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SOUTHERN WINE & SPIRITS OF AMERICA, INC.: A TRADITION OF SERVICE, A COMMITMENT TO EXCELLENCE, A RECORD OF GROWTH

Since its founding in 1968, Southern Wine & Spirits of America, Inc. (Southern), is a nationally recognized wine and spirits distributor known for its historic commitment to delivering the highest standards of customer service and creative marketing programs and partnerships. The Company is also known for its best-in-industry sales and marketing professionals; its efficient and effective and well-trained sales, operational and support staff; its ongoing investments in and contributions to hospitality and beverage education for this staff its customers and to many national educational institutions. In addition, Southern is justly respected for its deeply held belief in the importance of giving back, for being a socially responsible corporate citizen and for making generous contributions to national, state and local charitable organizations.

Today, Southern operates in 35 states, including its original Florida market, where its corporate headquarters is located in Miami.
Pursuing a determined strategy to expand through internal growth as well as through the acquisition of established wholesalers, Southern expanded its Florida operations into California in 1969, Nevada in 1976, Arizona in 1992, South Carolina in 1993, Pennsylvania in 1995, Hawaii in 1996, Kentucky in 1998, New Mexico in 2000, Colorado in 2001, Illinois in 2002, New York in 2004, Maine, Mississippi, New Hampshire, North Carolina, Vermont, Virginia and West Virginia in 2005. In 2006, Southern began operations in Alabama. In 2007, Southern entered Ohio, the country's third largest Control jurisdiction, followed in January 2008 by its entry into Delaware.

In July 2008, Southern and The Odom Corporation, a leading multi-state beverage distributor serving the Northwest since 1934, announced the formation of a new wine and spirits joint venture to wholesale operations in the states of Alaska, Idaho, Montana, Oregon, Utah, Washington, Wyoming through the Southern-Odom / Spirits West and Odom Southern Holding’s partnerships. The companies mutually agreed to end their multi-state partnership operations in March of 2012, and today Southern operates wholly-owned, independent distributor/brokerage subsidiaries in each of these seven markets. Next, in December 2009, Southern was granted a license to operate in Indiana and commenced its statewide operation in July 2010.

In March 2010, Southern announced the establishment of a joint venture with J.J. Taylor Distributing Company in Minnesota and with Frederick P. Winner Ltd in Maryland and Washington, D.C. The partnerships with J.J. Taylor and Winner, respectively, were both mutually terminated in early 2013, and Southern now operates wholly-owned, independent subsidiaries in Minnesota, Maryland and Washington D.C. Southern also holds operating licenses and permits in Nebraska and Texas.

As the country’s largest wine and spirits distributor, Southern is nationally recognized by its supplier partners as well as by its customers for its state-of-the-art distribution capabilities and its leading-edge information technology. And as the leader in the wine and spirits distribution business in the United States, Southern is committed to adhering to the highest professional and ethical standards in all of their corporate, civic and charitable activities.

From its beginnings in South Florida and Jacksonville to its newest open state market in Indiana, Southern has worked relentlessly to first establish and then enhance its reputation for excellence in customer service. The foundation of that reputation is the quality of its people. Harvey R. Chaplin, Chairman & CEO of Southern Wine & Spirits of America, Inc., says, "The key to our growth is that we have always had the best people. They know the local market because they live and work there." In fact, the company is widely regarded in the U.S. drinks industry as possessing one of the most talented and stable management teams—both at the national corporate level and in each of the state markets where Southern operates.

With corporate succession plans firmly in place and benefiting from an extremely able national executive team headed by Wayne E. Chaplin, President & Chief Operating Officer, Southern Wine & Spirits of America, Inc. is the country's leading multi-state distributor and is ready for further growth. Not one to rest on past achievements, Chaplin says, “For Southern to continue to be on the leading edge, we must execute supplier programs and supplier marketing plans to perfection. We must also seek not just to outpace our industry competitors’ efficiencies, we must compare ourselves to the best companies in the broader consumer products industry sector.”

