Although one previously worked at a brewery while the other leads one of the Midwest’s largest wholesaler beverage distributors, it’s safe to say that the beer business is in the blood of St. Louis-based Grey Eagle Distributors’ President and Chief Executive Officer David Stokes and his father, Patrick Stokes, former Chief Executive Officer and Chairman of the Board at the St. Louis-based Anheuser-Busch Co. (A-B). “I often say, ‘that Stokes brews beer; this Stokes sells beer,’ when referring to my dad and myself,” says David Stokes.

David Stokes says he has learned a lot about the beverage business from his father, who was the first non-Busch family member in 142 years to lead the company that included 12 United States-based breweries and numerous international operations, producing more than 100 million barrels of beer a year under such labels as Budweiser, Michelob and Busch.

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“Whenever I meet people in the beer business at various industry meetings, they always ask about my dad because everyone knows him and respects him,” David Stokes says. “He didn’t seek the limelight but worked hand-in-hand with August Busch III, who was very driven and demanding. Many would have faltered under that intense pressure, but [for] every question August asked, my dad had the answer.

“He helped to build a vast brewing empire during his career, growing share to nearly 50 percent of the domestic beer industry,” David Stokes continues.

David Stokes says he is proud of his father’s legacy and is honored to follow in his footsteps by working at Grey Eagle Distributors, which is the exclusive distributor of Anheuser-Busch beers in St. Louis, Franklin and Gasconade counties in Missouri, as well as St. Clair, Monroe and Madison counties in Illinois, covering 850 and 1,146 square miles, respectively.

“Our 5,000 friends at the downtown Anheuser-Busch Brewery help us sell beer,” he says. “Operating in the backyard of this historic brewery, and selling A-B beers, we hold ourselves to a higher standard. It’s as simple as that.”

Yet, Grey Eagle Distributors does more than sell beer. Since David Stokes purchased the company in 2005, the company has experienced “significant growth,” and now includes 81 brands and 917 SKUs of domestic, import and craft beers as well as non-alcohol products like ready-to-drink (RTD) teas, energy drinks and bottled waters in its diverse, evolving portfolio, he says.

“All the brands we carry in our portfolio have consumer and market relevance,” David Stokes says. “Our high-end beer portfolio (craft and import) has experienced double-digit growth for the last decade, while our core brands have remained relatively stable. By volume, Michelob Ultra is the fastest-growing beer brand in our portfolio. Additionally, our non-alcohol brands have grown exponentially in recent years.

“One of our core strategies for growth is territory expansion,” he continues. “We are continually looking for opportunities to grow our business throughout the Midwest and beyond.”

Its rich history, diversified portfolio and commitment to providing best-in-class service to its customers are among the reasons that Grey Eagle Distributors is Beverage Industry’s 2017 Wholesaler of the Year.

Although Grey Eagle has achieved Anheuser-Busch’s Ambassador of Excellence Top Performing Wholesaler recognition twice since the program’s founding in 2010, David Stokes notes the real achievement and reward comes from “knowing that we are consistently putting forth our best efforts. We have also received recognition for our efforts to support the St. Louis community — one of our top priorities — and something that we are happy to do.”

Backstoppers, which supports the families of fallen police and firefighters; Pedal the Cause, which raises funds for cancer research; and the St. Louis Sports Commission are among the local civic and charitable organizations that Grey Eagle Distributors supports.

Expanding operations

At the helm of Grey Eagle Distributors for 12 years, David Stokes previously worked in sales and marketing at Anheuser-Busch in Denver and Chicago; The Coca-Cola Co., Atlanta; and a tech start-up in Los Angeles. He also managed a company-owned A-B distributor in Sylmar, Calif., one of only 14 brewery-owned wholesalers, he says. 

Under David Stokes’ leadership, Grey Eagle Distributors, which was founded in 1963, has grown to become one of the largest beer distributors in the Midwest, servicing 3,000 retail customers in the greater St. Louis area and annually selling more than 9 million cases of Anheuser-Busch products and other premium beverages. It operates two facilities: a 115,400-square-foot facility at its St. Louis headquarters and a 166,000-square-foot facility in Belleville, Ill., which was acquired in December 2012.

Both facilities operate 24-hours a day, six days a week, with capacities of 550,000 and 450,000 cases in Missouri and Illinois, respectively.

“Grey Eagle enjoyed tremendous growth through population expansion and market share gains until the early 2000s and scaled up the size of the organization accordingly,” David Stokes says. “Over time, we have grown our product portfolio to satisfy the evolving tastes and preferences of the St. Louis consumer. During the past decade, we have expanded into emerging beer and non-alcohol beverage categories. Additionally, we have expanded our geographic footprint through acquisitions in both Missouri and Illinois.”

