L. Knife & Son: Champions of Beer
Written by Jennifer Cirillo   
Tuesday, 15 July 2008

When you think about some of the legendary sports teams—arguably the Chicago Bulls, the New York Yankees, the Pittsburgh Steelers—you can’t help but wonder: What was their winning strategy? Well, the response that you’d most often hear from the players, or coaches, is hard work, dedication and a deep-rooted love for the game.

At L. Knife & Son, one of the Top 10 US beer wholesalers based on volume, the “players” and the “coach” will tell you much of the same if you ask, “What has driven your success over the past 110 years?” That and, it feels pretty darn good to be on a winning team.

L. Knife & Son, based in Kingston, Mass., is an operation that extends from the East Coast to the Midwest, with 750 employees and a sales force of just over 350. It has grown to include an importing company, St. Killian Importing, and nine distribution operations located in Massachusetts, New York, New Jersey and Wisconsin, that all play a role in the company’s winning track record.

The “large run, small family business,” as Michael Brazel, vice president of sales & marketing at L. Knife refers to it, is one that has, through strategic acquisitions and a “simple plans, ruthless execution” sales and marketing motto, grown to become the force it is today.

Part of that force comes from the strong partnership L. Knife has had with Anheuser-Busch since 1934. L. Knife continues to build on its 75 years of success serving as one of A-B’s largest wholesalers in the US operating in six territories for A-B at freestanding distributorships in Massachusetts, New York and Wisconsin.

“Certainly our partnership with Anheuser-Busch has helped us in many ways,” says Tim Sheehan, president of L. Knife & Son, “insisting that we be a first class operation and look hard at ourselves, question everything regularly and don’t take anything for granted or easily give up on anything.”

Giving up isn’t an option for a winning team. It’s just not in their vocabulary.

From the Top Down
It always feels good when the home team wins. Massachusetts has seen some winning teams recently—the Boston Red Sox in 2007, the New England Patriots in 2004 and 2005, and as this article is being written, the Boston Celtics have just come off a game six victory, crushing the LA Lakers to claim the 2008 NBA title.

“Whether it’s the New England Patriots or the Boston Celtics it’s a great feeling,” says Sheehan. “It’s good to be on a team that is a winning team. That’s what I think brings people back to work every day.”

And it’s the hard-working and dedicated L. Knife employees that have played a major role in the continued success of the company. At the forefront of the company is the Sheehan family. Leading the team is Tim who recently took the place of his father, Gerald “Jerry” Sheehan, as president officially on May 7.

“It’s been a seamless transition,” says Sheehan of his new role. “Certainly my dad is still very active in the business and will be for a very long time.”

Jerry joined the company in 1956 as a route salesman working for his father-in-law, Tim Knife, then president of the company, to later become president himself in 1963.  

Residing at the helm of L. Knife for 45 years, Jerry is “the one that keeps the company moving forward,” says Jeff Annis, vice president of human resources. “Jerry is the head cheerleader.”

But it seems that all of the Sheehans involved in the business serve as motivational cheerleaders for their employees.

“Whether it’s Tim, John, Chris, Ted [Ted Landers is the general manager of Seaboard Products in Danvers, Mass., and Jerry’s son-in-law] they are active, involved. People definitely look to them,” adds Annis.

“I still carry my Class I license and will deliver beer if I have to, and do, on the Fourth of July,” laughs Tim.

Along with the family members, the executive team at L. Knife, composed of four vice presidents, has worked in tandem to nurture the company to its current level of success. They are: Charlie Smith, vice president of finance (24-year employee), Brian McGuire, vice president of operations (27-year employee) and Annis and Brazel (25-year employees).

“We have a lot of middle- and upper-level managers that have been with us for more than 25 years that are still under 50 years old, which is pretty remarkable in this day and age in any industry,” says Tim. “That is one of our, I believe, core strengths—the quality and commitment of our people.”

In speaking with a handful of employees, as well as the Sheehans, there is no doubt that a close-knit family atmosphere exists at L. Knife, regardless of whether or not a person holds the family name. And in times of uncertainty, family is whom you depend on. For beer wholesalers, consolidation is certainly an area where challenges are faced. And with the strong possibility of an InBev takeover of A-B, there is uncertainty about the future.
“It certainly represents change,” says Tim of the proposed acquisition. “But change generally favors our company.” In the end, he says, “It is way above our heads as to what would happen. We just have to be prepared for whatever does happen.”

