Miller, Coors, Heineken, Diageo, Inbev and Boston Beer
… Mesa Distributing Inc. and its Parent Company, san Diego-based
Liquid Investments Inc., Distribute National
Brands, Imports, Craft and Microbrews as Well as Water, Energy Drinks and
Other Non-alcohol Beverages for Nearly 30 Suppliers.
“Obviously this portfolio is a lot of
fun,” says Nick Gagliardi, president of Mesa Distributing and Liquid
Investments. Managing the portfolio is more than just filling accounts.
It’s about being best in class for Mesa, and technological
advancements that make the company more effective have been a major
initiative for the company since Gagliardi joined four and a half years
This ever expanding portfolio and consistent effort
for Mesa Distributing to be best in class is what led Beverage Industry to choose the
company as Wholesaler of the Year. Total Liquid Investments’ sales
this year will be close to $275 million, with case volume for Mesa
Distributing in San Diego increasing 3 percent for the fiscal year ending
Liquid Investments didn’t begin with the
territories it has today, but grew through the acquisition, consolidation
and leadership efforts of Ron Fowler, chairman and chief executive officer.
Fowler, who relinquished day-to-day operations to Gagliardi, now focuses
his time on strategic issues and the more than 10 boards he sits on for the
industry, the community and charities.
Fowler has undergone some 40 acquisitions during his
time in the industry, Gagliardi says. “We are always looking for ways
to not only grow market share, but to grow volume, and most importantly,
get our efficiencies better for the bottom line.”
Fowler started in the beer industry after he left
graduate school in 1968. His career eventually led him to take over the
management of a distributorship in San Diego in 1974. By September 1978,
Fowler had purchased the business and Mesa Distributing was formed,
conducting business in the southern half of San Diego County.
Mesa began its relationship with Miller Brewing, the
second-largest brewer in the United States, with the San Diego acquisition
in 1978. Liquid Invest-ments then expanded that relationship when it
acquired a Miller distributorship in Santa Rosa, Calif. About the same
time, Mesa bought the Miller distributorship in Grand Junction, Colo.,
which operates in a large territory on the Western Slope of Colorado. The
company added a Coors branch in Grand Junction as well as a privately owned
Coors distributor in Montrose, Colo., which became part of the territory as
well. Now the Colorado distributorship operates as a Coors and Miller
operation under Colorado Beverage Distributing Inc., which includes some of
its own unique craft brews as well as the imports and larger craft beer
brands that the rest of Liquid Investments offers.
Colorado investments also eventually led to further
growth in San Diego. Mesa Distributing, which had originally only been in
the southern half of San Diego County, used funds from the liquidation of
its once-held Colorado Front Range territory to purchase a Miller
distributor in the northern half of San Diego County. Now Mesa covers the
The last territory Liquid Investments added was in
Sacramento, Calif., almost nine years ago. Miller decided to terminate its
distributor in Sacramento, and as Mesa already was in Northern California,
it was told it needed to take the territory, Fowler recalls. The company
put a great deal of effort into its relationship with retailers and
suppliers in the area, and after building and rebuilding those
relationships, Mesa Beverage Sacramento will account for more than 5
million cases this year, Fowler says.
And last year, Liquid Investments further consolidated
its business in Northern California. The company used to distribute in
Marin, Sonoma, Napa and Solano counties, but sold Napa and most of Solano
to consolidate Coors, and added brands, including Red Bull and Fat Tire,
into its operations in Marin and Sonoma. “What we did was grow our
volume more than 400,000 cases, but most importantly our efficiencies
became better in two counties vs. the four counties,” Fowler says.
“What that does is provide better results. That was a big project
that is finally reaping some great benefits this year.”
Liquid Investments will reach more than 18 million
cases this year, with San Diego’s distributorship growing to about 9
million cases. So it makes sense that Liquid Investments and Mesa Distributing’s headquarters are in San Diego. Mesa has been in
its 200,000-square-foot office and warehouse building for 18 years. The
company has centralized supply chain, finance, marketing and human resource
departments for all of Liquid Investments in San Diego.
Mesa’s large portfolio helps address the diverse
nature of its consumers in San Diego County. Its “beach”
audience has a very different mix of beers than its downtown and Gaslamp
Quarter, which are full of trendy restaurants, bars and clubs. San Diego
has more of an “Urban Cowboy” element to the east, while there
are certain pockets with a concentrated Hispanic population. More than 30
percent of Mesa’s consumers are Hispanic, with particular product
preferences throughout the county.
