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Miller Brewing Co. needs to create a stronger partnership with its independent distributors or face increased market dominance by industry leader Anheuser-Busch Cos., President and Chief Executive Officer Norman Adami said on March 23, according to Milwaukee Journal Sentinel. "We've got to address this thing urgently," Adami said in an interview. "We can't allow that gap to get any bigger."

Adami's comments came as Miller prepared for this week's annual convention of the company's distributors. That meeting, which starts Thursday in New Orleans, will include details on what Miller expects from its 470 wholesale distributors, which buy Miller products and then sell them to taverns, supermarkets, convenience stores and other outlets."The bottom line is that our success is inextricably linked," Adami said. That message hasn't always been clear.

Just more than half of Miller wholesalers also carry products from Adolph Coors Co., which trails Anheuser-Busch and Miller for U.S. beer sales. As a result, there's often tension between wholesalers and Miller, with the company pushing wholesalers to devote more resources to selling such brands as Miller Lite, Miller Genuine Draft and Miller High Life. By contrast, Anheuser-Busch, with a 50 percent market share, carries much more leverage with its distributors than either Miller (18 percent share) or Coors (11 percent share).

The key is for wholesalers to use Miller's newly created local marketing plans and to invest the proper amounts of time and money in marketing those brands, Adami said. In the past, he said, Miller wholesalers focused too much on sales volume and not enough on long-term brand building. Miller and its wholesalers also were hamstrung by a Catch-22, Adami said. "They were waiting for us to deliver great advertising . . . and we we're waiting for them to deliver great market execution," he said.

To help break that pattern, Miller recently created marketing plans for 88 local areas, Adami said. That strategy shows a more sophisticated approach that appreciates the differences in local conditions, he said. Adami's pitch to the wholesalers will be better received if they're convinced that their efforts will result in specific financial rewards, said Mark Rodman, a consultant to beverage distributors. "The wholesalers are enthusiastic now. They're comfortable. They're experiencing double-digit growth. For the first time . . . they get the feeling they're going to be winners," said Rodman, who operates Beverage Distribution Consultants in Swampscott, Mass. "The last thing they need," Rodman said, "is to be told they have to come up with more dollars, more spending, more effort without getting a good return on their investment."

The wholesalers must be on board if Miller expects to make a dent in Anheuser-Busch's market dominance, Adami said. The St. Louis-based brewer of Budweiser, Bud Light and Michelob not only accounts for half of the U.S. market's sales, it encompasses about two-thirds of the profits, he said.

If Anheuser-Busch continues to grow significantly, the beer choices available to consumers on supermarket shelves and elsewhere probably will shrink as the world's largest brewer demands more space, Adami said. "The slice of the pie that A-B doesn't control just gets smaller and smaller. There's a sense of urgency within the Miller system to step up and prevent that gap from getting bigger. Because if we don't . . . there only will be one brewer in America that'll matter," he said.

Rodman said the time is right for Miller to make a run at its chief rivals. "Miller's got to make it now because Coors and A-B are clearly vulnerable and apparently feeling it," Rodman said. St. Louis-based Anheuser-Busch declined to comment on Adami's comments. But a March 9 report issued by UBS Investment Research on Anheuser-Busch said Miller's "strong momentum" will continue because of Adami's leadership, a continuing resurgence for Miller Lite and other factors.

"All this translates into a more intense competitive dynamic for A-B," the report said. Adami's call to arms is the latest in a series of high-profile moves he's made at Miller since becoming president and chief executive officer in February 2003 after John Bowlin resigned amid an extended sales decline. Adami is a former executive with South African Breweries, which bought Miller in 2002 and was renamed SABMiller PLC.


26 March, 2004