Yet, David Stokes notes that the wholesaler’s growth would not have been possible without the support of Anheuser-Busch’s parent company and partnerships — A-B InBev, Goose Island Beer Co., Kona Brewing Co. and several newly acquired craft breweries — which comprise the majority of its portfolio. It also has several  local craft beer partners and a growing number of non-alcohol brands, including Teavana, Sparkling Ice, Fitz’s Root Beer, Icelandic Glacial Water, Calypso Lemonades, Xyience Energy, Madrinas Coffee and AriZona Iced Tea.

He also credits Grey Eagle’s dedicated team of 300 employees who tirelessly work to sell its products while providing outstanding customer service and fulfilling the company’s values of passion, integrity, teamwork and customer focus.

“Our No. 1 priority continues to be providing best-in-class service to our customers whether that is our retailers, supplier partners or consumers,” David Stokes says. “I am most proud about the efforts of our team to consistently provide great service. It is part of our company purpose and it is the reason that we have been able to have success with Anheuser-Busch and our other supplier partners.” 

Acquisitions also are fostering growth. In July, Anheuser-Busch announced the acquisition of San Francisco-based Hiball, the manufacturer of self-titled organic energy drinks and sparkling energy waters, as well as Alta Palla (“high ball” in Italian), a brand of organic sparkling juices and sparkling waters. The acquisition will further deepen A-B’s brand-building experience, wholesaler network and operational expertise, it said in a statement at the time of the acquisition.

David Stokes says he is excited about the impact the acquisition, which is expected to close in the third quarter, will have on Grey Eagle Distributors.

“We are thrilled to partner with Todd [Berardi] and the rest of the Hiball team to take his brands to the next level. Hiball Energy and Alta Palla are great additions to our developing non-alcohol portfolio and allow us to offer more innovation to our customers,” Stokes says. “We have previous experience selling Monster Energy drinks before it transitioned to the Coca-Cola network, so we expect to hit the ground running. We are very pleased to see Anheuser-Busch’s commitment to grow their investment in new opportunities for the wholesaler network.”

Keeping beer relevant

Fostering communication and collaboration between Anheuser-Busch and a growing wholesaler network is top of mind for David Stokes, who was elected Chairman of the Anheuser-Busch Wholesaler Panel in January. The 20-member group meets monthly to discuss such topics as sales, technology, productivity, portfolio and logistics.

Noting the new sales tax on sweetened beverages in Cook County, Ill., David Stokes says Grey Eagle and the A-B Advisory Panel “continue to work with our local and national legislators along with our trade associations (NBWA, MBWA, ABDI, etc.) to ensure new legislation and potential incremental taxes do not have a negative effect on our industry.”

He also stresses the need for sharing best practices and for distributors to work together. 

“As most wholesalers are aware, the beer business is relatively flat and faces significant competitive pressure from wine and spirits,” he explains. “It is important for the industry to work together to rise to this challenge and keep beer relevant with consumers to grow our collective business.

“Through the first part of 2017, we are seeing similar trends from last year with some acceleration of the strong performance by Michelob Ultra,” he continues. “Michelob Ultra, Michelob Golden Draft Light and Bud Select are some of our top-performing domestic brands in both Missouri and Illinois. Through innovative package extensions and targeted marketing plans to support each of these brands, we continue to see sustained success. A good example is the ‘Brewed in the Lou’ marketing efforts behind Bud Select to try and localize the brand to St. Louis, which has helped the brand become the No. 2 brand in the market behind Bud Light.”

In addition to its domestic beer portfolio, the company’s high-end department focuses on craft and import brands like Stella Artois, Bass, Becks, Boddingtons, Spaten, St. Pauli Girl and Franziskaner.

In 2016, Grey Eagle introduced several new craft beers to the St. Louis market, including Elysian, Blue Point, 10 Barrel, Breckenridge and Golden Road, which all are performing well.

“All of the Anheuser-Busch craft expansion brands have exceeded our sales expectations and have been strong additions to our craft portfolio. Elysian, in particular, seems to have resonated well with our consumers,” David Stokes says. “Additionally, we continue to see strong growth from our local craft partners such as Urban Chestnut Brewing and O’Fallon.”

When it comes to top performers within the Grey Eagle import portfolio, Stella Artois is No. 1 with double-digit growth. Events also are helping to drive sales in the market.

“We partnered with A-B to hold ‘The Art of the Chalice’ event in our sales territory celebrating the best of Stella Artois and the best of St. Louis’ local art, culture and cuisine through the lens of the Stella Artois Chalice,” David Stokes says.

Not only are flavored malt beverages and ciders like Bud Light Lime-A-Rita, Shock Top Lemon Shandy and Stella Cidre doing a “terrific job” in recapturing consumption occasion from wine and spirits, but they also represent a good opportunity for future growth, he adds.

Although craft beer is more popular than imports in Grey Eagle’s distribution area, David Stokes points out that both segments require more hand selling. “It is important to have brand experts that can speak to the intrinsic and extrinsic elements that make these brands unique,” he explains. “In all cases, we are very diligent in our review of potential brand partners and the role they play in our portfolio.”

