Thousands attend NBWA convention in Vegas.
The trade show, which had sold out months in advance, also attracted record crowds. Traffic on the trade floor, which in past years seemed to trail off early, held up steadily throughout the two days of the show. Exhibitors of everything from new beer brands to computer systems reported heavy traffic in their booths.
The NBWA had arranged an impressive speaker's docket for the general sessions, headed by keynote speaker August Busch III, chairman and president of the Anheuser-Busch Brewing Company. Busch, who rarely speaks publicly, offered a solid nuts-and-bolts address, addressing himself to shoring up the foundations of the industry - stressing the importance of the three-tier distribution system and the continued value of high-volume main-line brands.
Busch lauded the NBWA for its bulldog legislative style, noting approvingly that "The NBWA doesn't run away from a fight." He congratulated the association's legislative affairs personnel for their successes in shaping a pro-business (and Republican majority) Congress, but stressed that "Beer marketing must remain non-partisan...neither [political] party is solely good or bad for the brewing industry."
Busch thanked wholesalers for their help in building his family's business, saying, "Our success is in large measure due to the efforts of those who put beer in the hands of retailers [and] we support the three-tier system without hesitation or qualification. It's in our self-interest, and although 20% of retailers feel they could handle direct shipments, you [the wholesalers] add value to the system."
Busch noted the need for evolution, however, saying, "Getting beer there is no longer enough, you also have to deliver solid marketing...none of us sell beer, we sell brands. Consumers take very seriously their favorite beer, and merchandising and marketing expertise is crucial to success in branded products business."
Busch also stressed the importance of product integrity - noting "We must be able to guarantee freshness, keeping beer cold all the way through the system."
Busch said that main-line brewers and wholesalers should not ignore the specialty beer business, saying, "These brands command higher price, and it's heartening to note that beer drinkers are willing to pay more...this should provide benefit to the price umbrella, and as people talk about beer we all will benefit.
"People are rediscovering what we have always known," Busch stated. "Beer is good. The brewer's art is being acknowledged today because it is timeless. Beer may be the oldest staple in the human diet, after bread," Busch added, "and it's worth noting the positive attention that beer is getting relative to health - moderate drinkers live longer."
Busch reported that A-B now produces 30 different brands, and announced the reintroduction of the "American Originals" brands (The company's revivalist all-malt Munchner dark, porter, bock, pils and lager). While pointing to these new brands, however, Busch emphasized the industry's bread and butter. "Ninety-eight percent of beer consumed in the United States is lager or light," he said, "and brewers must concentrate on continued growth of mainline brands. Many specialty brands have very short lifespans, and the vast majority of our focus will remain on mainline brands."
Glenn Hicks III, chairman of the NBWA, was next at the podium. In his address, he quoted Winston Churchill, saying "There is no greater exhilaration that being shot at without result," referring to the beer industry's past successful avoidance of regulatory interference, noting "the voters have now elected a pro-wholesaler, pro-business Congress, and that feels good."
Despite this development, Hicks said, "I'm taking nothing for granted, now or ever. I'd respectfully suggest that there's no time like the present to cement those relationships back home with elected officials to help prevent the spectre of the past from rearing its ugly head again."
Hicks said that the industry may be on the eve of a new round of competitive pressure, what Hicks called "Beer War II." He said that "share of stomach, share of mind and share of market locally [will be] won or lost using weapons such as delivering on and exceeding identifiable service and merchandising standards for retail customers and consumers based on quality, timeliness and efficiency, not price, price, price!"
He said that the wholesale tier would justify "its critical role in the distribution system, based on the concept of value added, a concept I sense, that is often cited, but not yet universal, and regrettably is not understood or embraced by all in this room - in all tiers represented."
Ron Sarasin, president of the NBWA, also took the podium to review the changing legislative climate, saying "What a difference a year makes." Sarasin pointed to the election of a pro-business Congress, and said, "Standing before you today, I can easily say that NBWA, rather than just playing defense, has the bail and we have taken the offense and are moving down the field."
Sarasin said that the aggressiveness of the NBWA PAC helped shape the incoming Congress, noting that 95% of NBWA-supported House candidates won their elections and 76% of Senate candidates were victorious.