It is this unwavering drive for growth, excellence and service that continues to propel Southern's destiny; these goals inspire Harvey and Wayne Chaplin as well as the company's entire team of talented sales, marketing and support staff.

Southern Wine & Spirits of America's Corporate Vision is…

“To be the leading distributor of beverage alcohol— creating superior value for all tiers of the industry."

We will achieve this vision by embracing a Mission of…

"Providing superior business solutions that drive growth and value for customers and suppliers alike through our national scale, state-level share, local market intelligence and brand-building expertise.”

Supporting this mission and vision, Southern invests heavily in its people, its operations and its technological capabilities, all to add value to the industry’s Three-Tier System—a legal system under which wine, spirits and beer pass from the manufacturer/supplier (first tier) to the distributor (second tier) and on to either the off-premise retailer or on-premise restaurateur (third tier). Southern’s ongoing commitment to customer service as well as performing at the highest levels of professionalism and marketing creativity bring added value in its work with the 17 spirits Control State jurisdictions in which the Company operates.

Achieving National Scale, Maintaining Local Focus

From its earliest days in Miami, Palm Beach and Jacksonville Florida, Southern Wine & Spirits of America has set out to be the most innovative and progressive distributor in each of its marketplaces. Overall, Southern employs more than 14,500 people—in a 6,000-mile reach that extends from Miami to Anchorage and Maine to Maui.

Today, Southern represents approximately over 1,500 wine, spirits, beer, and beverage suppliers from around the world, and markets, promotes, merchandises, and distributes over 5,000 individual brands. Indeed, during a typical working week, Southern sales, delivery, and support staff collectively call on or service over 180,000 different chain and independent retail and restaurant customers across the country.

Beginning in Florida, Southern worked hard to achieve efficient, statewide distribution capability, which it gained in 1972. In 1984, when much of California's wine and spirits wholesale business was still handled by dozens of small, regional players, the Southern Wine & Spirits of California operation was the first such distributor to gain statewide distribution capability. From then on, the company's strategy of offering statewide distribution in each of its markets ultimately added an invaluable dimension of service to both its suppliers and to its retail and restaurant customers alike.

Southern became one of the first distributors—if not the first—that was able to provide statewide distribution, merchandising and promotional support behind leading wine and spirits brands. The statewide distribution trend that Southern Wine & Spirits of America established in Florida and California became the industry standard over time.

Southern prides itself as a leader that not only responds to the needs and desires of its customers and suppliers, but also anticipates them. Recognizing the consolidation and growth of its supplier and customer trading partners in recent years, Southern has anticipated their needs—establishing a strategic, tightly knit organization that is capable of developing and executing creative, value-added marketing, national accounts, promotions and category management services in every trade channel in each and every Open and Control State market in which Southern is present. Nonetheless, these additional capabilities will not come at the cost Southern losing focus on its key role as the local brand steward within each of its markets. Southern Wine & Spirits of America is confident about its excellent track record concerning its ability to anticipate what its supplier and customer partners will need in the future—and the company continues to constantly and efficiently augment its offerings as necessary in this dynamic marketplace.

Brand Builders and Innovators Par Excellence

Alongside Southern Wine & Spirits of America's focus on growth and customer service is its prowess in brand building—especially its renowned ability to nurture growth for existing and new wine and spirits products. “It's always been Southern's strategy to invest with our brand-owner partners to build brands—both in on-premise accounts where brands are introduced and established and in off-premise chains and independents where we drive volume growth,” says Wayne E. Chaplin.

A key part of Southern’s ongoing drive to continue building brands as well as sustaining the highest levels of strategic sales, marketing and operational excellence was the appointment, in January 2005, of Brad Vassar, a 20-year employee of Southern and 25-year industry veteran, to the position of Executive Vice President, General Manager for Southern Wine & Spirits of America, Inc.

