August 31, 2011
Trust, as defined by Webster is “confidence in and reliance on good qualities, especially fairness,
truth, honor, or ability”. So how big a role does trust play in the beer business? You might think that
trust is a given in the beer business or if not a given it is contractually obligated. In my opinion, trust is everything
when it comes to relationships within the beer business. The level of trust or mistrust, if you chose to interpret it
that way, is deeply rooted in the relationships built between the brewer and the distributor. At times I question
if trust truly exists between a distributor and a brewer or if it is simply about the contractual obligations the parties
have with one another through their agreements. I would like to think there is a great degree of trust between the brewer
and distributor and it has been my observation over the years that trust is earned and nurtured over years but is easily destroyed
by a lack of honesty with one another.
While distributors trust that their brewers
are going to give them great product and support their brands with adequate marketing, it is the local representative that
the distributor ends up building the greatest level of trust with. As a distributor you realize that you will be in
your market much longer than many of those whom you work with at the brewery, as their careers may take them elsewhere.
So how much trust should a distributor have of his suppliers? I think this depends on the supplier. In the
majority of situations the distributor should have the utmost of faith in his brewers. In other situations where the
brewer has not lived up to their commitments, I question how the distributor can trust making any decisions regarding their
future together. If a distributor cannot trust the brewer one should consider if they wants to continue to do business
with them. If it is impractical to eliminate this brewer whom you may not trust you need to consider being proactive
and make changes in how you conduct business with them.
A brewery also needs to trust their distributor to live
up to the commitments in the distributor agreement. While easy to monitor and evaluate, this level of trust should not
be about an “obligation” the distributor has to the brewery but more about what the distributor will do to grow
the brands so that the relationship is mutually beneficial. So how much trust should a brewer have of the distributors?
I think that depends on the distributor. Sound familiar? Distributors can build a great amount of trust by living
up to the commitments they make to their brewers. Why wouldn’t a brewer want to do more business with a distributor
who lives up to his or her commitments? There are many distributors who have worked hard to earn this trust and deserve
the support from their brewers. In certain instances you find distributors making commitments to brewers to garner
favor or in consolidation situations, to gain the brewer’s approval. If not appropriately measured these
commitments serve no purpose except to mislead the brewer about the distributor’s intentions. Making commitments
without living up to them should ultimately negatively impact the distributor’s ability to grow within any network.
In looking at both sides of the distributor and brewery trust relationship I find
the greatest challenges being with the breweries. I think the lack of consistency with the breweries sales management
in the field, along with shifting priorities from a corporate standpoint makes it difficult for any distributor to have a
great degree of trust that today’s plans will remain consistent. The individual distributor must decide if the
brewery can make the right decision on their behalf, relative to consolidation. Can the distributor trust that the decisions
the brewers make today are the same ones they may make in the years ahead? Because of the before mentioned facts,
you see distributors taking consolidation into their own hands as they either disagree or cannot trust that brewery
consolidation plans will play out as designed. While it may be impossible to build a level of trust where both sides
are comfortable it is paramount that there is open and honest dialogue through the consolidation process.
I would suggest that trust is not a contractual obligation but must be earned. Earning someone’s trust means living
up to your commitments regardless of what side of a relationship you are on.
“The difficulty with trust and character is that
they don’t show up on a balance sheet”