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Glazer’s Takes First Step Toward Global Growth With Joint Venture Deal In USVI

September 24, 2012

Texas-based distributor Glazer’s Inc. has formed a joint venture with USVI-based Premier Wines and Spirits to distribute beer, wine and spirits in the U.S. Virgin Islands.

The new venture, to be called Glazer’s Premier Distributors LLC, combines Premier’s assets and operations with a financial investment from Glazer’s. Terms of the deal weren’t disclosed, but Glazer’s will be the controlling partner.

Premier, which has operations in St. Thomas and St. Croix, distributes brands from Pernod Ricard, Miller, Beam, Campari, Patrón, Imperial Brands, Serrallés, Sidney Frank, Constellation and also handles Red Bull. It’s owned by Ed McDonnell, former president and CEO of the Seagram Spirits & Wine Group, along with his son Paul, who serves as director of operations. Albert Paiewonsky is Premier’s CEO.

Shanken News Daily interviewed Glazer’s president and CEO Shelly Stein, COO Rob Swartz and chairman Bennett Glazer, about Glazer’s new plans for expansion.

SND: How did this deal in the USVI come about, and how long was it in the works?

Stein: About six or seven months ago, I got a call from someone who knows Ed McDonnell well, and that person suggested that I contact him. I soon met with Ed and his son Paul, and we started looking into the possibility of doing a deal. We met a number of times over the past six months and eventually were able to reach an agreement.

SND: Is it mainly the hotels and tourism trade you’ll be focused on with this deal?

Stein: Premier handles all the resorts and hotels, but it’s a very broad-based operation. So it’s a strategy that will be developed with the management team. But we will look to expand our footprint in the islands, while also expanding the portfolio. One example of the value that we’ll bring to the table is that in three weeks, our training staff and corporate accounts teams will be on the islands working with the major venues and properties to secure wine and drinks lists for the season.

SND: Glazer’s has set a corporate goal of reaching $10 billion in sales by 2020. How do you foresee getting there?

Stein: We’ll do that by achieving continued organic growth, by expanding our presence in the U.S., and we’ll also be looking internationally. All our suppliers are global producers. Their products are sold around the world, so why should we be only in the U.S.? We now have a management team that has done many international deals, so there’s a comfort level at Glazer’s in terms of our ability to make those types of transactions. For companies without experience in this area, it can be very difficult. So we have an advantage—and we have no doubt that we’ll expand our footprint both in the U.S. and globally. This deal with Premier is just the first step in our drive to become a distribution player in the global market.

SND: You’re probably the first of the major U.S. distributors to look at things this way.

Stein: (Some distributors) have made exploratory efforts, but if you go into markets that aren’t at the proper business and legal level, you can get hurt. You have to be careful, and every country is different. You need to spend a lot of time, money and effort on figuring out how things work in the markets where you’re looking.

Swartz: Our model is to partner with local players, so it’s critical to find the right partner—someone who understands our industry as well as the uniqueness of their particular market. And as Shelly said, it takes a good bit of time to get to know someone and get into a contractual relationship for the long run.

Stein: We’ve visited and focused on certain markets in South America, for example, and people really want to get to know you before forming a partnership. It can almost be like becoming part of their extended family. But we’ll be in a number of such markets. I can’t say exactly when, because these deals take much more time than in the U.S.

SND: And what you offer overseas is essentially the same expertise you offer in the U.S.?

Stein: We offer a very strong balance sheet and we offer relationships, since we handle virtually every major supplier. So we bring capital, we bring relationships, and we bring expertise. That’s attractive to potential partners. A major Argentine distributor recently visited one of our facilities and said we were 50 years ahead of them. We’ve probably spent about $70 million on technology upgrades. We just rolled out SAP in our first state, so we’re allocating a tremendous amount to technology and facilities. I’m not aware of anyone else in the industry who’s doing it to the level that we are.

Swartz: Sometimes it’s difficult for suppliers to really know what’s going on. With our technology, we can tell them where the product’s going, what’s happening with it, how the brands are being built.

Stein: And our major suppliers have been very supportive and encouraging about our expansion plans. Some have said that wherever we go, they’ll be with us. So it’s a very exciting time, because we feel like we’re in on the ground floor.

A second part of this interview with Glazer’s executives will run in tomorrow’s SND.


 

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