Sarasin reported that many bills that have stalked the beer industry in the past are no longer being considered - including ad warnings, additional label warnings, a national .08 standard, advertising deductibility and forced deposits.
On other fronts, OSHA's ergonomics regs were withdrawn; estate tax laws were reformed; prohibition of slotting fees was maintained. And in what Sarasin called NBWA's "greatest legislative victory to date" the House passed a bill to make it illegal for grantees of federal agencies to lobby government using tax dollars.
"These issues have been thorns in our sides for several years," Sarasin said. "But while it would be great to say we have nothing further to worry about, as beer wholesalers you know better.
"You should all congratulate each other on the fine job you have done and continue to do," Sarasin said. "If we didn't work together as partners to defeat or promote these issues, I probably wouldn't he standing before you today...but remember, although it is fine to savor our accomplishments, beer wholesalers know this road never ends."
Sarasin said "adversaries that oppose us" are "out there lurking in the regions and states, and filtering down to the cities and towns. They will not go away." Sarasin counseled continued vigilance on the part of beer wholesalers, but told them to continue to look forward. And, he said, "If the current political climate is maintained, we won't have to look over our shoulder as often."
Michael Minnig, president of American Potomac Distributors in Washington, D.C., previously NBWA vice chairman, began his term as new NBWA chairman at the close of the convention. He said that he welcomed the chance to head an organization that he called "the premier player in the beer industry" on legislative issues.
"NBWA will continue its political evolution under my watch over the next year," he said. "I assure you it that we will not be brought down by any neo-prohibitionist group, federal agency or coalition of those who believe that licensed beverages are just like illicit drugs."
On the business front, Minnig said that wholesalers need to look at suppliers and customers as partners, rather than adversaries. "The only way to get to workable solutions is to partner," he said. "There are very few of us out here today who pack enough clout to go it alone."
As Minnig pointed out, "Our partners are not trying to cut costs, speed up delivery and build inventories to satisfy some sadistic urge to force us out of business...in case you haven't looked, overall sales are flat or down in almost every market. If a wholesaler can't identify the problem in their market, suppliers will continue to believe that what looks good on their bottom line is what works in that market."
Minnig said that the "Holy Grail" for beer wholesalers is "identifying the value you add to your products." He said that wholesalers should say "We're not just delivery boys" to brewery reps that question business decisions.
At the same time, Minnig said that "I have to sometimes question a partnership that works on a 70-30% price increase and a 50-50 sharing of expenses." Minnig said that these types of agreements worked when wholesalers were selling a small amount of beer on promotion and not paying a 50-50 co-op on the other items, but said, "Now it's causing us major problems, and we need to sit down with our suppliers and discuss how these practices should change."
Minnig said that changes in the retail sphere are changing the business landscape, and said "the challenges in the business arena are multiplying with the club stores and super centers." He said that "While we continue explaining our reason for being, our customers - especially the large ones like some chains and club stores, are saying 'what the hell does this guy do that I can't do myself?'."
Minnig encouraged wholesalers to open lines of communication with these customers, looking at them as partners. He said that wholesalers still will add value: "We continue to provide access to the market, simplify the distribution process, build brand awareness through special events and advertising and warehouse the product. Some of us still collect the taxes."
Despite this, Minnig said that wholesalers will have to change. "Why do we have to change?" he asked rhetorically, "Because our ultimate consumer - the customer - is driving it. Our suppliers and retailers are consolidating, cutting costs and adding new products to give consumers value and variety."
Minnig noted that wholesalers are following suit, becoming larger and fewer, and said that, although "there doesn't seem to be an end in sight," wholesalers are "a pretty resilient bunch." He said that wholesalers should continue to examine how they add value, and work to partner with associations, suppliers, retailers, politicians, employees and the consuming public. Editor's Note: We will include expanded coverage of the NBWA convention in the upcoming November magazine issue.
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|Title Annotation:||National Beer Wholesalers' Association; Las Vegas, Nevada|
|Publication:||Modern Brewery Age|
|Date:||Oct 30, 1995|
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