WASHINGTON -- The nation's largest brewers and their 3,000 beer wholesalers are making some pioneering efforts in electronic data interchange.
The leading-edge participants are Budco, an independent Budweiser beer distributor, and H-E-B Grocery Co., both based in San Antonio. They have begun using a NEX system to speed backdoor receiving at stores and reduce invoice paperwork on beer deliveries.
NEX, or network exchange, is one of two universal communications standards developed by the Universal Code Council for this purpose. It involves transmission from the supplier's headquarters of invoice information. DEX, or direct exchange, is similar except that the delivery person uses a hand-held computer device to download the electronic invoice at the back door.
In Anaheim, Calif., Coors Brewing Co. distributing company, or CDC, is participating in an electronic data interchange pilot program with Ralph's Grocery Co., the regional supermarket chain. Ralph's is requiring that its deliveries use the DEX system.
In the same area of the country, Vons Cos. had reportedly scheduled a Feb. 15 meeting of its beer distributors at which it also planned to require DEX of its distributors.
The Budco/H-E-B activity, is one of several pilot programs which will be featured in an informational video being made ready for distribution by the Beer Industry Electronic Commerce Coalition [BIECC] a group formed less than one year ago, said Julia Kurdt, director of member affairs for the National Beer Wholesalers Association in Washington, which represents an industry with $28 billion in annual sales.
"There are two missions for the BIECC. First is the education of beer wholesalers as to what EDI is all about. The second is the monitoring of EDI groups, like the UCC and others to keep on top of their activities," she said.
The five largest beer companies, Anheuser-Busch, Miller, Coors, Stroh, and B. Heilman, are all active participants in the BIECC, although membership is open to all brewers,
The video tape, which should be ready for distribution in two months or so, is expected to be previewed for wholesaler/distributors who attend a meeting of the Rocky Mountain Conference of Beer Distributor Associations in Monterey, Calif, March 6 to 8.
The Rocky Mountain conference will also include a roundtable discussion on EDI, said Kurdt. (Information about the meeting is available from the Arizona Wholesale Beer and Liquor Association, Phoenix.)
The videotape is described as a basic primer on what EDI is and what its benefits can be. The message will be strictly soft-sell, said one brewery company source familiar with the project, because beer wholesaling is closely regulated and protected in many states.
The source, who spoke on condition of anonymity, said, "The structure of the Alcoholic Beverage Commissions and power of those wholesalers makes for a mesh that can stop progress and keep old ways."
In some cases, this control is seen in a favorable light by the brewers, such as when it curbs practices like slotting allowances. But the big brewers see some other rules as badly outdated: in particular, rules in a few states which require delivery paperwork to be kept on file at stores, or that payment be rendered in cash upon delivery to the store.
Electronic Funds Transfer is permitted for beer in only a few states. The Department of Liquor Licenses and Control in Arizona is one which ruled in favor of the practice about one year ago.
In several instances, investment-averse wholesalers have in some cases been able to resist retailer calls for technological improvements in delivery/receiving practices by seeking rulings from their state ABC boards. Said the source mentioned earlier: "The fear among distributors is that they feel this may be the demise of the three-tier system."
Although each of the major brewing companies has declared its continued support for the three-tier system, some wholesalers and ABCs have been closing ranks. The North Carolina ABC passed a law at the end of 1993 prohibiting EDI for beer. Retailers in Virginia have reportedly found it slow going with that state's Alcoholic Beverage Commission.
"EDI is very new to them. Yet retailers are demanding it," said Kurdt.
"It has been regarded with suspicion by wholesalers," said the brewer. "Even larger owners are not necessarily catching on to how technology can help them."
But as in other categories of consumer goods, the shift of power into retailer's hands is driving change. As distributors have diversified into other, nonregulated categories of goods, such as bottled water and snack foods, retailers have discovered the lever they can push to change back-door practices without oversight from the ABCs.
Said Kurdt, "An Anheuser-Busch wholesaler might represent the beers, Eagle Snacks, bottled waters, soft drinks, and other products."
"Our wholesalers all carry other non-alcoholic products," said the brewer mentioned earlier. "Retailers are starting to realize they don't have to worry about ABCs with those products."
Once a distributor has been muscled into investing in NEX or DEX capability for their other products, it makes little sense for them not to use the capacity for their beer as well -- unless state regulations specifically outlaw the practice.
H-E-B didn't set out to make a beer wholesaler its first NEX partner. Budco took part of the initiative, said Shawn Sedate, DSD project coordinator for the retailer.
"They were our first live production NEX vendor," he said. "It was a real success for us."
Said Sedate, "There are pockets or areas within our business that move at different speeds for different reasons. This is one. The regulatory environment, the distinct lines of authority between manufacturer, brewer distributor and retailer, all affect it."
He added, "With wholesalers you have to deal with many of them. Some will be more or less progressive. [The pilot with Budco] helped us get started with improving our business. They were immediately able to get in and out faster, and we have more accurate invoices."
H-E-B is not one of the retailers which is trying to unilaterally compel its DSD suppliers to adopt NEX or DEX, he added. "We have got a group of businesses in a unique situation where influence of regulatory agencies in protecting the three tier system. There is a separation between brewers, distributors and retailers. We support that."