During the week before this summer’s July 4th holiday—beer’s biggest selling weekend of the year—J.R. Hand was visiting retailers in the Chicago market served by his Lakeshore Beverage beer distributorship. As president and CEO of multi-state distributor Hand Family Cos., one of the country’s largest beer wholesalers, J.R. certainly has plenty of executive responsibilities. But his favorite task is meeting his retail customers.
“I enjoy engaging with retailers,” says J.R., a third-generation beer wholesaler. “It’s fun to dig in and find out what’s going on in the market.” Those visits provide Hand and his employees with a chance to lend their expertise. “We help retailers set their sails in the right direction,” he adds. “While we don’t sell our product to the people who ultimately consume it, we have to help those who do—and help them be better than the next guy.”
With distributorships in Illinois, Tennessee and Kentucky and nearly 1,100 employees, Hand Family has annual sales of nearly $650 million and represents about 200 suppliers—from Anheuser-Busch InBev (A-B InBev) to numerous import and craft beer players. The company handled more than 32 million cases of beer last year—including 23 million cases in Illinois alone—and projects a volume increase of about 1.5 percent for this year.
For its unyielding commitment to meeting the needs of its retail customers, Market Watch has named Hand Family Companies its 2016 Beer Wholesaler of the Year.
Hand Family’s origins date back to 1949, when Raymond Hand—J.R.’s grandfather—established Ideal Distributing in Clarksville, Tennessee. In 1956, the company was awarded distribution rights for Anheuser-Busch products in an eight-county area surrounding Clarksville. When Raymond died in 1961, his son Charles took over the company at age 22. J.R. officially joined the family business in 2003, just as the company embarked on a major expansion move, which included the establishment of a branch in neighboring Kentucky. From 2003 through 2013, Hand Family’s annual beer volume jumped from 4 million cases to 17 million cases. In 2009, Charles assumed the title of chairman, while J.R. was named president and CEO. J.R.’s sisters, Charlsie Hand and Aim-ee Hand, hold the roles of property manager and office manager, respectively, and both serve on the company’s board of directors as well.
The most dramatic move in Hand Family’s history came nearly three years ago with a series of moves that created Lakeshore Beverage—now the largest beer distributor in the Chicago market, according to J.R. Hand Family purchased A-B InBev’s 30-percent ownership in Chicago’s City Beverage, with private equity firm BDT Capital retaining the other 70 percent. At the same time, Hand Family partnered with BDT to acquire River North Sales and Service, another Chicago-area A-B InBev house, from Yusef Jackson. The two distributorships combined to form Lakeshore Beverage. “BDT has been a great financial partner,” J.R. says. “Our alliance has provided stability on the back end and helped achieve our goal of growth.”
Charles is pleasantly surprised at the company’s expansion to Illinois. “I never dreamed I’d be doing business in Chicago,” he says. While Charles concedes that the move has been the Hand Family’s most challenging to date, he notes that the company makes progress every year. J.R. adds that he’s proud of Hand Family’s ability to adapt to different markets. “As we’ve grown, we’ve gone from a very small, rural town to a large city like Chicago,” he says. “We’ve entered new markets with our eyes wide open, and we do our best to adjust to the particular market conditions. If we see something we like in a company we’re acquiring, we integrate that into our way of business.” Many of Hand Family’s functions are now centralized out of Clarksville.
Good Times In A Bottle
Noting that he sold his first case of beer more than 60 years ago, Charles considers how the beer industry has changed over the years. He points to consolidation at the supplier and wholesaler tiers and the explosion in craft beer, which he calls a game changer. But he notes that in many ways, the beer business has remained the same over the years. “It’s still a relationship business,” he says. “It’s all about relationships between us and our suppliers and customers. It’s also about our relationship with our employees. They keep our company humming.”