Adding another element to San Diego’s beverage
demands, the county conducts numerous events, making Mesa
Distributing’s draft business very significant in the market. In
addition, Mesa services key venue locations, including the Del Mar Race
Track, Qualcomm Stadium, Petco Park, ipayOne Center, Cox Arena and the San
“The county of San Diego is unique as a market
due to the diversification of demographics, which creates pockets for each
one of our sub-segments of beer,” Gagliardi says. “For example,
the downtown market is a tremendous draft market across our
Because draft sales provide so much volume for Mesa in
San Diego, it has a team of draft technicians. With brands such as Miller
Lite, Guinness, Fat Tire, Samuel Adams and Sierra Nevada, the ability to
install draft equipment and service the accounts is a real advantage to
Mesa, says Earl Kight, III, vice president of sales.
Fort Collins, Colo.-based New Belgium’s Fat Tire
Amber Ale, which Mesa launched in September 2005 in 22-ounce bottles,
became available on draft as of January 1. The distributor has more than
300 handles of this craft beer in the market, and will sell more than
130,000 cases this year. The brew has become one of the company’s
An import brew, and one of the quickest-growing
brands for the company overall, InBev’s Stella Artois has about 180
handles in the market, and sells around 1,000 barrels a month.
“It’s the highest velocity brand per handle that we
have,” Gagliardi says.
Pyramid Brewery’s portfolio has produced
double-digit growth for Mesa Distributing for six years now. Brands from
companies such as Sierra Nevada and Alaskan Brewing continue to grow for
the company, and it sells more than 300,000 cases of Samuel Adams a year.
Diageo’s Guinness continues as one of the top draft beers in San
For packaged goods, Mesa picked up beers from local
brewer Stone Brewing Co., Escondido, Calif., including flagship Stone Pale
Ale, and is distributing them to major supermarkets, select convenience
stores and venues such as Qualcomm Stadium and Petco Park.
Mesa distributes Heineken and Amstel Light for half of
San Diego County, but was awarded this year’s launch of Heineken
Premium Light for the whole county. Heineken Premium Light launched March 1
for 30 days in the on-premise channel. Mesa began distributing the light
lager in other channels in April.
“What’s exciting about Heineken is that
there is the halo effect with Heineken Premium Light that has actually
increased our volume for brand Heineken,” Gagliardi says.
Mesa also distributes the brands Heineken USA carries
for the Femsa Cerveza unit of Mexican brewer Fomento Economico Mexican
(CCM), including Tecate, which is a big brand for the company in San Diego
County. “The key for us here is that Tecate in Tijuana [Mexico] is an
82 share,” Gagliardi says. “We do a lot of cross-border
marketing, and we’re planning to do more in 2007.”
For Heineken USA, including the CCM brands, Liquid
Investments distributed more than 3 million cases last year, and will
probably reach close to 3.7 this year.
Miller still makes up 46 percent of Liquid
Investments’ total volume. While sales of Miller Genuine Draft have
been in decline for the company, increased sales of Miller Lite and other
Miller portfolio brands have helped offset the volume loss.
Mesa added several new items this year, including
Mickey’s Stinger, Rockstar 21 and Captain Morgan Parrot Bay Tropical
Malt Beverages, and InBev’s Brahma, which the company began
distributing in June 2005. “We’ve had a pipeline of new items
— Fat Tire, Heineken Premium Light, Rockstar 21, Stinger and Parrot
Bay — and when you look at the volume and margin contribution on all
those items, it is very critical to the success of the company,”
Gagliardi says. “Consumers are looking for new items, and
what’s exciting about these new items is that the consumers are
trading up. They are not just another ‘me too’
For example, on brands such as Stone and Fat Tire
there are no price discounts, which provides Mesa with higher margins.
Import brands, such as the new Heineken Premium Light with a higher price
point, contribute more revenue and margin dollars as well. “These
high-end items are driving the trade-up phenomenon with the
consumers,” Gagliardi says.
Mesa doesn’t just pick any new supplier or brand
to add to its portfolio; instead Gagliardi asks, “How does it fit our
“If we have seven beers that fit Italian, the
question that we have to ask ourselves is do we want to add another beer to
this trade class,” Gagliardi explains. “That really is the
first step of ‘Where does this fit into our portfolio?’ Do we
have a gap in our portfolio somewhere? What separates us from other
distributors is we organize our beers by sub-trade classes — sushi,
Italian, German, American, sports bars — we actually qualify our
brands under each one of these sub-classes.”
But does the company have any gaps? “Our biggest
gap today is in Asian beers,” Gagliardi says.
With Mesa already distributing non-alcohol beverages
such as energy drinks, Crystal Geyser water, Arizona teas and Henry
Weinhard’s and Thomas Kemper soft drinks, it plans to have a
non-alcohol distribution operation in the future. Since Liquid’s
non-alcohol drink offerings are different in every market, each operation
has a different volume, but overall non-alcohol drinks volume amounts to
around three percent.
