Powers Distribution Company

Source: Food and Drink Digital

Date :02/07/2007 17:38:05

Powers Distribution Company is successfully growing its beer distribution business through value-added services and good partnerships

Written and produced by Lynn Haber & Michael Magno

Back in 1939, when Safron Metes, a man with a grocery store, a delivery truck and the know-how to fix it, was offered the first Miller Brewing Company distributorship in Oakland County, Michigan, mechanical knowledge and familiarity with the area was enough to drive a successful distribution business.

Not any more. Today, a lot more is brewing in the beer industry. A proliferation of brands, globalization, and flat or declining beer sales revenue poses new challenges to wholesalers and distributors — challenges that a fleet of trucks alone can’t address.

Mete’s beer distributorship, today known as Powers Distributing Company, an $85 million family-owned and operated business, is successfully putting the fizz back in its beer business by focusing on value-add services and partner relationships. Powers, headquartered in Orion, Mich., has 200 employees and 45 trucks, and is owned and operated by Robert and Gerald Powers, company co-presidents.

“Today, we sell through our customers rather than to them,” says Gary Thompson, executive vice president, general manager and chief operating officer (COO) at Powers, a value-added beverage wholesaler and distributor serving Michigan’s Oakland and Macomb counties.

In a nutshell, Powers’ sales and marketing organizations are in the trenches with each of its accounts, spearheading and nurturing company and customer growth.

Until about three to four years ago, Powers maintained its volume base and drove market share through acquisitions. In 2003 the company refocused on organic growth to gain market share, and has since increased its market share by two percent, to 33 percent.

Changes in the beer industry are forcing wholesalers and distributors to put more focus on retail. Consumers, for example, are demanding more product diversity, a la Starbucks; globalization means more product imports, more product awareness and demand to carry products locally. For wholesalers and distributors, that means understanding the industry, products and market trends, understanding demographics, the retailer’s business and their goals, and being able to relate that back to the sales organization.

“We have to be more strategically focused and actively deliver against that strategy,” notes Thompson. “When we help our customers achieve their goals we achieve ours,” he adds.

In an industry where competition is stiffer than it used to be, customers can choose what products to carry and who to work with. Distribution is no longer about delivering cases and kegs.

“We have to demonstrate that we’d like to be the partner they choose,” says Thompson.

Whether it’s helping retail customers with inventory selection, warm and cold product shelving, merchandizing to drive consumer purchases, or product promotions, attention to detail is what Robert Powers, company co-president, believes distinguishes the his company from its competitors.

“Honing in on the daily objectives of the sales department and executing those objectives is our focus,” he says.

Powers has approximately 50 drivers, 35 presales people and nearly 50 routes. Product-wise the company handles 500 SKUs, 85 brands and works with 25 different suppliers, including Miller, Corona, Heineken, Molson and Sam Adams.

The company’s sales force is divided in two groups: an off-premise group that visits grocery, liquor, convenience, supermarkets and drug stores, for example, and an on-premise group whose focus is restaurants, bars and taverns, bowling alleys, etc. The company also has its own merchandisers, who set up displays and price products to get them ready for the consumer, and its own on-site facility to build displays.

Embracing change has been critical to staying afloat – and growing – at a time when beer industry sales are losing ground to escalating wine and liquor sales. To help set its compass to meet industry challenges as well as take advantage of new opportunities, the beverage distributor turns to its 14-year old advisory and planning board, with expertise in business, law and finance.

To grow market share, further differentiate itself and attract new customers, the International Beverage Company, a division of Powers, was started three years ago. The idea sprung from a strategic decision to focus on the growth of microbreweries and smaller suppliers and brands, such as Woodchuck, Hacker Pschorr, and Brooklyn Beer, to name a few.

With young consumers more worldly than predecessor generations, today’s beverage consumers enjoy learning about new ways to appreciate beer beyond its reputation as thirst-quencher.

“We have to help the public transcend the idea of beer as pure refreshment to a beverage for other things,” says Thompson.

As the beer industry looks for greater share of palate and a seat at the table, Powers is on the frontlines with value-added services that teach the consumer, the retailer, the bartender and waiter, what beer is capable of and how it works with food, such as wheat beer with salad or chocolate with stouts, for example.

At the same time, mature consumers are willing to spend more money on products they like, including beverages, Powers says. Consumer economic trends are not lost on Powers, which capitalizes on carrying high margin, high quality brands that the retailer needs to maximize his gross margins.

Value-add, however, costs money and increases operational spending for distributors. Market pressure has forced Powers to spend more than ever before on outside market experts for education and training of employees, which is on-going throughout the year. As in many industries, yesterday’s sales reps are today’s sales consultants and industry experts.

In addition to educational expenses, Powers has increased its sales staff by almost 20 percent over the past three years.

“We recognize that in today’s market, sales reps must spend more time with customers, which ultimately means we need more people,” says Thompson.

Steeper investments in employees mean that companies take more of a financial hit when employees leave. Powers recently undertook a new recruiting initiative to put processes in place that help hire the right people out of the gate.

“Even going outside the industry when we need to,” explains Thompson.

With more operational expenses and understanding the importance of investing in employees, Powers strategically automates where necessary and lowers backroom expenses by eliminating processes that don’t justify the cost: Cost shifting to revenue shifting.

At the end of the day, trends in the beverage industry dictate that wholesalers and distributors change or die. Powers early on demonstrated its agility, considered the new market challenges and takes action when required.