J.R. adds that while the beer wholesaling business has become more complex as distributors have grown in size and footprint, it’s important not to lose sight of the end goal. “A lot of people have forgotten that we sell good times in a bottle,” he says. “We’re not launching rockets to the moon. At the end of the day, we want to make as much money for our retailers, our suppliers and ourselves as we can, but we also want to have a damn good time doing it.”
J.R. credits A-B InBev for the company’s longevity. “Hand Family wouldn’t be in business without A-B InBev,” he says. “We’re very appreciative of their continued brand-building. They’re still our largest supplier, and our company is driven by the success of the A-B InBev brands.” Imported and craft beers, however, have become a growing part of the company’s business. “We have to focus on all elements,” J.R. notes. “We want to make all our brands successful.” Other beer marketers that Hand Family represents across its operations include Pabst Brewing Co., Constellation Brands, Heineken USA, Diageo Beer Co. USA, D.G. Yuengling & Son, Sierra Nevada Brewing Co. and New Belgium Brewing Co.
Urban To Rural Markets
Lakeshore Beverage distributes beer from about 80 different companies in 28 Illinois counties, according to regional vice president Mike Flynn, who’s worked in the Chicago beer market for 25 years. Lakeshore Beverage services more than 12,000 licensed accounts. While the Illinois beer market has struggled in recent years, Flynn notes that the on-premise and grocery channels have provided growth opportunities. Lakeshore Beverage counts sports venues like Wrigley Field and the United Center among its key accounts, but package stores remain the distributor’s largest trade channel. “We do about 35 percent of our business in package stores,” Flynn says. “Grocery and on-premise each represent about 20 percent, as does the convenience and drug store segment.” To support those accounts, Lakeshore Beverage participates in more than 750 events a year, he adds.
“As a marketing team, our goal is to make sure our retailers understand that we’re going to work really hard to get our brands out in front of consumers,” says Lakeshore Beverage marketing manager Wei Fraser. She handles the company’s special events, including brand promotions, corporate social responsibility programs, and sales staff and server training. Digital marketing has emerged as an important tool for the company to connect the brands it carries with local customers. “Through social media like Facebook, Instagram and Twitter, we’re able to do many great things on behalf of our brewery partners,” Fraser says.
The mainly urban and suburban markets that Lakeshore Beverage serves couldn’t be more different from the rural areas where Hand Family distributes beer. According to Rock Haines, regional vice president for Tennessee and Kentucky, Hand Family operations service nearly 2,000 accounts in those two states. The Fort Campbell army base, located outside of Clarksville, represents a big part of the company’s business, and rural western Kentucky also has a high market share. Convenience stores account for more than 60 percent of the distributor’s business in Tennessee, followed by grocery at 20 percent. But recent changes to state law that enable supermarkets to sell wine and package stores to stock beer could change that ratio. “We expect to be a little lower in grocery, but we’ll have more accounts with liquor stores,” Haines notes. In Kentucky, meanwhile, package stores—including drive-thru locations—are more than 40 percent of the company’s business.
Hand Family Cos. gives back to the communities in which it operates, and that practice begins at the top. “We believe that a good organization is as involved civically as it is economically,” J.R. says, noting that his father has set a great example as a philanthropist. The company supports charities like the United Way, as well as such universities as Northwestern in Illinois and Vanderbilt in Tennessee. Hand Family is also mindful of its carbon footprint, undertaking efforts like employee park cleanups, energy-efficient lighting and packaging recycling programs.
Already one of the country’s largest beer wholesalers, Hand Family Cos. had a pending acquisition at press time and is well positioned for further growth. “Any opportunity that’s a direct overlay of our current territory is always attractive,” J.R. says. “But we made the leap to Chicago from Tennessee and Kentucky, and if a deal makes sense in some other part of the country, we would jump at it with open arms.”
Charles is most proud that the distributorship has grown while remaining a family business. He’s thrilled that his children are involved in the company and hopes that down the road his grandchildren will join too. “That would mark the fourth generation,” he says. “That’s very rare these days.”