Iowa Beverage Systems of Des Moines will purchase Iowa Beer and Beverage, doing business as Fleck Sales in Cedar Rapids, to create a company with more than 4,000 wholesale customers and nearly 300 employees.
They are the largest distributors of MillerCoors beer.
The deal is expected to be closed by Oct. 1
Financial details were not disclosed.
Mike Brewington, president and CEO of Iowa Beverage Systems, will continue in that role. Dudley Fleck, president and CEO of Iowa Beer and Beverage and Fleck Sales, will be a member of the Iowa Beverage board of directors and oversee the Fleck Sales operations in Cedar Rapids and Eldridge, north of Davenport.
“I will be a minority shareholder in the company,” Fleck said. “I’m not interested in leaving the beer business yet. I’ve got two young children and I still love the beer business.
“I was looking for a way to continue doing that and also being able to help our company grow and have an opportunity for our people to grow.”
Fleck said merger discussions began about a year ago.
“Both companies are in the growth part of the state along the Interstate 80 corridor,” Fleck said. “It just made sense since we are contiguous to join forces and continue finding growth opportunities.”
The acquisition is a reflection of a trend in the industry in which the number of traditional beer distributors has fallen from 4,595 in 1980 to around 3,000 in 2017, according to the National Beer Wholesalers Association.
“We have done at least 10 acquisitions since the 1980s.” Fleck said. “It’s about getting larger and growing, or just getting out. We have chosen to grow.
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“The cost of doing business to service the retail demand and the cost shifting from brewers to wholesalers have made it necessary to get bigger to survive and thrive.”
Fleck Sales was founded in 1954 by Dudley Fleck’s father, Keith Fleck, who had been working for the local Falstaff beer distributor.
By 1968, the business had grown to the point that a large warehouse was built off Edgewood Road SW near Westdale Mall.
With the introduction and growth of Miller Lite in the 1970s and the recent boom in craft beers, Fleck Sales constructed a larger warehouse and corporate office in 2005 on High Life Court SW west of Interstate 380 in Cedar Rapids.
The company increased its distribution area to include Cedar Rapids, Iowa City, Burlington, Ottumwa, the Quad Cities and other communities in east-central and southeast Iowa.
Iowa Beverage Systems was formed in 1992 by Mike Brewington. It sells MillerCoors and other products to 1,600 retail customers in 13 central Iowa counties from a 110,000-square-foot warehouse in Des Moines.