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Archive for Sunday, April 29, 1990

BEER SELLERS TAP INTO LOCAL MARKET

April 29, 1990

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It was a sobering sight to a thirsty beer lover on a hot, muggy day: thousands of cases of beer and kegs stacked 15 to 20 feet high in a warehouse in eastern Lawrence.

The quantity of brew literally was enough to slake the thirst for Anheuser-Busch products in a six-county area.

Across town, close to the city's southern edge is a rival warehouse, packed with Miller Brewery products that go out to a territory encompassing eight northeastern Kansas counties.

Several miles to the west on U.S. 24 Highway is a third beer warehouse, which quenches the thirst for Adolf Coors Brewery products for a 10-county area that includes Lawrence.

About 2.6 million cases of domestic beer flow through the three distributorships each year, the beer wholesalers said in separate interviews last week.

AND THE TOP products? Budweiser, Coors Light and Miller Lite.

State laws have raised the drinking age from 18 to 21 and strengthened penalties for drunken driving. But beer sales have seen strongth growth in this part of the state, the distributors say.

Some also said the industry appears to be going in two directions: The large traditional breweries are consolidating, while "microbreweries," small breweries that sell on the premises, are popping up across the country.

The only local distributor based in Lawrence is also the oldest local distributor: McDonald Beverage Co. It was started by Frank McDonald, a prominent community leader, at the end of prohibition in 1933.

The business, which sells Anheuser-Busch products, was passed on to Frank's son, Cliff McDonald, and is now in its third generation.

IT'S NOW operated by Cliff's son, Greg McDonald, 32, who has been with the company for 13 years.

Walking around in his warehouse at 801 E. Ninth, the younger McDonald looked at the many cases of beer that crowded the warehouses.

"This is quite a little bit right now for this time of year," McDonald said. "But it's getting warm and we're looking at the holiday in the next month."

While Budweiser is still the king of his beer sales, Bud Light is the most popular among college-aged people, he said.

"There's a lot more young people in this town," he said. "Beer is generally the beverage of moderation and generally the beverage of choice here."

His distributorship sells beer in a six-county area, which includes Douglas, Anderson, Franklin, Jefferson, Leavenworth and Atchison counties.

MCDONALD SAID he didn't know how much beer flows through Lawrence each year but that his distributorship sells about 600,000 cases per year in its multicounty territory.

When the Kansas Legislature in 1986 raised the state's legal drinking age from 18 to 21 for 3.2 beer, sales dropped in the area, he said.

"But I've seen a rebound though," McDonald said. "And I don't know if it has to do with market share or what. . . . I think there's some increased population in this community. So we are selling more beer here than we ever have before."

Like McDonald, another area wholesaler said he considers Lawrence a good market area for beer because of its youthful, upscale community.

"With the university there, it helps to anchor a business," said Paul DeBauge, president of DeBauge Brothers Inc., a Coors distributorship in Emporia.

DEBAUGE, his brother Larry, and John Meier and Don Crews, who own Metro Distributing, Kansas City, Kan., recently formed a new distributorship, called Jayhawk Coors Inc. by purchasing two distributorships and part of a third.

Jayhawk Coors bought the Lapeka Inc. distributorship, which sold Adolph Coors products. Jayhawk Coors also bought Edington Distributors Inc., which sold the Stroh's, Pabst, G. Heileman brands and several imports and mineral waters. And Jayhawk Coors bought the rights from Kansas Beverage to distribute Stroh's, Pabst, G. Heileman and water brands in this area.

Jayhawk Coors will now sell the products of Adolph Coors, Stroh, G. Heileman and Pabst brewing companies, several import beers, Northwest Seltzer Co. products, and several flavored and mineral waters in a 10-county area that includes Lawrence.

DEBAUGE said Lawrence is a "fairly good" market.

Jayhawk Coors sells just under 1 million cases a year in its new 10-county area, while his Emporia distributorship, which spans across 10 different counties in east-central Kansas sells about 500,000 cases a year.

"I think for this part of the country, Coors Light is the dominant brand, especially with young people," DeBauge said.

He said he wanted to get into the Lawrence market because it is the alcoholic beverage of choice of the age group between 21 and 35. After age 35, people tend to drink more wines or other alcoholic beverages, he said.

DeBauge explained that beer wholesalers are allowed to sell in certain geographic territories that have been set up by the supplier.

THOSE territories are used by the state's Alcohol Beverage Control Division to regulate suppliers, distributors and retailers, he said.

Most of the territories overlap.

"In one county, we might sell some products, but not others," DeBauge said. "It depends on the franchise agreement with the supplier."

DeBauge said the beer suppliers are now in a consolidation stage, with the larger breweries buying up the smaller ones. He predicted that in the next 15 years, the major brewers will probably be Anheuser-Busch, Miller and Adolph Coors.

"That compares with the 650 brewing companies that existed right before prohibition," he said.

He also predicted the growth of microbreweries around the country, such as the Free State Brewing Co. Inc., 646 Mass.

MIDWEST Distributors Inc., a Kansas City, Kan., distributorship owned by Harry Scherzer, has a satellite warehouse in Lawrence at 940 E. 28th. Scherzer bought the Miller distributorship in 1984.

Rose Mulvany, assistant manager at the local Midwest warehouse, said the wholesaler serves Douglas County and seven other counties: Wyandotte, Johnson, Leavenworth, Atchison, Brown, Doniphan and part of Jefferson.

The distributorship sells Miller, G. Heileman and Hudpohl-Schoenling products within that eight-county region, Mulvany said.

The distributorship sold about 1 million cases of beer last year, which was "definitely an increase," she said. However, she declined to say what the percentage rise was over the previous year.

Tom White, executive vice president of Midwest, said "Those of drinking age, particularly at the entry level, are very trend conscious to the extent that we have a large presence in the college community and we have the opportunity to market directly to trend setters of legal age."

White also said that consolidation appears likely to continue on a national scale among the brewers other than the top three, Miller, Anheuser-Busch and Adolph Coors.

IN THE NORTHWEST part of town, another warehouse that supplies about 90 different brands of import beer throughout the state. That distributor is Standard Liquor Corp., which moved into its new Lawrence facility at 2300 Lakeview Rd. in November.

Among other products, Standard Liquors sells about 90 brands of import beers, said Mike Hebberger, the local general manager.

Hebberger said the import beer market is geared toward the more upscale consumer, so the products sell well in Lawrence.

"Particularly college towns are better," he said. "We do better in college towns and major metro areas than we do out in the rural areas."

Hebberger, whose company's corporate offices are in Wichita, said Standard Liquor's distribution territory spans statewide on about 95 percent of the import brands.

He said he didn't know how many cases a year are sold here locally, but "it's a fairly sizable number for import beer."

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