Wayne E. Chaplin stated, “Brad’s new position will have all our state General Managers reporting directly to him—as well as Southern’s Category Management & Business Intelligence Group and the National Accounts Off-Premise and On-Premise teams. I am also delighted that Brad will be working alongside Mel Dick, our Senior Vice President and President of our Wine Division; Lee Hager, our Executive Vice President & Chief Administrative Officer; and Rudy Ruiz, our Executive Vice President of Spirits. This group will—along with my father and me—serve as the core of our Senior Executive Management Team.”

At the time of this announcement, Vassar said, “I appreciate this tremendous opportunity to work alongside Mel and Rudy and look forward to continue to build on Southern Wine & Spirits of America’s industry-leading reputation and level of excellence in the years to come.”

Vassar added, “With our strategic vision of delivering best-in-industry service levels in all the growing and dynamic markets we serve and in combination with our second-to-none strategic and tactical marketing capabilities, Southern is in a unique position to offer our supplier partners a cohesive "go-to-market" approach in the areas of National On- and Off-Premise Accounts, Category Management and New Product Development in both Open and Control State markets. When you combine that with our very strong local market capabilities you have the ‘value added’ that we consistently deliver on a daily basis at a higher level than anyone else in the wholesale tier.”

Since Vassar’s appointment, he has led the Company’s wide-ranging efforts in the establishment of several new teams who concentrate on the inter-related disciplines of National Accounts, Category Management, Control State activities and Corporate Strategy.

Vassar said, “Our Company’s National Accounts Division is all about customer service, service to our retail and supplier trade partners alike. National Accounts is a rapidly growing business for Southern; this is also true for many of our valued supplier partners with the reality being that as a result of the wide range of recognized premium brands that we represent that in many cases we are the single largest provider of beverages to this critical and fast-growing National Accounts trade channel.”

Likewise, Vassar, working closely with Mr. Wayne Chaplin, spearheaded the establishment of a Corporate Category Management and Market Research team. Mr. Vassar said, “In our work on behalf of our supplier partners, we are determined to provide and utilize the very best market place information and intelligence we can gather and analyze in order to increase the sales of the brands we are honored to represent as well as help boost the profits of the on- and off-premise customers we are privileged to serve. For these reasons, we want to field the “best in class” organization designed to provide our retail customers with significant data and consumer insights. Our goal is to assist our customers in maximizing profits in their beverage alcohol departments.”

In addition, Vassar worked with the Company’s Senior Management in the creation and staffing of a new Strategic Programs Group to serve in support of Corporate and Divisional executives on strategic development, executive decision making, and business initiative execution and implementation. Vassar emphasized, “The formation of this new Strategic Programs Group at Southern is all about our heightened commitment to strengthening our leadership position in the distribution tier, while also expanding our best-practices achievements across our growing organization.” Stephen J. Von Oehsen, who is the Company’s Senior Vice President, Strategy and Business Development, heads this Corporate-level group; he reports to Vassar.

Since his appointment, Vassar also coordinated efforts with the Company’s Senior Management in the development of a new Control States corporate-level leadership team. At the time of the team’s establishment in late 2005, Vassar said, “The formation of the first-ever strategic Control State Management team within the Distribution-Broker Tier of the wine and spirits industry to focus exclusively on the needs of Control State Business. This is a historic development for not only Southern Wine & Spirits of America, but for all the Control Jurisdictions we are proud to serve. Our coordinated strategy of serving Control States is without question an industry first. As the leader in the wine and spirits distribution business, we are very proud that presently in the 16 Control States we serve, their collective wine and spirits volume accounts for approximately 90% of total Control jurisdiction wine and spirits sales volume.”

Recognizing Southern’s leadership role and the scope and breadth of its growing Control State operations, in 2005 the Company appointed Peter M. Hickey as Executive Vice President, General Manager – Control States Division of Southern Wine & Spirits of America, Inc., who works together with Steven G. Dick, Vice President, General Manager of Southern Wine & Spirits Pennsylvania; both executives report to Vassar.

