budweiser's high-tech distro network

[studentofbeer]

Article from business 2.0 via CNN about how Anheuser-Busch stays on top of the competition with its hardcore distributor database.

check it out (http://www.cnn.com/2004/TECH/ptech/02/25/bus2.feat.beer.network/index.html)

when i read something like this i realize how the big brewers keep on top-- it's not just advertising but also distributor muscle. i dont know much about beer distribution but it sounds pretty effed up.

[Stodbrew]

That's what having hundreds of millions of dollars at your disposal will do for you. A-B is notoriously cutthroat when it comes to their distribution. They rate their distributors by if they only carry A-B products. If they do, that distributor gets more money from the company. If they carry imports or micros, the money they receive is less. It is completly fucked up.

[thewiz]

A/B and beer distributors are not the only companies that do this.... I know of several industries that this happens in, but specifically in wireless - I've seen the actual contracts. Companies like Sprint PCS and AT&T Wireless have 'exclusive agreements' that pay more than 'non-exclusive agreements'.

In insurance (my industry), there are some insurance companies that won't even do business with you unless you are exclusive. It may seem unfair to small brewers, but it is by no means uncommon or exclusive to A/B.

[newportstorm]

A-B is efficient and very profitable. They know what they're doing and some people might call them ruthless. If you're a stockholder, you love it. If you're a craft beer lover, not so much. The scariest part is that they now own more than 50% market share of the domestic beer segment. It's funny. I know there are millions of people out there rant about the Buds, WalMarts, DunkinDonuts of the world gobbling up competition and vow to not buy their wares. Yet many of these people probably own stock in these companies (knowingly buying common stock or have a mutual fund that owns a piece) and pray for their success at the same time so they can retire comfortably. I know it's getting a little off topic, but you can't have it both ways.

Cheers!

[bigmf]

This is better than what they did in 1996. Back then III virtually demanded exclusivity from his distributors, stating that the company was concentrating on its profitable businesses. (They sold off the St. Louis Cardinals and some other things). The distributors didn't like it because they made higher margins on imports and microbrews - superpremium pricing. I beleive that the distributor that filed suit in 1997 as noted in this article was a result of the fall out.

It sounds like they are now using technology rather than force to gain a distribution edge. Also they are using smart marketing techniques to gain market share over their competitors.

I wouldn't worry about it too much. The micros have a unique selling proposition that III and The Fourth can't match. No matter how much Jim Koch annoys them people will keep buying Sam Adams. They tried hard to put a stop to them in the 90's and couldn't do it. It looks like they have accepted that their potential market does not include the imports and micros for now. AB is taking market share from Miller and Coors.

Rambling over...


M.

[Tweek]

It is going to be this way for a long time yet. Not only are these companies and ones like it superpowers of their industry but many people actually like their products. I know living in California I get caught up in thinking that the rest of the country has it similar to me. That is not true, many places you get bud or some other equally disgusting drink or nothing at all. Joe schmo doesnt want Dogfish head, he wants his trusty bud.

[danno]

while I abhor Bud's product, I admire the hell out of their data capabilities. Another division of my employer is an elite provider of these top end, massive data warehouses, and the software to mine them. It's pretty amazing what they'll do, and there is a competitive advantage to knowing your customer's habits. Here's an example, one of our major airline customers, using our data warehouse, runs a report every day that gives them a list of frequent flyers that have had more than one 30+ minute delay in the past month or so. These customers, the ones that really drive the airline's profits, get a written apololgy and a free ticket, just to make them feel good and keep their business.

I was looking for some statistics (not very hard, but still looked a little), and I believe that at the same time that Bud was gaining market share, so were our brewers, the micros. Bud isn't converting the Rogue and Bell's drinkers, they're just stealing them from Miller and Coors. They're also not monitoring shelf space for micros, just those other major competitors....