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Issue Date: Vol. 45, No. 2, February 2005, Posted On: 2/16/2005

Bar Joys, Bar Woes'And Direct Sales

Marcus Webb

This month's Nightclub & Bar Show will doubtless feature plenty of toasts to the health of the on-premise liquor industry. But make no mistake - the tavern industry is under fire. "So what else is new?" some might ask. The   answer to that is threefold.

First, smoking bans are reaching new heights across the United States. A new town, city or county seemingly bans smoking in public places every day. Statewide public smoking bans (of varied severity) are now in effect in nine states; more are sure to come. Some politically savvy operators believe they can fight and win at least a partial victory by modifying smoking bans so their effect is mitigated. That's probably true. But in the long view, this remains a rear-guard action. More and more companies are adopting zero-tolerance anti-smoking policies and some  employees can't even smoke at home.

Second, Mothers Against Drunk Driving is marking its 25th anniversary with a call for more roadside drunk-driving inspections. It also wants drunk driving offenses treated as harshly as violent crimes resulting in serious injury. If MADD gets its way, judges will handle DUIs the same way as bank robbing at gunpoint.

Third, critics have mounted an assault against the liquor industry's "equivalency" PR campaign. This sales pitch claims (roughly speaking) that drinking a slug of whiskey is no worse than ingesting a can of beer. Dennis Vacco, a former attorney general of New York, recently called the equivalency campaign "very deceptive and dangerous." He's got plenty of company.

All of these developments work to reduce tavern traffic, which can result in measurably fewer sales for bar-based operators. Do these clouds have a silver lining? Yes. Operators have already discovered that some customers continue to patronize bars, no matter what. But the less such customers drink, the more they require alternative social lubricants. And, the less money they spend on booze, the more dependent tavern owners become on alternative revenue sources. Music and games fill the bill in both cases. Demand for operator services in taverns is accordingly up.

Yet this silver lining also contains another cloud. Manufacturers, citing the famous "operator sales resistance" factor, increasingly pitch products directly to locations. That means glossy full-page advertisements in magazines that target location owners such as Nightclub & Bar and Pizza Today, among others. It means taking exhibit booths at the Nightclub & Bar Show and many other trade shows, some under the auspices of AAMA's Location Trade Show program (which is probably AAMA's most popular benefit).

Sometimes the purpose of all this location marketing is to excite tavern owners about new products so they will call their operators and say, "I gotta have this!" Other times the purpose is to sell product directly to locations. Operators, understandably, hate both. But all's fair in love, war and a free-market economy.

Industry trade magazines, it can be argued, also lose a chunk of ad budgets every time a manufacturer takes an ad in a location magazine. Yet a case can be made that direct manufacturer sales to locations have sometimes benefited the entire industry, including operators (and, by extension, trade journals). There have been times, even recently, when operators refused to buy an entire class of new product that deserved their support. By selling direct to locations, certain manufacturers prompt operators to step up and get involved. The same tactic occurs in distribution with new manufacturers.

Regrettable? Perhaps. Still, I'd rather see manufacturers sell direct and survive than see our industry lose entire sectors like touchscreen countertops, redemption and certain digital imaging products , all of which traveled this route on occasion.

As for the tavern, it's a 3,000-year-old institution that has evolved greatly. Smoking bans and DUI won't kill it, but short-sighted attitudes just might cost our industry its traditional tavern base. This month we examine some of these issues with features on AMOA's view on smoking bans and the trade's investment picture.

Topic: Editorial: Music and Games

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