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Southern Glazer’s, A Year After The Merger

July 17, 2017

On June 30 of last year, Southern Wine & Spirits of America and Glazer’s Inc. finalized their merger deal and launched spirits and wine distribution giant Southern Glazer’s Wine & Spirits, LLC. The deal, which had been announced six months earlier, created a distributor with total revenues projected at $17.5 billion for 2017. Southern Glazer’s today handles more than 150 million cases of wine and spirits annually, employs over 20,000 people and operates in 44 states plus the District of Columbia, in addition to the Caribbean and Canada. SND executive editor David Fleming spoke recently with Southern Glazer’s CEO Wayne Chaplin to get an update on progress after year-one.

SND: After a year of being Southern Glazer’s, how’s business?

Chaplin: Things are progressing even better than we thought. Most merged companies have major issues because the cultures don’t mesh, but for us that wasn’t an issue at all. Our cultures were totally aligned in terms of building a multi-generational organization. With our new scale, we can invest back into our business, and behind our brands, at levels never previously imagined.

SND: How have things changed, organizationally speaking?

Chaplin: We now have a commercial structure, led by Brad Vassar, with four regions. It’s designed to get closer to local markets and create greater alignment with suppliers, both regionally and nationally. It has provided a more effective route to market, making it easier and more cost-efficient for suppliers to do business with us. Meanwhile, our larger footprint has helped to grow our national accounts team. We now have unparalleled unit coverage both on- and off-premise, locally and nationally. For some national accounts, we now cover as much as 95% of their units. We’ve invested in dedicated teams to call on our top national customers. For the on-premise, we have a team of 17 executives calling on the top 200 restaurant chains, plus 60 hotels and resorts. Off-premise, seven different customer teams call on the top 19 retail chains. Six of those teams are completely dedicated to only one customer. The seventh calls on more regionalized customers. We also have a seven-person business development team that’s designed to focus on suppliers with very limited national account resouces. We can add a lot of value for our mid- and small-size suppliers.

SND: What are the revenue drivers right now, and where are the opportunities?

Chaplin: The new footprint is the real revenue driver, because it’s attractive to current and future suppliers. We see current suppliers wanting to expand the relationship into additional markets. That happened earlier this year, with Campari and Huneeus Vintners, for example. But the footprint is also attractive to suppliers with whom we’ve never done business. They want a simplified route to market with a single distributor across the U.S. and Canada.

SND: How much of a threat are direct-to-consumer (DTC) sales?

Chaplin: DTC will continue to grow, as it has with so many other industries. But we think it will be driven by same-day, or same-hour, or two-hour type delivery—and not delivery that will take a week, or three days, or even overnight to reach the consumer. So we believe that local retailers and service providers will fill that void in concert with the three-tier system, to bring DTC to a much bigger place than it’s been in the past.

SND: So that means working within the three-tier system.

Chaplin: Yes. Our view is that in order to get two-hour service or same-day service, merchandise will need to move through the three-tier system, using retailers and then either a delivery service or retailers doing it themselves.

SND: What opportunities do you see in control state markets?

Chaplin: Control states can represent upwards of 25% of a supplier’s U.S. business, and they’ve shown consistent growth over the last decade. Modernization efforts are ongoing, and the liquor boards are becoming increasingly progressive in terms of serving the consumer. So we see a big opportunity to grow our business there. Southern Glazer’s now has a region solely dedicated to the control markets, led by industry veteran Scott Oppenheimer. I’m proud to say we’re the only distributor/broker with a footprint across all 17 control markets, plus Montgomery County. In the past year, we’ve stepped up our investment in the control states by adding dedicated business intelligence, dedicated on-premise national accounts resources and, dedicated training and recruiting personnel. We’ve also launched our proprietary execution program, which we call SET (Southern Execution Tracking) across all control markets.

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