"I’m the oldest living what-ever-you-call-it,” laughs Michael Fox Sr., founder and chairman of M.E. Fox & Co., Inc., the oldest original beverage wholesaler in San Jose, Calif. It was with $96 and some sizeable loans, Fox, with his wife Mary Ellen Fox, co-founder and vice chairman, started the company back in 1965.

“Beer to me was something very dynamic,” says Fox, 71. “It was very competitive, almost like a college football game, and I wanted to get into it and sell and compete.”

In 1965, Fox estimates that there were about 250 major breweries in the country—there weren’t any microbreweries then, he adds—and after attending Notre Dame University, he went on to brewing school and became a brewmaster.
“In 1959 brewmasters were making $64 a week and I saw a job in the sales department that made $84 a week,” says Fox while working for the now defunct Minneapolis Brewing Co. “So I got into the sales department and got interested in selling.” The money was one plus to the business at the time, but what Fox found most attractive was that “beer was fun.”

He’s passed on that attitude to his six children, three of which are actively involved in the business—Terence Fox, Dennis Fox and Catherine Fox Bloyd—and slowly to his 16 grandchildren with hopes of the company becoming a dynasty. No pressure, though.

“We’ve been in the community a long time. I would like to see it stay on, but there is no emotion or ego tied with that,” he says.

Dennis, 46, vice president of the company, says: “The second generation is very intent on growing the business and making it as successful as my father has.”

The reasons why M.E. Fox & Co., Inc., a beer, bottled water and New Age beverage distributor, has been able to stick around has been because of its customer service, execution, portfolio and being able to fill the niches of the industry that its competitors haven’t. Fox looks back on the last 40-plus years and recalls how the demographics of its territory of Santa Clara County, a county of 1.8 million people, have changed and how the company has been able to offer the right product at the right time.

In 1965, explains Fox, Santa Clara County was a farming community. At the time, M.E. Fox & Co., Inc., a beer distributor that started off as the exclusive distributor for Hamm’s Beer, was fortunate enough to gain the Anheuser-Busch portfolio three weeks before opening for business, a good match for that demographic. (While Hamm’s is no longer offered, the Anheuser-Busch portfolio is the largest profit contributor for the company.)

 But in the mid 1970s, the farming community turned high-tech. “Their drinking habits changed with that,” says Fox. “You might classify them as a wine drinker or a scotch drinker on occasion, but when they drank beer, they went to the higher type beers, today what we are calling craft beers, import beers. They wanted to drink what they considered to be beer that was more in line with their own personal demographic.”

Because of the shift, the company moved to take on other beer brands like Heineken, Samuel Adams and Corona as well as Guinness and Bass, notes Fox.

“The high-tech economy in Silicon Valley brings people from every corner of the world to our marketplace and likewise the high-tech workforce of Santa Clara County travels to every corner of the world, exposing themselves to fuller flavored foods, cultures and beverages,” says Terence, 37, president of the company. “It has created a great market in the beverage segment—unique, high-end, upscale beverages from around the world. And we’ve capitalized on that by being open to try, distribute and sell things from every corner of the world.”

M.E. Fox & Co., Inc., also has been able to capitalize on other strong growth categories like energy drinks, perhaps because the high-tech economy also is known for its long workdays. The company is the second largest distributor in the United States of Red Bull and the energy drink has grown to become the third largest gross profit contributor. And due to its current growth rates, Red Bull is expected to become the company’s second largest gross profit contributor this year, reports Terence. To keep up with the demand, the company recently upgraded its exclusive Red Bull sales and delivery team to six-bay trucks.

M.E. Fox & Co., Inc. also has had success with bottled water, carrying the Nestlé Waters portfolio and most recently the addition of Icelandic Glacial Spring Water. The company also offers products from Sierra Nevada Brewing Co., Boston Beer Co., Gordon Biersch Brewing Co., Arizona Beverage Co. and Cadbury Schweppes’ Snapple.

Even though M.E. Fox & Co., Inc. prides itself on being able to offer the right products at the right time that still remains a challenge in today’s market where consumers are frequently switching brands. “I remember the days when we sold 300,000 cases of Michelob. Today it takes a lot of brands to please the entire complexities of the market,” says Fox.

The company is prepared for the growing tastes of consumers, though. It recently acquired a 25,000-square-foot warehouse in addition to its 126,000-square-foot warehouse. The company also invested in administrative efficiencies by purchasing some mobile computers and printers for its delivery drivers as well as outsourcing a portion of its accounts receivable.

The plan for the future is to keep growing the business and so far the plan has worked. The business tallied $60 million in revenue last year. But it’s not all about the numbers. “The nice thing about the business,” says Fox, “is that it pumps me full of adrenalin."

VITAL STATS
M.E. FOX & CO., INC.
FOUNDER & CHAIRMAN: Michael Fox Sr.
HEADQUARTERS: San Jose, Calif.
’07 REVENUE: $60 million
EMPLOYEES: 140
GOALS: To improve efficiencies by updating the IT infrastructure and other equipment, drive sales by focusing on  core brands within its portfolio and reduce expenses by eliminating redundant processes that add little value.

From Beverage World February 15, 2008