However, consolidation in the industry has presented opportunities. Tim stresses that the look of the future for
L. Knife will be much of the same—to be consistent in its approach to continue to expand its beer wholesaling business.

“It’s a niche that we seem to be successful at,” he says, “so we are not really looking to go too far off the playing field from what we’ve done well at in the past and there seems to be opportunities as consolidation in the industry continues.”

Over the past 10 years or so, L. Knife has extended its footprint in the US with strategic acquisitions in Wisconsin, Massachusetts, New York and New Jersey. While all have been success stories, the ones that have the most noteworthy tales are that of Beechwood Sales and Service based in New Berlin, Wis. (about 10 minutes outside of Milwaukee) and Union Beer Distributors, based in Brooklyn, N.Y.

Acquired in 1987, Beechwood has grown dramatically in the past 19 years as the distributor of A-B, Sprecher, Guinness, New Glarus and many other beers including local microbrews like New Lagures, from Lagures, Wis. In a Miller-loyal Milwaukee, Beechwood was able to grow Anheuser-Busch, which at the time of the acquisition was the fifth largest brewer in the state and became the No. 2 brewer some 15 years later. Today, A-B is closing in on a 30-percent share of the market in Milwaukee, according to John Sheehan, president of Beechwood, Tim’s brother.

“Our take when we looked at entering this market was there was this great opportunity,” says John, noting that beers like Pabst held a high share of volume, but had declining sales. “There was volume that we knew would change hands and our thinking was if we established something here, by just doing the basic blocking and tackling we could be the beneficiary of the volume that was changing hands—and it worked.”

Representing about 40 brands with 165 employees, Beechwood has outgrown its facility and is undergoing a 60,000-square-foot expansion, bringing its total footprint to about 170,000 square feet. “In 19 years,” says John, “we’ve never experienced a sales decrease.”

Crafting a Niche
With expansion, comes change. With change, comes greater challenges. But the one challenge that has remained the same for beer wholesalers in the US is how to best meet the needs of consumers. It’s been focusing on that one challenge in particular that has allowed L. Knife to become the wholesaler that it is today.

“The market always dictates what should happen, what it wants. And if someone is willing to provide that service or good, it will be well received,” says Tim.

The market has been gravitating to craft beer. L. Knife, a non-exclusive Anheuser-Bush distributor, saw an opportunity to take the lead. “It was evident,” says Tim, “that there were certain niches in the market that served as opportunities for us to expand into. And we’ve benefited from doing so.”

As one of the country’s leading craft beer distributors, representing 185 suppliers (leading brands include Magic Hat, Samuel Adams, Sierra Nevada, Smuttynose and Wachusett), L. Knife has made continuous efforts to provide answers to the many questions retailers and consumers have when it comes to the growing world of craft beer.

The company recently launched a beer education website, greatbrewers.com, a project spearheaded by Eric McKay, director of communications at L. Knife. The site is a “huge resource,” says Tim, which provides “a realm of brewery and brand information that is readily available at your fingertips that wasn’t available before.”

With the launch of the site, L. Knife is working on the formation of the Great Brewers Alliance that is intended to provide web resources to other likeminded wholesalers and to encourage dialogue between them.

“We are committed to being the go-to person for retailers when it comes to anything to do with beer,” says Brazel.

“The beer business is becoming more fragmented so you have to embrace a strategy that is going to allow you to partake in each of those multiple segments within the beer business if you are going to continue to grow your market share… Education is absolutely one of the components of it.”

In addition to the many educational resources offered to its employees, there is the Beer Scholastic Aptitude Test (BSAT)—an online testing platform that monitors the sales team education progress on general beer knowledge. Each month employees are required to take the test, and to muster up some friendly competition, the top 100 scorers are listed for all to see.

As Brazel points out, “We compete against some very good wholesalers, which actually is a benefit to us because it makes us better. And I’m sure in turn, we make them better.”

But don’t expect to see the L. Knife “players” or the “coach” gloating with their trophy. Winning isn’t everything…
Tim says, “We are happy to be who we are and quietly recognized for what we’ve accomplished… It’s nice to win. It’s not the end of the world (if we don’t), but we work hard to make it happen.”

 

From Beverage World July 15, 2008 

 
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