A fresh look at Young's Market Co

(There are now only two distributors in California that can accommodate major spirit brands. Wine producers are in a somewhat better position, but the two giants appear to decide the destiny of large scale distribution for now. For a fresh look at Young's Market Company, one of the two remaining giants, Wines & Vines interviewed Jim Crosbie, Vice President and Division Sales Manager; John Weeks, Vice President and Southern California General Wine Sales Manager of William George; Giampaolo Dorigo, Account Executive and Italian Wine Specialist; and Erle Martin, Senior Vice President and State Manager for William George.

New developments at Young's include an increased degree of latitude for sales managers in decision making, a move to a new and larger facility in Orange County, and the revival of the William George branch of the company. A feeling of family and shared responsibility is a strong theme among management at Young's. They are proud of the company's family attitude toward its people and its suppliers. Senior Vice President Erle Martin says Young's is a company on the move.)

If Young's Market Company were a car, it would be a Volvo--boxy and durable, but short on style and aerodynamics. In faster-paced industries this posture has cost companies such as Kodak and IBM their leadership edge and much of their profit. In the realm of licensed beverage distribution, however, meaningful change comes more slowly than in high-technology industries, and Young's conservative stance has proven to be a successful strategy.

In May of 1992 Impact estimated Young's 1991 revenues at $905 million and projected 1992 revenues at $930 million placing them second in the nation for both years after Southern Wine and Spirits (SW&S). Southern is active in more states than Young's, and those states include Florida and Nevada where liquor consumption is high. Young's handles many big name brands and has a reputation for keeping them for the long term. With the demise of Bohemian Distributing Company, Hess came aboard, and the purchases of Fetzer by Brown-Forman and Glen Ellen by Heublein added those well-established brands to the portfolio. Other lesser-known but timely acquisitions such as the Palm Bay Imports line of Italian wines fill niches in Young's growing book. The challenge now is to gear up to handle the increased responsibility. Young's executives are convinced they are rising to the challenge.

This time last year California suppliers and merchants could speak of the "Big Three" in reference to Young's, Southern Wine & Spirits (SW&S) and Bohemian. Bohemian, which closed its doors at the end of the summer of 1993, was once divided internally into Snyder, Bohemian, Western, and Schallert. This sort of administrative duplication has again appeared on the scene in a revised form at SW&S and now at Young's.

Young's had its own duality with William George, a sibling sales force that duplicated much of the work the Young's sales people performed. The William George Company has been retrieved from retirement in a form that has not yet been clearly defined by Young's management. The company says William George is different from Southern's spin-off, American Wines & Spirits, to the extent that William George does not have a distinct and separate portfolio of products; the staff is referred to as "fine wine specialists" and these are people shifted from the existing Young's sales force. Their customer focus will be primarily better restaurants and the sales person will work "in tandem" with the full-service Young's sales representative. The announcement had only been made official the day before the interview and details were still sketchy.

Calls to Young's suppliers revealed that they had received only brief outlines themselves of the revival of William George, but the reception to the move was positive. Danny Mantle, Key Account Manager for Fetzer Vineyards, sees the move as, "defining Young's seriousness about being in the wine business." He declared, "They are putting their money where their mouth is. I take my hat off to Vern Underwood."

Another expansion move is to a new facility in Orange County. Two existing facilities will be consolidated. The existing Anaheim branch will be eliminated.

Sales organization

In a memo dated Feb. 23, 1994, owner and CEO Vernon Underwood announced to suppliers a reorganization of the sales force under what the company calls Phase I. Seven individuals report directly to Underwood. The full organizational scheme, viewed on paper, is fairly complex as it is likely to be in a company generating approximately a billion dollars per year in sales revenue and catering to a diverse customer base.

Under the new organizational plan the following assignments are in place: Bill Eldien, head of California Wine Division; Leigh Medbury, head of California National Accounts; Greg Crakow, head of Northern California Broad Market and Chains; Bob Tester, head of Southern California Chains Spirits Division I; Karen Thomas, head of Southern California Chain Spirits Division II and Mark Sneed, administrative assistant (Sales & Marketing) to CEO.

The memo also states, "Under the new organization structure, sales management will be given more responsibility and latitude in making day to day sales decisions and in the running of their departments."

Ten years ago the sales force was divided into broad market and chain retail segments. Martin says, "About four years ago we broke the broad market sales force into on-premise and off-premise groups because they have different needs." Young's has also created a national accounts division. The company now has a telemarketing division and a beer and wine division. "We have sales people who can zero-in on the specific needs of their customers," said Martin.

Managers sift through reports daily. Regions meet weekly, managers meet monthly and the entire sales force meets together monthly. "We're getting good at meetings," jests Crosbie. Sales people are assigned to about 45 accounts each, according to Crosbie.

Sales meetings

Suppliers are routinely allocated 10 or 15 minutes per presentation. "I think we see a lot more people bringing a slide show or a video, something more appealing than the same old story. Suppliers need to be a little more creative. They need to be more memorable," Weeks advised. He then shared a recollection of an exceptional presenter, Jack Jelenko, who is with B.R. Cohn:

"We had a particular supplier who came to a meeting and played the banjo. It was great! He played the banjo, and he'd stop and tell a joke, and everybody was still talking about it an hour later. Then he came back a couple of meetings later and started playing the harmonica! And he did his sales presentation in a blues rap . . . our new Chardonnay, badaa barum! That kind of stuff really adds a lot to the sales meeting. People who do that sort of thing really have an opportunity to grab peoples' attention."

Meeting sales objectives

"There is not a day that goes by," said John Weeks, "that we don't get a report from the broad market on wine where we are looking at what the trends are, how sales stack up on the brands that are on program. Every Friday I speak with the other managers based on how they are performing on goals for that particular period. We have a managers' meeting the middle of every month where we look at goals. At the end of the month we have a general meeting where suppliers come on and talk about any changes in their program. It is an on-going process."

