Presentations from the 78th annual National Beer Wholesalers Convention, being held at the Caesers Palace in Las Vegas, concluded this afternoon with a panel of industry leaders who discussed, among other topics, the pending tie-up of the world’s two largest beer companies.
Five prominent brewery executives (listed below) joined the panel, which was moderated by Mike Gretz, president of Gretz Beer Company, a wholesaler in Hatfield, Penn.
- Sierra Nevada Brewing founder Ken Grossman;
- Constellation Brands beer division president Bill Hackett;
- Anheuser-Busch InBev North America zone president João Castro Neves;
- Heineken USA chief Ronald Den Elzen;
- MillerCoors CEO Gavin Hattersley.
The group wasted little time addressing the elephant in the room – news that A-B InBev and SABMiller had reached a tentative merger agreement worth nearly $106 billion.
Castro Neves toed the company line, saying that both A-B InBev and SABMiller “together will be better than they are independently,” adding that a merger would be “great for consumers and shareholders.”
Newly appointed MillerCoors CEO Gavin Hattersley, who previously served as the CFO of Molson Coors, said he doesn’t envision the company’s strategy changing, even if A-B InBev is required to divest its stake in the American-based SABMiller/Molson Coors joint venture.
Heineken’s Den Elzen said news of an agreement was not “a surprise,” suggesting that A-B would begin to look for ways to quickly repay its debt, a move that could include the implementation of drastic cost-cutting tactics.
“That’s what I expect and it is something to look for,” he said. “We have to make sure that a level playing field does exist in the U.S.”
Grossman also highlighted his concerns about restricted access to market as a result of the merger while Hackett, for his part, suggested that Constellation was simply staying focused on the continued growth of its core Mexican import business.
“The reality is that you can’t control what people are doing,” he said. “But we can control how we react to it.”
And despite a claim that A-B was in the business of “making friends,” Castro Neves drew the ire of Den Elzen, who sounded off on A-B’s continued attempts to challenge 3-tier dynamics via wholesaler acquisitions.
“I am not happy with where that is going,” he said, contrasting the U.S. distribution structure to a European system where major suppliers are allowed to own local distributors.
“There is hardly any space for small, new brands,” he said. “When you are a very big brewer, you want to control the whole value chain. It will limit new entrants to the marketplace.”
Castro Neves defended A-B’s strategy by saying that only 10 percent of company-wide volumes are sold through wholly-owned A-B branches and that all of their 2015 distributor acquisitions haven’t “changed that number.”
But as A-B continues to invest in both craft breweries and wholesalers, craft brewers like Grossman are beginning to express their market access fears.
A-B’s distributor purchases, he said, “should be of concern when choosing wholesale partners,” adding that there needs to be a viable alternative in any market where A-B invests.
But it was Den Elzen who drew the biggest reaction from a crowd of about 2,000 beer wholesalers in attendance.
“I am not a big fan of what’s happening. Absolutely not,” he added, to a round of cheers and applause.