Today's NY Times Story

Check in here for reviews of whiskey related books and other materials

Moderator: Squire

Today's NY Times Story

Unread postby cowdery » Tue Mar 01, 2005 8:44 pm

I want to commend to everyone's attention the excellent story from the NY Times, posted in the Industry News section. The headline is: "Allied Domecq-Pernod Deal Won't Be the Toast of an Industry Consolidation." If you have any interest in the larger industry of which the American whiskey industry is a part, this is a very good survey of the forces driving it at the moment and of the various participants.
- Chuck Cowdery

Author of Bourbon, Straight
User avatar
cowdery
Registered User
 
Posts: 1586
Joined: Tue Oct 19, 2004 1:07 pm
Location: Chicago

Unread postby tlsmothers » Wed Mar 02, 2005 2:46 am

I don't know about y'all, but all this consolidation sort of scares the hell out of me. From my perspective, it seems the larger these companies get, the less personal they become and the harder it is to get smaller esoteric production items through the distribution chains.
"Drinking just to get drunk is like having sex just to get pregnant." --Robert Hess
User avatar
tlsmothers
Registered User
 
Posts: 353
Joined: Sun Oct 10, 2004 2:31 pm
Location: New York City

Unread postby gillmang » Wed Mar 02, 2005 8:05 pm

I think those exclusive (dedicated) distribution arrangements mentioned in the story are a factor in the trend to consolidation. Under current anti-trust doctrine, most such arrangements are viewed as not anti-competitve. It is different (as noted in the story) if producers acquire too many competitive brands (i.e. at the horizontal level), then the authorities can get involved. But naming a distributor dedicated to one's brands is seen as fair ball. Which I think it is. The reason being, price is not impacted by such arrangements unless one is very dominant in the market (such that exclusive distribution can prevent new or small players from accessing distribution channels. I don't think that point has been reached in the liquor industry nor even the beer industry despite that, say, Anheuser-Busch has better than 50 % of the market nation-wide.

Gary
User avatar
gillmang
Vatman
 
Posts: 2173
Joined: Mon Jan 24, 2005 4:44 pm

Unread postby cowdery » Wed Mar 02, 2005 10:22 pm

Consolidation can be disturbing and unsettling, and it's real sad when great companies with great histories, like Seagrams, simply vanish. However, customers (by which I mean trade customers, like LeNell) like to have choices and when companies get so big, customers will go out of their way to find alternatives. Because of that, every round of industry consolidations has created opportunities, some of which have been terrific for the interests of a narrow clique called bourbon enthusiasts.

Some examples:

  • Seagrams is broken up and Kirin buys Four Roses, makes the brand more widely available in the US and introduces Four Roses Single Barrel.
  • Seagrams sells of two of its bourbon brands, Benchmark and Eagle Rare, turning Sazerac from a regional distributor into a national marketer and, eventually, a major bourbon producer.
  • Diageo unloads most of its bourbon brands to concentrate its efforts on increasing the market share of its category-leading worldwide spirits brands. The Weller and Old Fitzgerald brands go to two different distillers, so now we have three distillers making wheated bourbon whereas before we only had two.
  • Innovative, small, independent bottlers and marketers like Julian Van Winkle, Even Kulsveen and the David Sherman Company find a way to successfully and profitably market extra-aged whiskies that have been languishing in the warehouses of the distilleries that made them.
- Chuck Cowdery

Author of Bourbon, Straight
User avatar
cowdery
Registered User
 
Posts: 1586
Joined: Tue Oct 19, 2004 1:07 pm
Location: Chicago


Return to The Library

Who is online

Users browsing this forum: No registered users and 18 guests