Monster Energy is switching distribution houses in San Diego, and Sean Nichols is none too happy about it.
Nichols, the vice president of sales at John Lenore & Co. – which has distributed Monster for the brand’s entire existence – told BevNET that the company had been terminated with two weeks’ notice. The switch will take place on April 1. The energy drink volume sales leader is moving to a pair of wholesalers affiliated with Anheuser-Busch, including an AB-owned affiliate in the south half of the city and Markstein Beverage Co. in the north.
“This is about as ruthless an industry as you can get,” Nichols said. Lenore does receive a buyout – the Monster franchise in San Diego is so valuable it likely reaches the millions – but the timing is painful for the once-thriving Lenore operation, which lost Glaceau last year, as well. “Here we are going into the summer selling season, we’ve spent millions renovating our warehouse, our company, our trucks, they knew we were doing all this and they gave us a two-week notice.”
Monster Beverage does not comment on distributor matters, according to the company’s president, Mark Hall. But there have been two undercurrents that lend context to the switch: first, Lenore has a practice of strong, exclusive contracts that have left some entrepreneurial beverage companies wary of signing with the group, despite an impressive roster of brands including Vita Coco, Sparkling Ice, Muscle Milk, Marley, Calypso and Neuro. Even with those movers, the Monster volume was extremely important to the company’s health, Nichols said.
“We’ve got to rebuild to try to find the next thing – things – to replace it with,” he said. “Luckily we still have some good brands and they’re all growing.”
The second undercurrent is that A-B lost distribution for Monster in New York when the energy drink maker moved into independent player Big Geyser during the winter. The move has some suspecting that the switch to A-B houses in San Diego is payback. Regardless, it’s an interesting development, particularly since Markstein had the Monster on-premise franchise and relinquished it a few years ago.
For his part, Nichols looked at the loss of Monster as a telling lesson for the distribution community – and one that could have ramifications for entrepreneurs when it comes to moving between wholesalers.
“Other independent distributors should learn from this,” Nichols said. “Don’t trust suppliers, don’t trust whatever guarantees you think you have.”