Mark Green: Back in 1978, according to your website, Kentucky Eagle had four nameplates and sold 1.25 million cases of beer. Nowadays, it has 1,500 accounts, 400 brands, and sales are 5 million cases annually, plus other products. What are the highlights of the company’s growth?
Ann Bakhaus: My dad bought Bennie Robinson distributing in 1948. It was started in 1933. The company had Hudepohl, Budweiser and Wiedemann beer and sold lettuce and vegetables on the same trucks. When dad bought it he took it to beer only. They sold about 979 barrels a year and gross sales were $177,000. When you move on up to 1978, my father had Bennie Robinson, Champion, Ace and Old South, which were four different distributorships. At that time a lot of breweries didn’t want their beers in the same distributorships with certain other brands. Back then Hudepohl and Wiedemann were the No. 1 beers for many years. Some of the other brands he had were Coors and Pabst. He ended up selling the three others and consolidated some of the beers into Bennie Robinson. Later in the 1980s, we changed the name to Kentucky Eagle Inc.
MG: What about the addition of the other products?
AB: I think it’s very important to diversify. We sell everything from wine and spirits, beer, to non-alcs, waters and now beer cheese. If you’ve got room on the trucks and sell things that enhance your products, it’s a win-win for everybody. I started in 1997, and we were AB only – Anheuser-Busch would pay you to be exclusive to them, so many cents per case of beer. After I got involved, I thought we needed to diversify. We saw the craft beer industry coming on. We have another generation that likes a different style and flavor of beer. The craft guys have done a fabulous job being creative with so many things. It has added a lot of excitement to the industry.
MG: Your family has been in this business your entire lifetime. How did you get involved in it and learn the business?
AB: My brother was supposed to take over the beer part of my father’s businesses but he decided that he was more interested in the real estate side, so that was when my family made the decision to get into the beer business. When I got involved in 1997 I was one of four women wholesalers in the nation. Now there are many more. When I first became involved, Anheuser Busch came for a visit and asked how I was planning on taking care of the company. I shared with them that I was going to do it just as my father did for many years. He treated it as a family business and I would do the same. They told me the business was much too big for that, and I told them that I would take care of it just as he did, which I have tried to do. I look at my opportunity for getting involved as a blessing because if I had not gotten involved my daughter wouldn’t have had the opportunity as well. I learned the business from the ground up and I have enjoyed every minute.
MG: Did you have any business background or education?
AB: No. My education was fashion design. But my father always instilled in me that I could do whatever I set my mind to, and I have loved every second of being in the business.
MG: What kind of work had you done previously?
AB: I ran advertising for different department stores and worked with my father in the real estate side of his businesses and helped him manage his rental properties.
MG: Marketing applies to all business.
AB: We do a lot of media buys, radio television and billboards. But we also do Twitter, Instagram and Facebook.
MG: What is the product divide among the 400-plus brands of beer, spirits, wines, ciders, specialty beverages and beer cheese Kentucky Eagle distributes?
AB: Ninety-eight percent of our products are malt beverages and we sell around 5 million cases. Our sales people know our customers and their accounts very well and we sell them the products that work best in their accounts. We don’t want to put every single brand in every account if it will not sell well.
MG: Did Kentucky Eagle have to obtain the rights to market within a geographical territory?
AB: Yes, Kentucky Eagle’s distribution rights cover 19 counties. All of our brands go to every county, just not every brand in every account though.
MG: Has it always been 19 counties, or did you grow to that?
AB: We grew because seven or eight years ago, half of the counties in Kentucky were dry. When a county does go wet, ABI (which is our largest brewer) decides which wholesaler they want to give that county to. We all go in and make presentations for that county. It matters a lot if you’re contiguous with the county; they don’t usually hop over counties to give you a territory. The smaller brewers let ABI decide because they are well over 90 percent of our business.
MG: How does a new product or producer get into Kentucky Eagle’s distribution network? Do they have to establish demand in the marketplace before you pick them up? Or do you go to them?
