can add more value to our businesses by redefining the relationship we have with our suppliers; redefining the relationship we have with our retailers; enhancing the image of beer among our consumers; and redefining the relationships we've established in our own communities."

Forth related a story to illustrate his view of the current state of wholesaler-supplier relations. "I'm reminded of one of my wholesaler friends who recently took a camping trip with his supplier's vice president of sales. They were hiking in Yellowstone Park, getting ready to break for lunch, when an enormous grizzly bear stepped from behind a tree and charged them. Suddenly, the sales v.p. handed the lunch bag to the wholesaler, pulled off his pack and madly began putting on a pair of sneakers. 'Hell,' the wholesaler said, 'There's no way those sneakers will help you outrun a bear.' The brewer's rep looked at him, and said breathlessly, 'I don't need to outrun the bear, I just need to outrun you.'

"Is it my imagination," Forth asked rhetorically, "or does it seem that these days this is what the relationship with our suppliers has become? Do you all feel like the grizzly bear of price promotion is chasing both brewers and wholesalers, but that the brewers are the ones putting on their sneakers, willing to leave us holding the bag?"

Forth recalled that the supplier-wholesaler relationship has traditionally been viewed as a partnership. "But lately," he noted, "it sometimes doesn't feel very much like a partnership, and it sometimes feels that someone has forgotten that we are their customers too. Inconsistent and inequitable splits on price increases and post-offs, reachbacks, demands for exclusivity, co-op advertising dollars and perhaps the inference that you're not a team player if you can't see the wisdom of working on 72 cents gross margin per case on some brands...

"If our own suppliers do not view us as integral to their success," Forth pointed out, "then we will gradually become shippers and shipping clerks, not value-added distributors.

"We must use our relationship with our communities, with our retailers and with our employees to give the brewers and importers something they don't have, and they can't buy," Forth said. "Only we can add value in local markets. We must be a vital part of the equation of success that our success becomes their success."

According to Forth, the place to begin is with the retailer. "|We must~ make all retailers, including the large chains, understand that we bring a lot to the party. Our brands, our advertising, our in-store promotions and merchandising--all are bringing high-ticket customers into stores. Our products deserve floor display space and pricing considerations consistent with their added value."

The message must also reach the consumer, Forth observed. "If our consumers do not perceive brand or product value," he said, "we can't sell them a value-added product at a value-added price. I urge our suppliers, and each of you |wholesalers~ to work together across the spectrum of brands in a sustained effort to remind America that beer belongs--as a part of our heritage from different cultures, as part of our nation's birth, as part of our enjoyment of family and friends.

"This issue," Forth said, "the categorical erosion of brand loyalty and diminished consumer perception of product value, goes well beyond any brand or any supplier's family of brands. It goes to the core of our product.

"All beer is threatened by cut-throat pricing and the absence of strong support for beer as an inherently quality product," Forth continued, "a product that, when consumed responsibly by adults, can add value to the human experience."

Forth called for a summit meeting between NBWA directors and the principal suppliers, under the auspices of the Beer Institute. "The purpose of the summit meeting is to explore creative strategies and to come up with solutions," he said. "The outcome would be a sustained industry-wide program to remind Americans about the value that beer adds."

Forth then turned to the potential for electoral changes this November. "The newly-elected members of congress--and there will be a lot of them--will not be from the get-elected, get-along school," Forth said. "For the most part, they will be people on a mission, and many of them are not naturally going to be our friends. Unless you know these candidates personally, I don't think you can assume that these new members of congress know our positions, or are aware of the positive things we've done, or will share our interest in the cultural rituals in which beer plays a part.

"The balance of the '90s is going to be a time of trial and challenge for every member of NBWA," Forth concluded. "We must find a new common ground with our suppliers...we must find ways to make all retailers appreciate the unique value that beer and beer wholesalers offer them...we must remind America's beer drinkers about the magic and refreshment that only beer can offer...and we must protect our franchises by increasing investment in communities to meet a new cultural and demographic cycle.

"If there was ever a doubt in your mind why you and your competitor need to be involved in NBWA with your concern, your commitment, and your checkbook," Forth said, "I hope I have helped answer your question."

The convention's keynote address was delivered by Pat Stokes, president of Anheuser-Busch. In his speech, Stokes reviewed the raft of pressing issues facing the industry, and put the harmful effects of the excise tax at the top of the list. "I think it's safe to say that the blow felt by our industry has been worse than anticipated," Stokes said. "We continue to feel its repercussions, and all brewers have been affected. It doesn't matter whether your brand portfolio includes premium brands, popular price brands or malt liquors--no one was untouched by the excise tax. Our industry growth has been seriously affected."

Stokes illustrated his point by citing affordability. "Over the last two decades," he said, "the price of beer has risen at about 75 percent the rate of the consumer price index... To put that in perspective, consider that the price of a six-pack today would be 22-percent higher if beer prices had kept pace with the consumer price index over the last 20 years.

"In 1991, however," Stokes continued, "we saw a dramatic shift in the relationship between beer price increases and the consumer price index. Last year, because of the excise tax, the price of beer increased 10.8 percent, or three times the normal annual rate."

Stokes said that volume declines have contributed to increased discounting activity, with a resulting negative impact on gross profit. "The consumer prices that resulted from the excise tax are hurting our ability to increase revenue through both volume and unit price increases."

After a discussion of the perils facing the industry on the legislative front, including potential ad warning and forced deposit laws, Stokes observed, "The November elections will usher in an era of change as well as opportunity. There is a growing anti-incumbency sentiment in this country," Stokes said, "and redistricting complicates the political picture.

"However," Stokes said, "as large as the Congressional turnover is expected to be--and predictions of 150 new members would make it the largest turnover since the 1930s--federal change will seem slight compared to what will happen at the state level. Experts are predicting that fully 1/3 of the nation's 7,000 state lawmakers will be new next year."

Stokes emphasized the importance of involvement in the legislative process. "It is important that candidates know where we stand," Stokes said. "We must work hard in the months ahead to get commitments on the issues that are important to our industry. Those of you in the audience today play a critical role in this task because of your access at the local level, where all political initiatives start."
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Title Annotation:National Beer Wholesalers' Association; New Orleans, Louisiana
Publication:Modern Brewery Age
Date:Oct 5, 1992
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