Competing in an Evolving Marketplace

If there’s one word that accurately defines the latter half of this decade in the domestic spirits industry, it’s “consolidation.” Consolidation is driving how we do business today.

The Diageo merger is the most recent example of this. Our parent company, Allied Domecq PLC, has been an active participant in the consolidation trend from the beginning, first acquiring the Whitbread spirits division (which included Beefeater and Laphroaig) in 1989, and then Pedro Domecq in 1994. Shortly after, Allied Domecq Spirits & Wine “right-sized” its portfolio here in the U.S., shifting three brands from Hiram Walker to sister companies — Harveys Bristol Cream to The Wine Alliance and Beefeater and Courvoisier to Domecq Importers.

Wholesalers have gotten into the act, too, merging with or acquiring competitors to create larger, more efficient operations. The same thing’s happening at retail, with multi-store chains consolidating and becoming a powerful force.

Finally, the consumer is changing, as well. Strategies that worked yesterday to create blockbuster brands have no relevance today for any number of reasons, including shifting demographics, redefined usage occasions and tastes. At the same time, it would be a mistake for a company in our industry to ignore the core consumer who has helped build and sustain a successful brand.

The company and brands that will set the standard of industry excellence in the future are those that can keep pace with consumer trends, while also staying in tune with wholesalers’ and retailers’ needs.

Toward that end, Hiram Walker recently borrowed a page from the industry’s book, consolidating its marketing and sales efforts in a single department that I now manage.

After just a few short months, we feel it may set the benchmark for other companies in our industry.

The basic functions haven’t changed, but the real value to this consolidation has been that now program planning starts and ends in the field, where previously it started at headquarters and ended in the field, frequently with something lost in the middle. The new system allows our regional marketing managers more flexibility, which is important because we all know it’s a different job to sell Kahlúa in New York City than in Washington State.

The regional marketing managers coordinate national sales plans at the field level and supplement those national plans with local overlays. And, because the brand managers at headquarters are now in the sales loop, they always know what’s going on in the field. At the same time, this internal consolidation has allowed us to rededicate staff resources to be more commensurate with brand profits and sales growth, resulting in a refocus on key brands (Kahlúa and Canadian Club, in the case of Hiram Walker). It also has created a collaborative work force, better positioned to support emerging brands like Maker’s Mark, our Defenders of the Malt’s single malts (Laphroaig, Scapa and The Glendronach), Tuaca, Tullamore Dew, and Midori, to name a few.

In short, we’ve created a seamless, single team that can make things happen more quickly and efficiently, improving both delivery time and the quality of the programs in the field.

That all sounds good on paper, but is it working?

Candidly, it was a bit overwhelming for all of us at first. But we’ve received 100% support from both the marketing and sales forces, and there’s nothing but excitement about potential for the future. The timing for creating new excitement and energy couldn’t have been better, as the industry in the two past years seems to have finally reversed its downward sales trend.

Hiram Walker today is much better positioned to be a proactive, forward-thinking company, from both a sales and marketing perspective, due to this reorganization. Just as importantly, though, we’re a more agile company, able to shape industry trends rather than just react to them.

As we move forward, the emphasis will continue to be on integration, teamwork and common objectives. The consolidation has allowed us to take the first steps in creating the industry’s sales and marketing model for the 21st century, and we plan to build on this early success going forward. It’s my belief that our competitors will follow suit, recognizing the value of a seamless operation in today’s rapidly shifting marketplace.