Beer Marketer's Insights - Several AB Wholesalers Are Being Forced to Sell for Violating Equity Agreement

This is a stunning and unprecedented development. AB is forcing several distribs (at least) to file Exhibit 5, meaning they must begin the process of selling their distributorship or face potential termination. Why? Because of violations of the equity agreement, INSIGHTS understands. So far INSIGHTS has heard about a handful of distribs, mostly smaller to mid-sized and in midwest, with one in west. Much of the chatter is about distribs selling old Busch Light Peach, but situation is broader than that, according to others. Then too, several sources pointed out the difference between actively selling old beer into mkt and old beer that's just found sitting at retail. The latter is readily fixable; former is crossing a big line in AB's equity agreement, distribs acknowledge. Pushing a bunch of wholesalers out at once like this hasn't happened before in AB network, whatever the genesis of these situations (and they may differ). At the very least, AB is clearly stepping up enforcement of its equity agreement and that's its legitimate right. At same time, it is also exercising more control over its distribs and forcing consolidation, more openly. "This is plainly an exercise, using whatever levers are available, to force consolidation," said a source. And coming at a time when AB is finally performing better in the marketplace, the optics are certainly not good for brewer/wholesaler relationships.In that respect, this is similar to other AB moves this year. AB is once again sending shock waves through its system, like it did when it took Nutrl from its CA distribs and gave Southern Glazer's Nutrl and Cutwater there, or when it sent MET team to investigate CO distrib Eagle Rock. These forced sales are part of a pattern, and create an atmosphere of fear and intimidation. "You're walking on eggshells around your supplier and you don't know when the hammer is going to drop," said a distrib. These are perhaps an extension of finding more than 100 distribs out of compliance in its spring assessments. In previous Nutrl and MET situations, distribs/others almost uniformly expressed their disapproval/outrage and expressed support for distribs impacted by these moves. Yet here, several sources express understanding that if indeed distribs knowingly sold out-of-code beer, that's a big problem. And yet, an unanswered question remains: why now?

Several AB Wholesalers Are Being Forced to Sell for Violating Equity Agreement

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