Discounts

When asked if the wine discount structure has stabilized Martin replied, "We evaluate it almost on a brand-by-brand basis. We like to feel that we are sensitive to the needs of the market place. If the sales force comes back to us and says we are all wet on this five case bracket, we're not getting anywhere because it is unattainable for most of the people who would buy this product, we will roll it down to three if we get the consent of the supplier."

Specialized departments

Young's Market has been strong historically with chains. They continue to expand their chain capability with an ample staff and with specialists to concentrate on critical areas such as merchandising. A recent addition is Alan Santo, who came over from Gallo to serve as head of Southern California Chain Merchandising.

Giampaolo Dorigo, a charming man with matching accent, is the Italian wine specialist. He was brought aboard to capitalize on the wave of Italian restaurants and the growing interest in low-fat Mediterranean cuisine among restaurants in general. Dorigo is understandably preferential to Italian wines. He is convinced they taste better with food while California wines taste better as aperitifs due to their forward flavors.

With an infectious enthusiasm that he always carries with him he declares, "There is no doubt Italian wine sales are up, they are up all the way! When is the last time you saw a French restaurant open?" He has seen sales of the middle price range of Italian wines soften. The interest, he says, is in bargain Chianti and Pinot grigio and high-priced designer wines.

Dorigo is convinced that Pinot grigio is the restaurateur's white Italian wine of choice and from there attention goes to Italian reds. "Even Gavi, unfortunately, is in a downswing. Forty percent of Italian wine sales are Pinot grigio and Chianti," Dorigo declared. He is optimistic about the future of Italian wine sales. He sees the increasing presence of Italian wines at auction as a sign of their increasing stature.

Use of computers

Young's is on-line with InfoScan giving them complete access to this data which they can sort and analyze according to their own needs. Since chain buyers are keenly sensitive to turn rates of competing brands, this information is essential to a strong sales presentation. Gone are the days when the seller can learn the customer's business from the customer. Access to InfoScan data provides the distributor with complete knowledge of the success level of every wine brand sold at that store and at competing chain stores.

The chain division uses specialized software to make shelf management calculations to advise on resets, another resource that has become the industry norm for large wholesalers in recent years. Sales people in the field enter their orders electronically into the computer system over telephone lines.

Trade tastings

Young's has expanded their annual tasting circuit to include Santa Barbara and they have branched out to specialty categories such as Italian wine tastings. The Italian theme was originally launched in two locations and has grown to four annually. This is testimony to their confidence in the event's ability to attract and educate buyers. "The tastings last year were arguably the best tasting we have ever put on," declared Weeks. "I saw more new faces this year than in the past," he added. "We have more winemakers and winery owners at our tastings now than we have ever had in the past, so that has been a great facet of it too."

"It may seem expensive to run them, but I tell an Italian supplier that in four or five days he can see customers at a very inexpensive price. You can talk to the Valentinos of the world, the Wine Exchanges of the world, for five minutes. If you go around town to do these presentations it's not so cheap," declared Dorigo.

"The best part," according to Crosbie, "is that the restaurateur has a story to tell, so that when he is at his customer's table he is talking from personal experience. At this point he is not selling anything, he is just sharing information but he ends up selling that product because he believes in it."

"There is a lot of hard work that goes into the wine business. There are a lot of late nights, a lot of weekends, a lot of time put into it. The romantic aspect comes through at the tastings. I think that is where we start to see the romance," Weeks said.

Young's view on Southern Wine & Spirits

Erle Martin commented, "Southern has been more pro-active in their distribution style. They have identified changes in the market in a swifter manner than we have. They had telemarketing before we did. They identified hotels as a market prior to us actively going into that segment. On the other hand, Young's reputation for integrity is probably higher than Southern's. There is a real willingness to want to do business with Young's. We're the local boys, the good family-owned distributor that has made good for over 100 years."

Martin added, "We're going through a lot of changes right now and there are going to be some real strong signals sent in the year 1994. There is a real sense of pro-activity here in going after business and recognizing the competitive nature of the relationship with Southern."

Dorigo offered, "I've talked to people from Southern and it seems like Young's is more family oriented. Yes, they are more aggressive; if it takes something to do business, I see them, they do it. Us, we go back, and if it doesn't make sense we don't do it, because there is always tomorrow."

"With most of the suppliers that we have," said Crosbie, "it has been a long, long relationship. Through the years, and it started with Mr. Underwood senior, a lot of the relationships were built on handshakes. With the demise of Bohemian a lot of companies are trying to figure which way to go. One thing that Mr. Underwood did when he was considering bringing on another supplier, he would contact the suppliers already in our house and ask them how they felt about that. We are all in this together, and we would pretty much have to receive their blessing in order to make the final decision to bring that brand aboard." He continued, "I know there have been companies that would like to come to us but for various reasons we could not accommodate them because of loyalties that we have had with long-standing relationships. I'm proud of that sort of thing."

John Weeks declared his feelings about Young's: "I'll sum it up this way. Somebody asked me when I came to work for Young's Market, 'How do you like the difference between the two companies?' I've enjoyed the first five months here more than I enjoyed the entire five years there. And that has only grown as I have been with Young's Market a lot longer." He concluded, "I feel that there is a real great sense of cooperation and unity within this company, and I think that conveys to the street."

Erle Martin summarized his feelings: "We are better equipping ourselves for some big changes that I can't really speak to right now. We are putting ourselves in a more competitive position. I've never seen this company either better prepared or more eager to attack the opportunities that exist in the market place."

(Daniel Wilson last wrote for Wines & Vines in April).

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