May 24, 2011
According to the Merriam-Webster dictionary Status Quo is defined as “the existing state of
affairs.” In the ever changing world of the beer industry is there really a status quo? Knowing that there are
always outside issues that influence the status of your business can you ever expect the status quo? Despite this ever
changing environment, there are many today who want the status quo but expect to achieve it with minimal effort. The absence
of effort to change your business or look forward in planning for the future means you are, in reality, losing ground in building
The ostrich approach of ignoring what is changing around you
will not only prevent you from maintaining the status quo but will make you more susceptible to the potentially detrimental
effects of these changes. I have often heard, from those who want normalcy that they see no need to change. These
individuals will typically say that they have been operating this way for years and are happy with the results. Those who
do the same thing over and over and expect different and or improved results are not being realistic. In these cases,
the businesses status quo is not being maintained, the market and their competitors are changing, which means the existing
state of affairs is not the same. I would contend that those distributors who are not changing operationally or in their
approach to growing their volume do not have long term viability in the industry. Once they realize the need to change
it will be too late as their options will be limited or their expansion opportunities will have been completely eliminated.
As consolidation in the beverage industry continues to evolve, those who are not being assertive in their efforts to grow
will be less and less viable operations.
As I previously mentioned, distributor
consolidation is an area where there is no status quo. The norm going forward with brewery and distributor consolidation
scenarios is that they develop on a daily basis. Because of this, I believe, those who are just trying to
“wait it out” will lose as the environment for consolidation has never been better. The cost of money is
as low as it has been in years and the number of willing buyers for brands has suddenly grown from outside the typical ABI
or MillerCoors transaction. As a result of these two elements there will be more buyers for a business than ever before
and they may be willing to pay more than ever before. I would be at fault to not point the other argument that says
the environment to keep the status quo is better than ever. This argument is based on record setting gross profits and
the absence of a method to place meaningful pressure on distributors that suppliers want out of their systems.
If you are not actively involved in making an acquisition or selling your business I believe you should reconsider your strategy.
As consolidation takes place around you, being the last one to take action may not always be in your best interest.
I would suggest that if you are the last to sell, your price is dictated to you by those who sold before you. If you
are waiting to make that one acquisition, you may want to move now. It is difficult to determine who will be there to
compete with you for that opportunity when it happens in the future or even if that opportunity will still be present.
So what price do you pay to ensure you are not left waiting when the train leaves the
station? There is no one answer to this question, but if you plan on growing either through consolidation or organically,
NOW is the time to invest. One thing is certain….the “status quo” of tomorrow will not look like
the “status quo” of today.
are three kinds of businesses:
Those that make things happen…..
Those who watch things happen…..
Those who wonder what has happened.”