Snags for Single Distributor

Deals in Florida, Mississippi now off the table.

For months, there’s been speculation that the creation of a single distributor system -- a scheme in which one wholesaler would handle all the beer brands in a market -- was around the corner.

That’s on hold, at least for now.

As Beer Business Daily reported, Anheuser-Busch killed a proposed deal under which an “all other” distributor in Miami would have acquired an A-B distributor. Meanwhile, Miller did not approve an A-B distributor’s proposed purchase of two Miller distributors in Mississippi. Instead, the brewer facilitated deals with other Miller distributors.

As Beer Business Daily notes, Miller -- and apparently A-B -- are “against” a single system.

Pundits who predict the coming of a single-system argue that it makes sense for A-B to sponsor such a system. As the 50 share industry leader, it would be the biggest supplier – and potentially could get the most attention.

But, as reported in the April issue of Brew Magazine, a single system also has risks for A-B. A single distributor with a wide range of brands might pay less attention to long-flagging Budweiser than would a restricted distributor – and that inattention would have significant implications for A-B.

Indeed, as A-B funnels imports and crafts to its distributors it’s also been imploring them to keep focused on the core brands.

As Brew Magazine reported, the single system is risky. It could invite regulatory intervention. It could trigger opposition from retailers. And it could weaken the three-tier system, as retailers might step up challenges of commerce laws that are essential to distributors’ businesses.

For its part, Miller believes healthy competition is the best way forward and recognizes it has a role to play in helping foster a financially strong distributor network.

The Beer Business Daily story can be seen here (subscription required).