One Winner on 2012 Execution

December 5, 2011

Dear Client:

The end of 2011 is nigh. Planning for 2012 is [or should be, mostly] done. Now comes the hard part: Execution. The execs at CBA are in the thick of that, and have been all year. For it took more than lofty brands and plans to start the turnaround of Widmer, and kickstart Redhook full-year growth after 5 years of relative languish. It took technology. It took speaking Wholesaler. It took turning branding into something tangible. It took, to be emphatic, execution.

Here, the leaders of CBA on how they did it, and how they will continue to do it next year.

TERRY AND MARTY ON EXECUTING WITH THE RIGHT TECHNOLOGY: “What it takes is the right people, the right structure,” says CEO Terry Michaelson. “The fact is this business is getting more complex. Craft used to be about taking draft craft to on-premise accounts, and relationships. Honestly now if you’re going to be successful in any scope, you’ve got to have technology too. We’ve got CRM systems that allow us to track what we’re doing with our customers, our planning process; our people all sit down, marketing and sales, to talk about how the brands come alive.”

We can point to their use of Salesforce.com as a primary example of what Terry is talking about. The CRM tool helps CBA leadership track sales guys in the field, grab national and custom reports like shipments and STRs at a glance, and share notes among themselves and with linked-up distributors. All in a social-media friendly, non-invasive layout reminiscent of a Facebook wall ticker. The field sales team are all plugged into this matrix with laptops, iPads and smartphones.

VP of sales Marty Wall says the technology is of utmost importance to their small but far-flung company. “I believe that we need to push use of technology to be on the leading edge and to attract the type of people that can be nimble and innovative enough to grow in a competitive marketplace,” he says.

They just recently got all the pieces of the puzzle. “We use GreatVines, a software provider, which has a platform that integrates with Salesforce.com to work efficiently in the 3-tier system, accessed through any internet portal,” Marty says. “This is important because I tried to use other CRM software over a 7-8 year period, but we could never quite get it right until we started working with a provider who understood 3-tier. The distributors are our connection to retail and we needed to find a solution with a provider that actually understood [that].”

Their supply chain logistics have become more efficient and service-centric as well. Last year CBA hired supply chain director Kyle Jennings to help nail special programs and seasonal fluctuations for their almost 500-strong seamless distributor network. Potential out of stocks are supposed to be pinged before they come to fruition. And there’s an emphasis on fresh beer, more than ever – distributors’ cash isn’t tied up for long, and neither is their warehouse space. That’s the goal, anyway. Service orientation all around. The big craft guys are realizing they need to think this way if they’re going to lead.

REDHOOK AND THE IMPORTANCE OF PROPER BRANDING EXECUTION. Says president of commercial operations Andy Thomas: “We’re going to be doing more with Redhook bottles because we believe that what makes Redhook different is the personality [wait for flippant billboards and POS next year. One ad: 'Unlike your ex, it won't get fat and bitter.']. The personality doesn’t come through unless you hold the bottle, see the label, see the funny things the weatherman is doing on it. If we don’t get the bottle into people’s hands, they’re not going to get the joke. Because we’re speaking someone else’s language. We’re trying to get them to understand why this blonde kind of lager is better than this blonde kind of lager that is $2 cheaper. In any category, people drink the brand. They taste the beer – that’s critical to that higher-end consumer – but they drink the brand. We’ve got to get wholesalers and retailers to understand what makes us different too.”

ANDY ON EXECUTING ON THE RIGHT LANGAUGE IN 3 TIERS: “We hammer the whole gross margin point. We’ve got a slide that shows what $48 in gross margin looks like for a wholesaler. These numbers are directional, but it’s something like 34 cases of Natural Light 30-packs, or 20 cases of Bud Light 30-packs, or 9 cases of one of our core beers, or 4 cases of the [Widmer] 924 series. Or 1 case of the Brothers Reserve.”

Andy also tells the story of a Northern California wholesaler with whom CBA had to overcome a sort of dialectal barrier: “We weren’t speaking the right language. He was about gross margin. We were allowing him to talk about gross margin in terms of front-line pricing, when our whole thing was about mix. So we didn’t do a good enough job translating that high-end product mix equals gross margin. Because he lived in the world of higher front line, higher per-case margin equals gross margin. It was a matter of us [all] understanding that.”

EXECUTING ‘BIG’ CRAFT’S BIG TASK. “We have to figure out how, as we grow, we continue to do the things we need to do to be competitive with big boys but not lose our soul,” Andy says. “Kurt and Rob [Widmer] are critical to that. Folks like Mattson [Davis, of Kona] are critical to that. Understanding the origins of Redhook and letting it be quirky is critical to making sure our brands stay as crafty and small and soulful as they can be while our company continues to get bigger and more efficient. It’s about separating CBA from CBA brands. CBA brands should always be small, soulful, crafty, authentic. Our company should turn into a pretty well-oiled machine. We understand the trade, we can go toe-to-toe with big guys in terms of the way we work with people; we should be able to be more flexible because we’re smaller. But the combination of those two things is what should distinguish us: The CBA model.”