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06/10/2019

AB in CA: Looking for Answers, Could Sell Branches; Buy Distribs? From 50 to 30 Share

Nation’s largest beer mkt a long-term trouble spot for AB; it went from 50 share in early 90s to just 30.5 share last yr.  And its biz still getting weaker in CA as sales continue down mid-single digits, branches fight with only declining AB portfolio, and several strong indy distribs lost Constellation last yr. So what’s a global mega-brewer to do?  

AB exploring different options, looking for solutions to its ongoing CA woes. Yet even at this late date, it has “no plan,” some say.  And to some extent, it has thrown ball back in distribs’ court. Among other options considered in recent mos: some time back it offered to buy indy AB distribs that lost Constellation in Southern CA. In one case, it reportedly offered virtually nothing for good will. Then too, it has offered to sell some of its branches to same distribs.  Also considered: two indy distribs would combine and buy a coupla AB branches. While that sounds like a big biz, it’s across a broad geography. And so it would be low share, not necessarily competitive with nation’s largest distrib Reyes.  Recall, Reyes sells near 90 mil cases in SoCal, almost half of that Constellation. And in big chunks of SoCal, Reyes at 60 share or more. What’s more, even if it sells some branches, AB would still have branches in SoCal, which would impair indy distribs’ chances to get new brands.  AB seemingly still thinks it can provide all of a distribs’ brand needs, tho that hasn’t been case in Cali in quite some time.  

AB’s long-term losses, lack of direction and/or traction in CA ain’t a big vote of confidence for branch system. CA contains more AB branch volume than any other state.  At INSIGHTS Spring Conference last mo, chief sales officer Brendan Whitworth was asked about AB’s current thinking on branches and whether it’s considering selling any, in Calif/Pac NW where share losses outsized.  AB thinks of branches as “proving ground” that “allows us to mess up” with new ideas and fix ’em before they’re brought to indie system, said Brendan.  Branches also provide “really nice talent pipeline” for AB field sales, which helps AB understand distrib dynamics.  But no response re possible sale of western branches.

And in CA, more crucially than in any other state, AB has gone from dominant to non-dominant in the course of a decade with no end in sight. In fact, AB lost 2.8 mil bbls, 29% of its biz in last decade alone, dropping nearly 12 share in 10 yrs. Looked at from a scan $$ perspective, conditions starker as Constellation now #1 going away. In fact, Constellation at 35.5 share of $$ in LA IRI multioutlet + convenience yr-to-date thru May 5, while AB down to 25 share.   

What about up north?  A similar situation, tho perhaps not as pronounced.  Recall, AB bought 2 NorCal distribs a few yrs ago (Oakland and San Jose).  As branches, they continue to lose volume/share. AB has also reportedly floated selling those operations. Meanwhile, Constellation widely expected to consolidate more of its NorCal volume in coming mos and over next couple of yrs.  So several indy AB distribs gotta be wondering when next shoe will drop. No deal with AB to buy or sell imminent either in north or south, as far as INSIGHTS knows. But potential sale of branches have become part of conversation in multiple geographies. Not just in CA.  That could represent an important switch.

Publishing Info

  • Year: 2019
  • Volume: 50
  • Issue #: 11
Read 311 times Last modified on 08/01/2019

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