When Paul Wachholz and Dale Collins purchased B&B Beverage in 1981, the company received shipments of beer by rail to a Kalispell location that is today occupied by Herberger’s. The beverage distributor then made deliveries with trucks full of the only three brands in its repertoire: Hamm’s, Olympia and Lone Star.
Then came a pivotal point, in 1983, when the company purchased Frontier Coors and Ralston Wines, significantly boosting its product diversity and local market share of beer and wine distribution. With a new name, Fun Beverage Inc., the business continued growing steadily over the decades, led by a philosophy of innovation and risk-taking in which it wasn’t, and still isn’t, afraid to embrace obscure or off-beat brands.
As an example, President and Chief Operating Officer Brian Clark tells the story of company officials approaching Red Bull in the 1990s, before the energy drink was widely known in Montana. Fun Beverage was rewarded for its forward thinking as Red Bull’s popularity skyrocketed. More recently, the business became the region’s sole distributor of the increasingly trendy White Claw alcoholic beverage.
“We generally were the ones saying, ‘Hell yeah, we’ll take that on and see what happens,’” Clark said. “We’ll take it out there and let the consumer decide.”
Today, Fun Beverage is the largest locally owned and operated beer and wine distributor in Northwest Montana, employing more than 100 people during peak season and operating out of an attractive 105,000-square-foot facility south of Kalispell that welcomes visitors with a striking, cavernous waiting area hardly reminiscent of a traditional industrial warehouse.
But make no mistake: big industry happens there.
On a recent afternoon, Clark estimated $4.3 million worth of inventory was stocked in the football-field-length warehouse, which has 12 receiving and shipping docks accessed by semi-trucks emblazoned with beverage brand logos and measuring 30 to 40 feet long. Counting vans used for frequent emergency deliveries, when retailers run out of supply, and other employee cars, Fun Beverage maintains a fleet of 70 licensed vehicles and operates its own spacious in-house mechanics’ garage.
All told, the company represents over 200 beer, wine and soft-drink suppliers, generating more than $40 million in annual sales and delivering to 480 licensed accounts in Northwest Montana with an inventory checklist of over 3,000 items. Fun Beverage prides itself on being a major local employer, paying out $6.23 million in wages and benefits in 2017. Officials are equally proud of the nearly $100,000 doled out last year in corporate community donations and contributions.
Indeed, the company has come a long way since its humble three-beer beginnings.
Along with Flathead Beverage Co., Fun Beverage is one of only two major independent beer and wine distributors in a service area comprising about 125,000 residents, and tens of thousands more thirsty tourists. Roughly 60 percent of Fun Beverage’s revenue comes from beer, 30 percent from wine and 10 percent from non-alcoholic beverages.
That revenue breakdown reflects a tiered regulatory system that allows local independent distributors to thrive with alcohol in ways they can’t with soft drinks. The unique governing configuration draws clear lines separating the alcohol industry into three tiers: brewers, distillers and winemakers manufacturing the product; distributors playing the role of middlemen; and retailers selling the inventory.
The system emerged in the 1930s after Prohibition, when a newly legal alcohol landscape provided a blank slate for redrawing the country’s regulatory structure. Although states control their own specific rules and laws, the overarching structure is consistent across the country.
Non-alcoholic beverages have a considerably different system, in which corporate conglomerates can more easily control every aspect of the process, from manufacturing through distribution to sales. For instance, global firms such as Coke and Pepsi can not only dominate the production and delivery of their soft drinks, but they can also purchase shelf space at retailers, pushing out smaller companies, which isn’t allowed with alcohol.
Thus, the three-tier system creates more opportunities for both independent distributors like Fun Beverage and small craft beer and wine makers. It’s an example of strict regulations fostering greater competition and opening up more room for the little guys. The Atlantic magazine described the arrangement as “deliberately inefficient and hard to monopolize.”
“The great effervescence in America’s beer industry,” wrote Barry Lynn, executive director of the Open Markets Institute, a nonprofit that researches antitrust issues, “is largely the product of a market structure designed to ensure moral balances, one that relies on independent middlemen to limit the reach and power of the giants.”
Still, business is business, and it takes astute entrepreneurs like Wachholz, Collins (who passed away), Clark and other Fun Beverage leaders to thrive through shifting markets and cultural trends for nearly four decades. The same can be said for Flathead Beverage Co., the oldest family-owned beverage distributor in western Montana, with operations passed down through three generations beginning in the 1950s.
Recently, Clark and Wachholz joined Kim Clausen, vice president of the wine division, and Gary McClarty, vice president of the non-alcohol division, in Fun Beverage’s conference room to reminisce about the company’s growth. Wachholz recalls Clark, upon his arrival in 1985, as being “smart, young and green.”
“That ‘green’ part put him on a fast track because he was thrown into the jungle,” Wachholz said.
Clark has been happy in that jungle for 34 years, one of only two presidents in 38 years, providing steady leadership that has bred stability and helped nurture a unified vision. Wachholz remains chief executive officer.
Clark says the company’s steady expansion mirrors the region’s population growth, and he’s humbly grateful for Fun Beverage’s sustained presence in a constantly changing valley.
“We’ve been really fortunate to be able to grow with it,” Clark said. “Really fortunate.”