AB: Most brewers come in and scope out your territory without you even knowing. They send people to see what the distributors are doing in their territories as far as point of sale, distribution, cases and the percentage of shelf space. Then they will ask to meet with you to discuss distribution and let you know their plans for coming to the state. After that, each wholesaler will go to them and make a presentation and then they will make a decision on distribution.
MG: If a new craft brewer comes on the scene, do you automatically pick them up, or do they have to prove themselves?
AB: We love all of our local craft guys. We distribute all local beers except for West Sixth, which Clark distributes. We meet with brewers when we find out they are in the game and find out what their vision and capacity is for their business. That is something you have to pay a lot of attention to because when you have a craft like Kentucky Ale or Country Boy you don’t want to put too much pressure on the brewer to where they can’t supply all the accounts that we have them in. The worst thing I can do is to put them in too many accounts, and then they cannot supply the capacity and run out of beer in those accounts.
MG: Kentucky Eagle emphasizes customer service. What policies differentiate you from others?
AB: To give the best service possible to our customers, we try to hear what their needs are, service them in a timely manner, give them the products we know will sell the best for them. Rotation is a big deal; we want to keep our products fresh in their stores and restaurants. If a product doesn’t sell as well as others and gets close-dated, we’ll change it out so they have the freshest beer possible. That’s a big piece of what we do.
MG: How has the craft beer explosion affected wholesale distribution?
AB: I can’t say enough great things about the craft business. It has brought new excitement to the industry. Customers who are experimenters who want to try different things are absolutely wonderful. The local craft brewers have done a great job. It’s important for them to stay tied into the overall community and for those local brands to be sold through their local restaurants and stores all over Central Kentucky. That touches jobs for Kentucky Eagles 160 employees and also for all waiters, waitresses and everyone who sells their beer in the stores and restaurants and gas stations. We need to keep that top of mind with the craft guys because that’s supporting local. The craft taprooms they have now are taking some of that away because it’s just the craft guys selling it in their taprooms and they are not touching all of those other businesses out in the community. We need to be aware and keep a balance. That is very important because their business is very important to the rest of our community. For them to grow right, they need to be in all of those accounts.
MG: Has craft grown the overall beer market?
AB: They are taking business from the domestic brands because some of our drinkers are changing. There are still a lot of loyalists out there that like domestic brands as well.
MG: Beer is a perishable product. How much time does a container of beer spend in your distribution chain?
AB: A case, or package as we call it, has a 110-day shelf life and draft has 60 days. We want to keep the freshest beer possible. As we order beer, we try to figure out how much of the product we’re going to sell within 30, 60 or 90 days. I have one person who does all of the ordering for all the beer in our territory. We just had one of our guys retire who did this job for us for well over 40 years. He was fourth in the nation as far as accuracy. Very impressive!
MG: Are your other products perishable?
AB: Liquors and wines have a long shelf life.
MG: What’s been the most difficult business issue you’ve had to confront?
AB: The hardest thing probably is dealing with taxes and different issues that will come up during the state legislative session. People will pass bills that are tough on our industry. That part of it has been the hardest for me because we can’t just sell beer; we’re over in Frankfort fighting taxes and fighting this or that.
MG: Your 190,000-s.f. headquarters here was the first LEED-certified distributor-ship nationally in the AB network. How and why did Kentucky Eagle do that?
AB: I wanted to do that when I built this facility in 2009. Our warehouse is one of the biggest refrigerators you will ever see. We have to keep package beer at a certain temperature and draft beer a lot colder. I looked into LEED and Gray Construction, who built our facility, was on the cutting edge of LEED. I also wanted to do it for my community: 83 percent of all the debris from this building was recycled. My office floor was made from an old black tobacco barn that was on the property, and I thought that was pretty neat. The paints and carpets are all environmentally friendly. We previously had a warehouse of 130,000 s.f. and my utility bills here for my new 190,000-s.f. facility are the same. That speaks volumes.
MG: Did achieving LEED certification require a bigger investment?
