Stories and Myths | Booze Business: A Blog Dedicated to the Business of Spirits and Wine

How to increase sales

February 2, 2011 No Comments

As a group, spirits and wine distributors are among the smartest business people I know.

But there are exceptions.

Back when Metro New York had many distributors and wholesalers, there was one operation whose owner was – how should I put it? – the runt of the litter intellectually.

On one occasion, or so the story goes, a sales manager was having difficulty meeting the NYC plan for Chivas Regal. He paid a visit to this particular distributor and I imagine the conversation went like this.

Sales person: Listen XXXXX, we’re having problems making the numbers on Chivas and I need you to increase your inventory.

Distributor (in a slow whiny voice): But, YYYYY, I already have a warehouse full of Chivas. It’s moving slowly. How can I take more?

Sales person: I don’t care. We need to increase our shipments.

Distributor (in an even whinier voice): Well, what should I do with the cases I currently have.

Sales person (getting angry): Listen to me. I don’t give a damn what you do with the goods in the warehouse – sell it, give it away, spill it out, burn it, whatever….

Distributor (now very confused): Slow down, slowdown, I want to make sure I got it…you said sell it, burn it, what else?

Rumor has it that the distributor is now a supplier.

The Bronfman Enigma

January 24, 2011 2 Comments

There have been lots of conversations among Seagram alumni since it was announced on Friday that Edgar Bronfman Jr. was convicted of insider trading in a French court.

The news reports I read raised a number of questions. According to Crain’s NY Business, “The conviction came even though the prosecutor had recommended acquittal…” That’s curious.

The report went on to say that “the prosecutor felt the executives did not have enough information themselves about the company’s health.” What? Are we talking Edgar Jr. here? Didn’t have enough information after having bet the heritage and fortune on a guy who referred to himself as Master of the Universe?

I wonder what the judge heard and saw that the prosecutor missed.

Edgar Jr. sometimes referred to the ease and depth with which people in Hollywood were capable of lying. He described studio executives as people who can swear on their mother’s life that it is raining outside when you and they know it’s a beautiful sunny day. Yet, he couldn’t wait to do business there.

Every year since the 1950’s, Seagram ran the Seagram Family Association (SFA) meeting, an annual session for senior managers and distributor principals. At what turned out to be the last SFA, while it wasn’t known at the time, the deal to sell the company was in the works. Rumors were widespread and felt to have more than the ring of truth. Every conversation, among distributors and management alike, dealt with the speculation. Junior was at the event but hardly visible. Stayed in his suite the entire time, and based on subsequent events, was probably cutting the deals.

He showed up at the last session where customarily the owner addressed the distributors to remind them that Seagram was a family in both the literal and figurative sense of the word and to provide remarks on the state of the business and the future.

When he walked into the back of the room, he stopped and asked what we thought he should touch on in his remarks. What was the tempo, what were the top issues, what’s on their minds?

The answer was candid. “What’s on everyone’s mind is — are we going to be sold?” “The concerns are palpable…they, we, all want to know what’s going on.”

He just looked at us and went on the stage. Immediately, he began to address the topic of a sale in no uncertain terms. He said emphatically and repeatedly that Seagram was not for sale. He didn’t say this — but it was almost as though he swore on his grandfather that would not happen. Less than a month later the announcement of a sale was made.

It was a sunny, beautiful day in southern California but inside the meeting room the rain was pouring down.

In a previous blog on the Bronfman’s I wrote about pity or scorn. This is another occasion for pity. Junior orchestrated the end of his family’s spirits and wine business in favor of the idea of integrating media, entertainment, information and communications in one hand held device. The Smartphone. The idea he had was ahead of its time and with the wrong people.

Quel dommage.

Predictions for 2011

December 30, 2010 No Comments

After reading all sorts of predictions for the upcoming year, I’ve decided to add my own.

However, I should alert you a few things. First, while this blog has a diverse audience, these predictions are distinctly spirits and wine industry oriented. My ‘editor’ thinks they’re a bit too insider. But, it’s call Booze Business…duh.

Second, please be aware of the fact that any similarity between these forecasts and the likelihood of occurrence is, well, unlikely.

Without further ado, here are my tongue-in-cheek predictions for 2011.

Companies

In a complete reversal of expectations, Fortune Brands will become the majority stockholder in Diageo and the expected owner by 2012. “Hey, we’re one of the only American owned spirits companies left,” a Fortune senior executive will say, “…and the groundswell of patriotic fervor helped us raise the funds.”

Wholesalers/distributors

McLane Company (whose parent company is owned by Warren Buffett) will finish 2011 by buying nearly all spirits and wine wholesalers except for Southern Wine and Spirits.

Meanwhile, in a related action, Southern will announce that it is vacating the distributor tier and will become a spirits and wine supplier. Someone with the company will say, “What the hell, we’re the ones who build the brands anyhow… it’s time we started making the stuff.”

Products

The blended scotch market will start to grow dramatically led by Haig, Cutty Sark, Old Smuggler and Black & White. The Scotch Whisky Association will declare a drought of inventories and prices will soar. As a result, consumers will leave scotch by year’s end.

Next year will indeed be the year of brown goods, as sales of blended American whisky will increase, led by interest among millennial drinkers. Brands like Philadelphia, Carstairs and the venerable Seagram’s 7 will lead the growth. Some entry-level consumers will remark, “If it was good enough for my great granddad, it’s good enough for me.”

The maker’s of 4 Loco will reformulate the product replacing the energy drink component with a Viagra-like ingredient. Their advertising will include the statement, “We make no claims about sexual prowess but do suggest that it’s the best 4 hours you’ll ever have.”

Also in the new products area, trying to capture a large share of the aging baby boomer market, the makers of Metamucil fiber products will license their name and ingredients for a liqueur. A spokesperson will explain, “While everyone concentrates on the youth market, we’re looking at the other end of drinkers.” The brand will bring a new meaning to the phrase, the morning after.

Privatization

In a startling development, all the control states looking at privatization will decide to keep the status quo and remain state run. They will explain that control states are the only way for small brands to survive. Not to mention the financial well being of their employees.

Retailers

Big box store chains will reverse course and stop selling major brands at extremely low prices. They will say, “We’re less interested in deep discounts and more interested in building brands and making sure that the independent stores are able to compete.” Executives in charge will be committed.

Seagram

The former Seagram owner will sell his shares in a music company to invest in a new spirits product that consumers will love, will generate huge profit margins and will revolutionize the spirits business beyond imagination. Unfortunately, none of the distributors will handle the brand.