Clare Rose Inc. Business Information, Profile, and History

History of Clare Rose Inc.

Privately owned Clare Rose Inc. is one of the largest beer distributors in the United States, dominating a number of markets: Long Island's Suffolk and Nassau counties and the New York City borough of Staten Island. Domestic beer products include Anheuser-Busch's Budweiser, Busch, and Michelob products, as well as microbrewed products such as Redhook Extra Special Bitter Ale, Ballard Bitter Ale, Blackhook Porter, and Boardy Barn Brew, produced by a popular Hamptons bar. Imports include Amstel, Beck's, Heineken, and those brewed by Anheuser-Busch in the United States: Krinn Lager, Kirin Ichiban, and Kirin Light. Clare Rose also offers Anheuser-Busch's nonalcohol O'Doul's beer. In addition, Clare Rose distributes Tequiza, a beer flavored with Mexican tequila and lime; Bicardi Silver, made with Bicardi rum and citrus; and 180, a carbonated citrus energy drink supplemented with vitamins and natural guarana. Clare Rose is owned by the Rose family and headed by a third generation.

1930s Origins

Clare Rose was founded by Clare F. Rose, who was born in the Long Island hamlet of Patchogue, New York. His father worked as a foreman at a lumber mill, while his mother, of Cherokee descent, worked at a lace mill. Rose quit school at an early age, apparently due to his inability to accept his high school music teacher's criticism of the way he played the cello. He reacted by hurling his instrument into the seats of the auditorium and as a result was asked to leave Patchogue High School. He took a job as a clerk and time keeper at Bailey's Lumber Mill, where his father worked, and later found employment at area grocers. He became involved in the beverage business when a Pepsi bottling plant was opened in Patchogue during the 1930s. Rose became the operation's first salesman and went on to manage the plant. In November 1936 he struck out on his own, forming Clare Rose, Inc. by launching a small distributorship to handle Mission orange soda, a California beverage. He also took on the Plaza brand of soda.

When the United States entered World War II in 1941, Rose became a captain in the Army's Transport Service. Sent home to await deployment to Australia, Rose continued to grow his routes but never received his orders. Instead, he kept working and was able to establish his young business so that by 1944 he was the largest independent soda distributor in Suffolk County. He was also ready to take advantage of the post-war population boom and the buildup of Long Island. In 1947 both Piels and Budweiser beer were interested in entering the market and approached Rose about distributing their products. He took on both companies and began his career as a beer wholesaler. While the Piels brand would fade into obscurity, Budweiser expanded at a rapid clip, and Clare Rose, at first handling just the eastern part of Suffolk County, grew along with it.

Adding Territory in the 1960s

In 1964 Anheuser-Busch asked Clare Rose to add the western half of Suffolk County. Rose called his son Mark, who was about to graduate from college, and told him that if he didn't come to work for him he'd pass on the opportunity. Mark had worked for his father during the summers since he was 15 years of age, but he had been considering the idea of working elsewhere after college, at least for a few years. Eventually Mark gave in to his father's prodding. He told Long Island Business News in a 2000 interview, "After college, the day I walked into the office, my dad walked away from his desk and said he'd never have to sign another check again." That gesture was in keeping with Rose's belief that members of the second generation in a family business needed the room to run things as they saw fit. Mark was joined by his brother, Frederick, and they took over the running of the expanded distributorship. Just in case a conflict might arise between the siblings, the elder Rose took care to establish a board of directors, to arbitrate conflicts after he transferred ownership to them. But the board would never be called on to resolve any issues.

Prior to taking over the western half of Suffolk County for Anheiser-Busch, Clare Rose had been a pre-sell operation, meaning that a salesman first visited an account to take an order and a driver later delivered the beverages. For the new territory, the company now adopted a driver-sales approach, with the driver taking his own orders. Not only did it eliminate possible confusion between the salesman and the driver, it proved to be a better fit with many customers--hard working managers who connected better with a blue-collar truck driver than with a white collar salesman who only lifted a pad and pen. The new arrangement worked so well that Clare Rose soon converted the eastern portion of Suffolk County to the driver-salesman model. In the beginning, the drivers earned a base salary and received a commission on all sales exceeding a base level, but at the urging of the union Clare Rose switched to a pure commission system, whereby drivers earned a commission on every sale they made. It was an arrangement that both sides found beneficial. Drivers virtually owned their routes and were more willing to go the extra yard to make another sale.

The driver-salesman practice also encouraged company loyalty, a key to the growth of Clare Rose, which hired individuals with the idea in mind of creating life-long employees. Non-union new hires generally started out with low paying positions, like point-of-sale hangers. Those who prove their commitment to the company would then move to the warehouse and work their way up through the ranks, taking relief sales slots, with the ultimate goal of becoming a driver-salesman. To reinforce the idea that Clare Rose was looking for long-term employees, the company parking lot featured a reserved parking space for everyone in the organization, no matter what their rank, with the name stenciled on the pavement. To boost company morale, Clare Rose also developed the tradition of hosting a black-tie Christmas party each year, as well as an all-expenses-paid five-day "convention" at a vacation spot for employees and their spouses. In addition, Clare Rose was willing to invest in technology to help its driver-salesman to produce even better results. For instance, in the early 1980s Clare Rose was one of the first distributors to equip drivers with handheld computer terminals. Despite some initial resistance, the handhelds proved successful and soon drivers became dependent on them.