AB: Yes, but it absolutely paid for itself in no time. Well worth every penny. We also received wonderful PR nationwide for being the first AB wholesaler in the nation to be LEED certified. I had people calling me from all over the country inquiring about it.
MG: You’re chair of the Town Branch Fund advisory board that is putting together private financing for part of the project to “daylight” Lexington’s long-buried original downtown waterway, build a linear greenway and then a larger commons park. How did you get involved?
AB: This was a vision of Lexington Mayor Jim Gray. About five years ago he took a group of us to 21st-Century Parks that Dan Jones built right outside of Louisville. It is a big, beautiful park – about 4,000 acres. Our mayor said “think about a park in downtown Lexington and what that would do for our downtown.” Right after that, the city hosted a design competition for a park. SCAPE, out of New York, won the competition. Landscape architect Kate Orff just won the McArthur Foundation genius grant for her design of our park. The project never got off the ground back then because they could not figure out the funding. About two years ago the mayor came to me and said, “I think we have it figured out.” The linear park of Town Branch commons from Winchester Road down Vine Street to Rupp Arena, which we will call Town Branch Trail, will be publicly funded with the federal, state, city funding. Town Branch Park just west of Rupp Arena will be privately funded. Lexington Center Corp. (owner of the land for the park) will lease the property to the community, and the community will raise the money and manage the 9-acre park. I loved his idea of our community bringing a piece of our beautiful countryside into our city, so I volunteered to head up our Town Branch Fund board to help raise $30 million to build our park.
We started working on this about two years ago. The initial advisory board is only eight people. As soon as we are able to raise the majority of the money, we are going open it up to everyone in our community. When we get to that point I would love for every person in our community to give something to this park: 50 cents, a dollar, or whatever. But I want everybody to have ownership because this is our community’s park.
We’re going to be providing over 600 free programs a year for our community. We’ll have an amphitheater, a dog park, a children’s play area, wet splash area for kids, a big green lawn, a large area for soccer etc., and a lot of places to gather for coffee, food, wine and beer. We will have beautiful art throughout the park, and we will be telling the history of the piece of land and the settlement that was there many years ago. Town Branch Creek will run throughout the entire park, and we are going to clean the water by natural processes as well. There will also be a large educational piece for kids from all over to come and study the ecological part of our park.
Dan Jones says, “If you want to make this thing work you have to hold your park to very high standards and clean your bathrooms six to seven times a day and have fresh flowers as well!” We will hold our park to very high standards. We have raised well over $6 million so far for our $30 million project.
MG: What’s the timetable on the fundraising?
AB: It is going on at the same time LCC is building the new convention center. I think they will start construction in June or July. So the big parking lot where our park will be is the staging area for them. We hope to complete the park within seven to eight years.
MG: So ideally, when the LCC convention center is finished, then everyone will shift gears into the commons?
AB: The Town Branch Trail part of the Town Branch Commons is going to break ground in April for infrastructure and so forth going down Midland Avenue and Vine Street. It is so exciting. This is going to be transformational for our downtown. I am so passionate about what makes us so special and that is our countryside, and we’re bringing a piece of that into our city. I’m excited also about what impact this will have on our economic development downtown. Back when we started this two years ago, we all went to Dallas and Houston to visit parks that were connected to convention centers, to study the good, the bad and the ugly. One thing we saw in all the places we visited is that the economic development property around those areas was selling for $80 a square foot prior to the park being built and $500 a square foot after the park. Granted, we’re not Dallas or Houston, but we’re still talking about at least $300 a square foot I would think. This will also finally give the Distillery District the boost that it needs to be completed.
MG: Kentucky Eagle makes giving back to the community part of its culture. Is there an approach to this corporate citizenship that you can recommend to other people?
AB: It’s just called taking care of your community, which has been so good to our company since 1948. My father was a big believer in taking care of the community and my family and I are as well. We are very passionate about different things. One of my big passions is leaving something for my community that will benefit our community for generations to come – like our park. ■
Mark Green is executive editor/vice president of The Lane Report. He can be reached at [email protected]