“We ensure any prospective brand or supplier has a thorough short- and long-term strategy in conjunction with a strong marketing plan,” he continues. “We take our time to make sure we are on-board with the right brand — not just any brand. They must fit our business model and, more importantly, it must be what the consumer wants.”

Adding to the bottom line

Although 95 percent of Grey Eagle’s portfolio is comprised of domestic, import and craft/specialty beers, David Stokes notes that the demand for non-alcohol products is accelerating. Given the fact that bottled water now is the No. 1 beverage based on volume in the market, according to New York-based Beverage Marketing Corporation (BMC), Grey Eagle distributes five bottled water brands: Sparkling Ice, Nestlé Pure Life, Ice Mountain, Essentia and Icelandic Glacial. It also sells a lineup of RTD teas, energy drinks and craft sodas.

Its non-alcohol portfolio was further bolstered when Grey Eagle began selling Teavana’s RTD iced tea, which is a product of the joint venture between A-B InBev and Starbucks that was announced in February 2016.

“Launching Teavana ready-to-drink bottled iced tea in St. Louis was a fantastic opportunity for us to partner with two global beverage leaders in Anheuser-Busch and Starbucks,” David Stokes says. “Since launching the brand in February 2016, we have seen tremendous results and feedback from both retailers and consumers alike. We look forward to continued growth in this new opportunity with a recent unsweetened line extension and are very excited about the future.”

He adds: “These products and the ever-growing consumer demand for innovative offerings are driving double-digit growth in this area. With overall beer trends being flat and wholesalers already making deliveries to retailers, our growth in the non-alcohol portfolio helps maintain efficiencies while adding to the bottom line.”

In 2016, Grey Eagle Distributors reported “mostly flat” revenue of $160 million due to the continued impact of the loss of the Monster Energy brand to the Coca-Cola distribution network in 2015.

But the beer business, in general, is relatively flat as it faces competitive pressure from wine and spirits, aging consumers, and shifting consumer preferences that have adversely impacted beer sales.

“More baby boomers are drinking wine and entry-level consumers are drinking spirits,” David Stokes says. “Additionally, economic uncertainty combined with pressure on [the] blue-collar industry (steel, manufacturing, etc.) are challenges we continue to face.”

Yet, as Grey Eagle Distributors looks to grow its business in the Midwest and beyond through territory acquisitions, supporting the frontline salesforce and ensuring the smooth operation of its two warehouses are pivotal to the company’s success, David Stokes notes.

To support the frontline salesforce, who are shared between Missouri and Illinois, Grey Eagle has a number of departments including chain sales, space planning, graphics, marketing, brand development, draft services and merchandising.

“Depending on the market and focus area, we have on-premise, off-premise large-format and off-premise small-format sales reps,” he says. “Additionally, where needed, we have combination sales routes, which call on all types of accounts (grocery, c-store, bars and restaurants) in our more rural areas.

“Our sales reps utilize the Mobility software platform to process orders at [the] account level,” he continues. “We also have TapWiser, an online ordering application for retailers who wish to place their orders or view invoices … when it is convenient for them while maintaining an assigned delivery day. Additionally, we have a Call Center for our tel-sell sales routes to place orders over the phone.”

To keep pace with warehouse operations, the company uses a mechanical layer-picker, a double-wide fork lift and voice-picking technology. It also utilizes 13 forklifts and 10 Walkie-Ryders to load and unload shipments. To accommodate the proliferation of SKUs, Grey Eagle has added a considerable amount of static and gravity flow racking, David Stokes says.

While on the road, products are moved via a diverse fleet that includes eight-, 12-, 16-, 18- and 20-bay side-loaders as well as tractor trailers, refrigerated draft trucks and sprinter vans.

“We average 36 routes per day in Missouri and 14 routes per day in Illinois. This number grows considerably during peak holidays,” he says.

An interesting journey

David Stokes says he learned what it takes to succeed in a competitive business from his dad.

“My dad is a person of great integrity who fostered high-quality attributes in his employees and applied it to the brewing industry,” David Stokes says. “At Grey Eagle, I have tried to take that same fastidious approach and ensure that we are providing best-in-class service to our retailers. For example, if we get a call at noon that a bar is out of Bud Light draft, we strive to have a fresh keg there by 3 p.m.”

In the future, David Stokes expects technology and eCommerce to further impact sales.

“We expect that eCommerce, online ordering and other developments in technology will play a much larger role in our organization as we move forward and represent areas that could provide a competitive advantage as we grow our business into the future,” he says.

Collaboration in the beer industry also will remain key, he adds.

“As the beer industry faces significant competitive pressure from wine and spirits, it is in the best interests of brewers, both large and small, and distributors to work together to create a bright future for beer and to remind consumers of the great attributes of beer that make it the most popular choice for consumers in the U.S.

“I think our biggest challenge is our past success,” he continues. “We have achieved a very high market share, in excess of 65 percent, and it is [a] significant challenge to maintain that share given the changing landscape of consumer tastes and product innovation. We wake up every day trying to improve our performance, so we have yet to overcome this challenge, but it keeps the journey interesting.” BI