We are here again. Like clockwork, December comes and everyone in the adult beverage world looks backwards at their successes and failures, otherwise known as depletions, and then look forward in a hopeful way knowing that sales and marketing can always be better. For the last five years I have written a column of predictions for the following year. I have been correct on four of the five years. It does not make me “Kreskin the Great”, but it does make me a trend watcher and someone who’s got a good eye on the industry.
This year, 2018, has brought a plus for of mergers, brand acquisitions, private equity investment in the adult beverage space, and a lot of talk about marijuana. This year has also seen the strong rise and advocacy of companies like MHW and Park Street and everything imaginable has been infused with cannabis. What will next year look like? The year 2019? Below are five predictions for the year 2019. If you’re a betting person I would hedge in this direction.
1. Three PL’s go mainstream.
The way consolidation is happening and with the rate of new brands coming to the market, the next logical tier to grow is third party logistics. These easy entry distribution models, like MHW and others, allow all brands to be sold in many states without the chase and dance with a more traditional distribution model. Look for these to be your 1st choice for market entry.
2. In markets where legal cannabis infused drinks will take a bite out of low tier beer and inexpensive spirits.
Low tier drinking buzzes will now come from pot and the cheap beer and non-descript spirit will feel that hit. (pun intended)
3. The à la carte nature of the business will continue to pull the freight is there are more options that ever before to go to market period.
We are entering a place where you can pick your sales force, i.e. BevStrat, you can pick your market, i.e. California and you can pick your 3PL. The days are dwindling where big distro will tell you where to launch, what price point to launch at and whom to sell to. Those days are ending!
4. Top tier distribution will no longer have merger as an option and Second tier, or class B distributors will begin a wave of consolidation is 2019 draws to the close.
Smaller players, more regional players, will begin to get better brands caused by the reduncies in inventory from mergers. The more regional distributors will begin to lose smaller brands because of the Darwin theory; and so, it continues down the line.
5. Mezcal, Gin, Rosé, Canadian whiskey, high proof beer will all move in market share and acceptance.
Just data folks- numbers don’t lie.
All in all, 2019 will be a very exciting year for suppliers and consumers and mid-tier distributors. The consumer will have more choice than ever before of what to drink. Suppliers will have more ways than ever before to go to market with accepted forms of distribution. Retailers Will continue to struggle to figure out how to make money in the business with mass downward pressure on gross margin. The three PL model of distribution will become mainstream by the end of the year.
Please save this article and let’s bring it back and refer to it in December 2019. Thank you to all have read my work in 2018 and thank you for your support happy holidays!
Three Tier Talk
by Brian Rosen, www.BevStrat.com
Brian Rosen is Former CEO of America’s #1 Retailer, Sam’s Wines in Chicago, Former Partner at PricewaterhouseCoopers in Retail and sought after retailer consultant.
EMail: [email protected]