Silver Eagle Distributors, headed by owner John Nau III, is the largest U.S. distributor of Anheuser-Busch products, thanks to strong retailer relations and strategic acquisitions.

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A beer distributor can’t fly much higher than Silver Eagle Distributors of Houston. The company recently became the largest distributor of Anheuser-Busch products in the nation and the fourth-largest beer distributor overall. Achieving this was no small feat, and has taken decades of building relationships with retailers and making strategic acquisitions. The latest of these acquisitions, BudCo in San Antonio, was what put Silver Eagle over the top, according to president and CEO John L. Nau III.

“Today, we have 1,200 employees, five fully operating warehouses and two sales depots, and in the last year we’ve also acquired [distribution rights to] some of the brands Anheuser-Busch has become involved in,” including Rolling Rock and Grolsch, Nau says. Even though the territory covered by Silver Eagle is relatively small geographically, it packs a wallop demographically.

“Texas has 254 counties, and we service 16 of them,” Nau says. “The good news is that we have the cities of Houston and San Antonio, great beer markets and both of them growing markets.”

Nau says the company has become the biggest by having the right people, the right equipment and by redefining the role of the distributor. Taking on more marketing duties has been a great help to the company’s retailer customers, he says, and helped solidify Silver Eagle’s position in the Houston market. “In a market as big and diverse as Houston, we had to become marketers,” he says.

The company’s relationship with its retail customers is a key component of Silver Eagle’s success, Nau says. Making friends and selling beer go hand-in-hand, he adds, and that’s become a mantra for the company going forward. He says the company will continue to build market share “one person, one beer at a time.”

First Steps
The company was originally a distributorship owned by Anheuser-Busch in the late 1950s and early 1960s, but was sold to Basil Bill Georges, who operated it as Southwest Distributing. Nau says Georges “built the company from very small to about a 25 percent market share.”

Nau was co-owner of a distributor in Florida and, in 1987, purchased Southwest Distributing with his partners. The company was renamed Silver Eagle, and by 1996, Nau was the sole owner. He says the company experienced significant expansion throughout the 1980s and 1990s.

“We built the company from a 25 percent share to around 50 percent, at least the high 40s,” Nau says. Silver Eagle currently serves more than 10,000 retail customers, with sales of 43 million cases annually.

Flying the Flag
Nau says the company’s employees drive its success, and as such, he has developed a hands-off management style that gives them room to excel. “I tell the employees that my job has three parts,” he says. “First, let everyone know what’s expected of them. Two, provide equipment, whether it’s a truck or a computer. Once I’ve done that, the third thing is to get out of the way.”

Understanding the marketplace is also an important part of being a distributor, and Nau says Silver Eagle follows the traditional approach to that as well as its own. “The traditional way is that you segment your marketplace by standard demographics, and you look at your customer base in terms of [segments],” Nau says. “You need to know every aspect of the volume opportunities that exist in every one of those markets.”

But while Silver Eagle studies the demographics, it also takes a more proactive strategy and provides marketing services for its customers.

Nau says this not only gives Silver Eagle closer contact with customers and a better understanding of their needs, it also helps both customers and Silver Eagle create a bigger market for beer in the face of growing competition.

“We felt we needed to take the marketing elements provided by the brewer and combine that with our market knowledge,” Nau says.

The information Silver Eagle provides its customers with is state-of-the-art, taking the form of detailed computerized records. “I’ve been in the beverage business so long, I can remember making resets with an ink pen on the back of a sheet of paper,” Nau says. “That won’t go anymore.”

He says the marketing help that Silver Eagle provides is welcome because of the makeup of the market. “We do about 52 percent of our business [in Houston] through convenience stores,” Nau says. “In San Antonio, that number is about 58 percent. Most of them are independently operated, they’re not chains.”

Providing Back-Up
Without the resources of a chain behind them, the independent operators that make up much of Silver Eagle’s customer base rely on the company’s demographic know-how to make purchasing decisions.

“More importantly, we also help [the retailer] make statements that sell our beer,” Nau says.

Specifically, Silver Eagle helps independent retailers create displays and marketing materials that appeal to customers.

This is important because beer has become a more diverse product than ever, Nau says. Joining domestic brands in convenience store coolers today are imports, specialty beers and microbrewery products. All of these labels appearing on shelves can make it harder for a beer, even a nationally known brand like Budweiser, to stand out.

“I believe that the beer industry in general and the product beer has begun to get its footing again,” he says. “Consumers are beginning to get a wider variety of choice, and they are responding to it.”

Part of this is due to the fact that import and specialty beers have only within the last 10 years made it to Texas and the middle of the country. Nau says niche beers normally hit the coasts first, and then slowly work their way into the middle of the country. “It became accelerated in 2007,” he says.

Beer has also been challenged by other segments of the alcoholic beverage market, such as wine and flavored malt beverages. Nau says beer recently started to mount a comeback, especially among people aged 21-25 in Houston. “The first step in dealing with that was simply recognizing there was competition from somebody out there other than our beer competitors,” he says. The company worked with retailers to develop marketing that would help increase beer’s profile in stores.

Making Friends
Helping retailers with marketing is one thing, but Silver Eagle does more than that to keep the Anheuser-Busch name out. “If you go back to the late ’80s, one of our strategies was to dominate special events,” Nau says. The company continues to sponsor special events all across the Houston and San Antonio markets to this day.

“The other side is simply the company and the family supporting the community in general, and we do that as a matter of personal support as well as corporate,” Nau says.

Silver Eagle is also very involved in promoting responsible drinking, and Nau says the company does more than the brewers require to further the message of moderation. “We recognize that we are in a highly regulated business with a product that can be misused,” he says. The company takes a four-pronged approach to educating the community about the dangers of underage and irresponsible drinking, and draws from the brewer for help.

“Silver Eagle works collectively with Anheuser-Busch to proactively educate and create greater awareness of responsibility efforts among target audiences within our community,” Communications Manager Misty Cornelius adds. “Through a comprehensive portfolio of community-based programs and advertising campaigns, we focus our efforts on four issues: preventing underage drinking, preventing drunk driving, promoting responsible drinking among adults and bringing all of these efforts together to address college drinking, where there are individuals both above and below the legal drinking age.”

Whether dealing with retailers, consumers or brewers, Nau says distributors need to remember that they are dealing with people first and foremost. “This business has been and always will be about relationships,” he says. He recalls a meeting with an industry legend that inspired him to follow that creed.

“It came to me from the man himself, [late Anheuser-Busch chairman] ‘Gussie’ Busch, when I was introduced to him right after we got into the business,” Nau says.

“He looked at me and said, ‘Remember, making friends is our business,’” Nau continues. “I’ve adopted a phrase that says, ‘If you’re not having fun selling Budweiser, you’re doing something wrong.’”