Sales and promotion
Liquid Investments and Mesa’s sales force is
channel-specific. Its chain group includes large-format grocery stores and
drug stores. Another channel is broad-market, which includes independent
liquor stores, neighborhood stores and convenience stores.
With the company’s and sales team’s goal
of being best in class, Liquid Investments is
using technology to help increase sales and efficiencies.
“Our sales handheld that we use out in the field
can actually run a TV commercial on it,” Gagliardi says.
“We’re taking inventory every day. We’re looking at
quality control and accounts receivable by account. The sales rep has the
history of what was ordered last time, as well as what the distribution
should be for the account.”
In September, Mesa is taking its technology to the
next phase by moving into a new portfolio selling program. While this may
limit some of the SKUs sales reps are allowed to sell at certain venues, it
will open up retailers to new beers that better represent the image or
clientele of the location, Gagliardi says. “It’s about being in
the right place that generates the best velocity by brand and most dollars
for the retailer,” he says.
In the on-premise department, Mesa has promotional
account managers who divide the county between the north and south, and
manage promotions along with account managers in the marketplace. All
point-of-sale materials are inventoried and tracked through a POS manager.
“It’s amazing how much POS we carry, and how much money goes
into it,” Gagliardi says. “We are very careful, because POS is
a critical marketing element.”
POS is a team effort, Kight says. Mesa has its own
in-house sign department that is used by its sales force. Through this
in-house department, using programs provided by suppliers, Mesa executes
retail plans specific to each channel. “We have a team that starts at
5 a.m.,” Kight says. “We are the last individuals who touch the
product before the consumer picks it up. A lot of effort goes into
merchandising to make sure we are building displays and executing to the
standards our suppliers expect.”
Liquid Investments is involved in numerous community
events. Along with the San Diego Padres, the company sponsors the
Sacramento River Cats and distributes to NASCAR’s Infineon Raceway in
Sonoma County and numerous colleges and universities, including San Diego
State; the University of San Diego; Univer-sity of California, San Diego;
and Sacramento State. Liquid Investments, in conjunction with Heineken USA,
sponsors San Diego’s Street Scene, a two-day event featuring 50 acts
at Qualcomm Stadium drawing more than 75,000 people; as well as Copa
Tecate, the largest amateur Hispanic soccer
tournament in the United States at Raley Field
in Sacramento. “You could probably spend every night going to events
if you wanted to,” Gagliardi says.
Liquid Investments’ Vice President of Marketing
Pat Conners, who has been with the company for more than 22 years, oversees
local brand development and marketing initiatives, works with suppliers and
their agencies on media buys, special events, sports and entertainment
properties, and implements the company’s charity and community
involvement. Conners works with Pete Leesha, the director of marketing for
Northern California, as well as Kristy Dielke, community affairs manager
for Liquid Investments.
A certain dynamic exists running five different
operations under the Liquid Investments corporate head. During the past
year, suppliers started asking Liquid Investments to look at its yearly
planning for the total company, instead of by
each division. Suppliers wanted to know what volume to expect from Liquid
Investments for the total year.
In turn, Gagliardi and all of his general managers
will meet with a supplier to set objectives for total Liquid Investments,
including ways to grow the overall volume faster and the opportunities that
are out there for the distributor and the supplier. By planning farther
ahead and utilizing all the company’s resources, the goal is to
impact the overall business for the supplier, which also means more cases
sold for Liquid Investments.
“When you get everyone in the room, you get
better ideas, as well as assisting our operations side in coordinating
supply chain,” Gagliardi says.
Liquid Investments spends most of its money on sales
activities, but watches its expenses and provides equipment to drivers and
operations to improve cost effectiveness in these areas as well. “We
are a very efficient distributor in terms of delivery and operation,”
And even though Fowler and Gagliardi have more than a
decade difference in age, when looking at the business, both usually end up
in the same place. “The journey as to how we get there is somewhat
different,” Fowler says. “He is very analytical and I am more
But Fowler does think what defines the company is that
it is never satisfied. “It’s continuous improvement,” he
says. “Most of it is incremental change. However, if you
don’t like to win and you don’t like to compete, then this
isn’t the right business to be in.”
I want to hear from you. Tell me how we can improve.
The February 2020 issue dives into Essentia water, their high-pH and high aspirations for ongoing innovation. Speaking of innovation, this issue also features a special report on how (and why) the zero-proof functional beverage market is growing. Also, check out what types of rifts and shifts are shaking up the wine category and discount variety stores, as well as the latest ingredient highlights (hint: exotic fruits make an appearance). To cap it off, peruse new product releases, the latest appearances in packaging, and holistic approaches to cognitive health. Thirsty for more? Subscribe to get the latest stories delivered right to your inbox.
Check back throughout the month for additional content.
Check back throughout the month for additional content.