Market Watch 2014 Beer Wholesaler of the Year

As one of the country’s leading beer wholesalers, Tim Sheehan’s work day is often filled with high-level meetings and conference calls, travel engagements, responses to emails and other critical tasks required to run a multistate business. But the part of his job that he finds most exciting is visiting his retail customers. “I like going into stores and seeing our customers—our friends—and finding out what’s important to their business and how we can help them make their stores better,” says Sheehan, CEO of Kingston, Massachusetts-based beer distributor L. Knife & Son Cos. 
 
This industry veteran even still takes pleasure in building beer displays and resetting coolers at retail outlets. “It gets the blood flowing,” Sheehan says. “I enjoy building our business and that of our retail partners and making friends for our company.”
 
With operations in 14 states and Washington, D.C., Sheehan’s family-owned business has made lots of friends over the years. And while L. Knife—2014 Beer Wholesaler of the Year—has grown to become one of the largest in the beer wholesaling business, Sheehan and other company executives maintain that the focus is on being the best, not the biggest. According to vice president of sales and marketing Michael Brazel, L. Knife’s vision is to be “the best beverage distribution company in each of our respective markets by continuously improving employee satisfaction, retailer satisfaction and supplier satisfaction.” Tim’s father, Gerald “Jerry” Sheehan—who serves as chairman of the board—concedes that while he never expected L. Knife would grow to its current size when he first joined the business nearly 60 years ago, the secret to the company’s success has been its commitment to quality. “We believe that every one of our brands has its value,” Jerry Sheehan says. “We’re very selective in what we take on.”
 
L. Knife declines to report sales data, but it’s estimated that combined volume is 35 million cases and annual revenue exceeds $700 million. The company services much of the Eastern Seaboard, from Maine to Virginia, as well as Kentucky, Wisconsin, Montana and Southern California. (In all but California, L. Knife is a statewide craft beer distributor.) The company comprises some 20 different divisions, including its three largest operations—L. Knife & Son Inc. in Massachusetts, Union Beer Distributors in New York and Beechwood Sales & Service in Wisconsin. Brazel notes that the distributor partners with hundreds of beer suppliers, ranging from Anheuser-Busch (A-B) InBev to emerging craft breweries, and employs 1,500 workers. 
 
Deep Roots
 
The company’s roots date back to the late 1800s—perhaps longer than any other leading beer distributor—when Luigi Cortelli, an Italian immigrant whose name was Americanized to “Louis Knife,” settled in Plymouth, Massachusetts, and sold groceries from a horse-drawn cart. His son, Domero—Jerry Sheehan’s father-in-law—established a distribution agreement for eastern Massachusetts with Anheuser-Busch in 1934 following the repeal of Prohibition. In 1956, Jerry Sheehan joined the company as a route salesman and purchased the business seven years later. 
 
Over the course of the next four decades, Jerry—joined by his sons, Tim, Chris and John—expanded the company’s beer holdings in Massachusetts, New York and Wisconsin, representing A-B and other beer suppliers. In 2002, the distributor acquired the statewide Massachusetts Craft Brewers Guild portfolio from Brooklyn Brewery, followed the next year by the Craft Brewers Guild portfolio for the 14 counties of south-eastern New York. For the past decade, L. Knife has made a series of acquisitions in various states to position itself as perhaps the largest distributor of craft beer and specialty imports in the country with its multistate Craft Brewers Guild network. Tim Sheehan was named CEO in 2008, while Chris Sheehan serves as president and general manager of Union Beer Distributors, and John Sheehan holds the position of president and general manager at Beechwood Sales and Service.
 
A-B remains a key supplier. Jerry Sheehan acknowledges the roles A-B and A-B InBev have played in the success of his company. “That business has been a significant partner and a major driver in our success,” he says. Six of the company’s 20 operations are A-B distributorships (three in New York, two in Massachusetts and one in Wisconsin).
 
L. Knife first started handling craft brews in 1987 and hasn’t looked back. “We took every opportunity we could with craft beer,” Jerry Sheehan says. The company represents such producers as D.G. Yuengling & Son, Sierra Nevada Brewing Co., Bell’s Brewery, Abita Brewing Co., New Belgium Brewing Co. and Lagunitas Brewing Co.
 
The beer wholesaler has also branched out into wine and distilled spirits in some markets. Last year, the company formed Blueprint Brands, an artisanal spirits division that represents the likes of Sound Spirits Distilling in Seattle, New England Distilling in Portland, Maine, and Middle West Spirits in Columbus, Ohio. The spirits unit currently focuses on New York, New Jersey, Connecticut, Boston and Washington, D.C. “We’ll continue to look for opportunities in all beverage categories,” Brazel says.
 
Trade Support
 
L. Knife distributorships service tens of thousands of retailers and on-premise venues in the markets they cover. “We aim for quality distribution,” Brazel says, noting that A-B’s wide array of brews allows for high levels of penetration. “There are many brands that are appropriate for just about every account.” He adds that craft brews require a particular amount of attention. “We’re very diligent about putting the right beers in the right accounts,” Brazel explains.
 
The company also hosts regular retail trade events for its customers that showcase supplier partners and their brands. In addition, L. Knife distributorships offer training forums for the employees of their retail and bar accounts, concentrating on beer and sensory training. The wholesaler’s own employees also take part in “brewery immersions,” Brazel says. “We try to get our staff to truly understand the brewing process by doing it hands on.” Another resource is the Learning Pub, an internal online tool that provides intense training for the company’s sales staff. “We train and certify our sales management teams and educate sales and merchandising reps,” Brazel adds. 
 
The distributorships also play important roles in numerous consumer events, including increasingly popular functions like beer dinners and festivals. The company is active in beer week programs in the markets it serves and helps promote related on- and off-premise events. Moreover, L. Knife has made a big commitment to digital communications, operating Facebook, Twitter and Instagram accounts and using Greatbrewers.com, a social media marketing platform that aims “to unite the beer community with a paramount focus on education,” according to the website. “Young adult consumers seek information via social media, and we try to talk to them there,” Brazel says.
 
L. Knife and its owners also believe in giving back to the communities where they do business. The Sheehan Family Foundation, established more than 20 years ago, emphasizes environmental and early childhood education causes. According to Jerry Sheehan, contributions have exceeded $10 million, and many of the donations have been given in the names of L. Knife employees. “My family is lucky to be driving the bus, but there are a lot of people who keep that bus running,” Tim Sheehan says.
 
Maintaining Relationships
 
Noting that the success of his company and others in the beverage alcohol business can be attributed to the strength of the three-tier system, Tim Sheehan points to the opportunity and innovation that has resulted. “The separation of the tiers allows individuals to start companies and have access to market,” he says, adding that the system provides for “unbri-
dled creativity” in beverage alcohol. 
 
Sheehan—whose first experience with the family business as a child included “sorting breakage”—points to technology as one of the biggest changes he’s seen in the beer industry. “I remember the first IBM System/32 computer we installed. Today’s smartphone probably has 10,000 times more computing capacity,” he says. Yet in many ways, the executive notes, the beer wholesaling business hasn’t changed. “It’s still a people business,” he explains. “People sell beer, not computers. At the end of the day, success is determined by who has the strongest personal relationship with the retailer.”
 
L. Knife & Son Cos. only has plans to strengthen and expand those relationships in the future. “The fifth generation is coming along,” Tim Sheehan says. “I’m looking forward to them joining the company and making a significant contribution.” He adds that the company is always evaluating opportunities, but that growth will be healthy and strategic. “We’re not good because we’re big,” Sheehan notes. “We’re big because we’re good.”