Saturday, 7 June 2008

A-B Distributors Frustrated by Exclusivity

A friend sent in a Wall Street Journal story on Anheuser-Busch's distributors which unfortunately it doesn't look like I can provide a link to.

A decade ago, Anheuser-Busch Cos. began dangling financial incentives to get beer distributors to jettison rival brands. The campaign, known as "100% Share of Mind," was a big hit, helping the King of Beers tighten its grip on the U.S. market.

But now, some distributors are finding that selling only Anheuser products might not be smart in the fast-changing alcohol-beverage industry.

In the past year, distributors in Texas, Tennessee and elsewhere have decided to eschew Anheuser's incentives and begin selling rival beers...

Those distributors carrying A-B products exclusively have missed out on much of the boom in craft beer sales, while their competitors cashed in.

Now, it sounds to me like the market is becoming more healthy and competitive, and less of an oligopoly. Good news, right? Right:

For consumers, it means greater choice at their local bars and liquor stores. Wall Street analysts say the movement signals a weakening of the St. Louis brewer's clout in the marketplace, as small-batch "craft" beers and imports, as well as wine and spirits, wrest market share from mass-market brews like Budweiser.

Anheuser's exclusive distribution system "was a great business model," but "the consumer environment has changed dramatically," says Bump Williams, general manager of the beer, wine and spirits practice of market-research firm Information Resources Inc.

Times change, and companies need to adapt or die. The distributors are adapting, and A-B will in time, too.

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