Under second generation leadership, Clare Rose enjoyed steady growth, which the company continued during the 1980s despite a number of challenges. In the mid-1980s the state of New York enacted a new bottle law that mandated the responsibility for the five-cent deposit on cans and bottles rested with the wholesaler, not the bottler or brewer. The unforeseen problem was that beverages could be shipped into an area and the wholesalers in that market would have to redeem the deposits, whether or not they originated the cans or bottles. Because of its location Clare Rose was put at a decided disadvantage. As explained by Beverage World in a 1989 article, "Almost 80 percent of the beer consumed in New York State is sold in the New York City metropolitan area, including Long Island. Thus, wholesalers in the rural northern parts of the state have an incentive to ship beer into the New York City area by selling to a unique tier of 'home distributors' with both wholesale and retail privileges. By shipping trailer-loads and 'forgetting' to charge a deposit, upstate wholesalers can tempt these home distributors with lower prices than they get from their local wholesaler." As a result, an Anheuser-Busch distributor like Clare Rose found itself competing against Miller and Coors distributors as well as fellow Anheuser-Busch distributors from another territory. Moreover, Clare Rose had to absorb the cost of redeeming the empties sold into its market by the upstate Anheuser-Busch wholesalers. The New York State Beer Wholesalers Association failed to address the unfairness of the situation, prompting Clare Rose to withdraw from the organization, which it felt was in the pocket of upstate wholesalers and acting against its interest.

In 1987 Clare Rose also faced new competition in the form of Coors Distributing Company of New York, which now entered the Long Island market. What made the new operation so much of a challenge was that Coors granted it a 14-county territory. This arrangement freed the distributor from the problem of upstate wholesalers shipping in cheaper product. In addition, Coors Distributing of New York was able to handle both distribution and deposits for the entire New York metropolitan region from a single location. While the Coors operation succeeded in taking a major share of the market in most territories, it did not succeed as well on Long Island, however. It hindered Clare Rose's growth somewhat, but did not take away sales. One factor in Clare Rose's ability to maintain its market share was its ability to build brands. The promotion of Busch products was a notable success in the late 1980s. The brand was poorly positioned in the marketplace, hardly a premium beer yet not able to compete with the less expensive brands like Schmidt's and Meister Brau. Clare Rose cuts prices, but the resulting growth in sales more than made up for the sacrifice in margin. All told, sales of Busch increased by 66 percent, including a whopping 212 percent in convenience stores.

Territorial Expansion in the 1990s

During the 1990s Clare Rose expanded its territory. In August 1991 it moved closer to New York City, becoming the official Anheuser-Busch wholesaler for Nassau County. Two years later, in May 1993, Clare Rose entered the city itself by acquiring the Staten Island territory for Anheuser-Busch products. The company also expanded beyond Anheuser-Busch products in the 1990s, adding Amstel, Beck's, and Heineken, as well as distributing Boardy Barn Brew to supermarkets. By 2000, as a result, revenues grew to about $110 million, a total that made Clare Rose one of Long Island's largest private companies. But the pace of the company's growth only accelerated over the next few years. In 2002 Clare Rose reached the $150 million mark in annual sales, and a year later reach $178 million.

By now a third generation of the Rose family was working full-time at the wholesaler. Cousins Lisa Rose and Sean Rose both took positions at the company and worked their way up to positions of responsibility. According to Lisa there was no pressure to enter the family business. In fact, she majored in political science at college and thought about becoming a career foreign service officer. She told Long Island Business News in 2004, "I never really thought about going into the family business until I got here and saw what it was all about. ... It's wonderful working with my family. Sometimes I say I'm the luckiest person in the world." Her cousin took a more conventional route to a business career. After graduating from Sienna College he earned a master's degree in management from Webster University in London. He would become general manager of Clare Rose. As was the case with the founder, who was still alive in 2004, responsibility was smoothly passed to a new generation by Mark and Frederic Rose. Sean Rose was named chairman of the board and Lisa Rose became chief executive. Their fathers continued to come into work each day, but like Clare F. Rose they gave their offspring a chance to make their own marks. "My grandfather set the example," Lisa Rose told Long Island Business News, "You can't have too many chefs and run a business successfully."

Principal Subsidiaries: Clare Rose of Nassau, Inc.; Clare Rose of Staten Island Inc.

Principal Competitors: Brooklyn Brewery; Capital Beverage Corporation; Coors Distributing Company of New York; The Gambrinus Company.

Chronology

• Key Dates:
• 1936: Company founded.
• 1947: Clare Rose become Anheuser-Busch distributor for eastern Suffolk County.
• 1964: Clare Rose adds western Suffolk County to its territory.
• 1991: Nassau County added to Anheuser-Busch territory.
• 1993: Clare Rose becomes Anheuser-Busch wholesaler to Staten Island.
• 2003: Third generation of Rose family takes charge.