Beer Marketer's Insights - Distribution World "Shifting Right in Front Of Us" Said Gallo's Britt; Feels Like We're Only "in the First Quarter," Said OMAC's Adam

One big through-line in several presentations at this year's Beer Insights Seminar was the striking changes taking place in the beer distribution system this year, whether it be the largest beer distrib (Reyes Bev Group) becoming a top spirits distrib or the largest wine and spirits distrib (Southern Glazer's Wine and Spirits) becoming a more sizable beer distrib with its purchase of NYC AB branch. "The world is shifting right in front of us," said Gallo cco Britt West at Seminar, and has "gone topsy-turvy," pointing to exactly those changes, i.e. RBG selling "traditional" spirits and SGWS getting bigger in beer. "The continued through-line of this consolidation wave is not only consolidation but convergence," said OMAC's Adam Bush in a panel on the evolution of distribution. "Beer distributors getting into spirits. Spirits distributors getting into beer." That's "only just starting. We'll see how it ends up. It feels like we're in the first quarter. A lot of really big players still have to weigh in." Beer distribs buying into spirits biz could be good for MC, acknowledged Molson Coors sales prexy Brian Feiro. "Things that make our distributors more healthy and stronger are good for all of us…. Looking at other categories and building capabilities that strengthen their overall business is positive for us as a supplier." But MC Distribs Buying AB Distribs? "Not Supportive," Said MC's Brian But Brian threw cold water on another possibility discussed more recently. MC is "not supportive" of Molson Coors "guys buying AB distributors or getting into the AB network," he said bluntly. "We believe very strongly that you've got to play in one lane." There are "legacy guys" who "have been there forever" and "a few extreme exceptions" mostly in smaller, tougher-to-service mkts. Beyond those "legacy guys and extreme exceptions," MC is "not supportive" of combining the 2 networks. MC's attitude would be: "Congratulations on the decisions you've made. But we'd really like to help you find a buyer for the [MC] business." Selling different portfolios in different markets happens more frequently in wine and spirits world, INSIGHTS understands. Brian's comments clearly don't favor that either. Yet Southern does sell Molson Coors' portfolio in Rhode Island. And Reyes Bev Group has long had interest in getting into the AB system. It tried to buy Silver Eagle in Houston yrs ago. So how this develops (or doesn't) really matters in the evolution of distribution. "Not Crazy" to Think Reyes "Might Enter the ABI System," Wrote Robert; "Potentially a Good Fit" Possibility of largest MC distrib buying AB distrib raised again recently by appearance of RBG ceo Tom Day at AB distrib party at NBWA, invited by AB. INSIGHTS briefly mentioned this in Oct 24 Beer Marketer's INSIGHTS. But Evercore ISI's Robert Ottenstein wrote a Nov 7 report on "4 Recent Surprises" just prior to our conference and that prospect took up most of a page. "While we would not have imagined it in the past, it's not crazy to think that Reyes might enter the ABI system," he wrote. "Reyes is known for leveraging its scale and technology to drive execution, suggesting potentially a good fit with ABI's culture." Wow! "Given persistently weak industry volumes and the increasing importance of technology to drive execution, we expect an acceleration of beer distributor consolidation as well as for TBA (Total Beverage Alcohol)," he added. Gallo "Will Evolve" with Changing Distribution Landscape Route to market is "an evolving landscape, and we will evolve with it," Gallo cco Britt West declared at Seminar on Monday. So Gallo's "been very clear with our traditional wine and spirits wholesalers that we are consumer-centric first. One hundred percent. And if you cannot get us to market to our consumer, we will find somebody that can." For any who doubt that Gallo is willing to make changes, Britt pointed them to New Jersey, where "we did it to our own wholesaler." Gallo "pulled the brand from" its self-distribution arm in NJ "because they weren't meeting the needs of where our consumer was," moving High Noon to a collection of NJ beer distribs instead. That change "has been a great one," he commented. Co also moved High Noon to Reyes Beverage Group in CA over the summer following RNDC's implosion. And by the sound of it, there may soon be more distribution moves on the horizon.

Distribution World "Shifting Right in Front Of Us" Said Gallo's Britt; Feels Like We're Only "in the First Quarter," Said OMAC's Adam

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