In March 2009, Southern announced the appointment of wine and spirits industry veteran, Kevin Fennessey, to the newly created corporate position of Senior Vice President, Supplier Strategy and National Accounts, reporting directly to Brad Vassar.

According to Vassar, Fennessey brings almost 30 years of experience in the U.S. wine and spirits industry. Commenting on Fennessey’s appointment at Southern, Vassar said, “We are extremely excited to have Kevin join the Southern Family. Given his long and distinguished record of accomplishment, leadership and professionalism in the wine and spirits industry, his presence will help Southern to continue to elevate its performance and growth.”

Outlining Fennessey’s role, Vassar added, “In taking on this new role and working closely with our supplier partners, Kevin will oversee and coordinate all of Southern’s corporate Marketing departments, including On- and Off-Premise National Accounts, Category Management, and Business Intelligence.

Southern’s Master Wine Salesman: Mel Dick

Mel Dick, Senior Vice President of Southern Wine & Spirits of America, and President of the Company's Wine Division, is widely credited with raising the standard of wine appreciation and salesmanship in the U.S., not only by his peers in the America wine and spirits industry, but also by the most respected wine industry professionals around the globe.

In recognition of his pioneering efforts for more than four decades in bringing premium American and imported wines to both restaurants and in independent and chain retail trade channels, Mel has been the recipient of the wine and spirits industry’s most distinguished awards, honors and tributes in both the United States and abroad.

In 2000, Mel was acknowledged by the President of France, Jacques Chirac, for his lifelong efforts to promote the appreciation of French wine and was accorded that country’s highest civilian honor: The Legion of Honor.

Mel was among the very first wine sales professionals at the distribution tier in the United States to concentrate on developing sales of premium American and imported wine brands in both retail and restaurant accounts. Recalling an early example of this strategy, Mel says, “When I first came to Southern Wine & Spirits, we really didn't have much wine; we had a few French wine brands. So I put a program together to sell these French wines to supermarkets and liquor-store chains. I also worked with restaurants to feature the French Beaujolais, Pinot Noir, Chardonnay and Rosé d'Anjou varietals. We sold thousands of cases from 1969 to 1971. We also began promoting our premium liquor brands, with a very strong focus on-premise.”

Not only did Mel Dick begin to seriously promote premium wine brands, but he also understood the importance of the organic process of building premium wine and spirits brand in restaurants, bars, and nightclubs—the on-premise business. There is probably no distributor in the country that knows how to introduce, position, promote and sell premium wine and spirits brands in on-premise accounts better than Southern Wine & Spirits of America.

Starting in Florida and soon replicating this brand-building process successfully in other Southern markets, the company quickly gained a positive reputation for its ability to promote and merchandise premium wine and spirits brands. This hard-fought talent for patiently, persistently building the sales of new (or newly won) premium brands soon helped distinguish Southern from its competition. Following soon on his on-premise attack, Mel says, “We insisted that our sales people and ‘Mr. Retailer’ promote and build displays for more premium merchandise—rather than low-end merchandise—in the best-selling sections of the store.”

With a strong record of success over time, Southern attracted more and more new suppliers in market after market. It should come as no surprise that many of the company's most senior sales staff first trained under Mel Dick.

Related to this on-premise sales strategy, Southern was one of the first in the beverage distribution businesses to realign its entire sales force into designated groups of specially trained teams. Each group was carefully trained to handle a specific sales channel, for example, chain supermarkets, national hotel chains, independent restaurants and chain liquor stores, to name a few.

The senior management's organic growth strategy combined with its proactive market-by-market expansion enabled it to develop unprecedented and unrivalled skills in building premium brands in on-premise accounts. It has been this overall vision that has driven and energized Southern’s astonishing record of growth.

Back Office Innovation and Excellence

Southern Wine & Spirits of America, Inc., has a tradition of pursuing innovation and new technology for the benefit of brand owners and customers. Southern’s underlying criterion behind the application of new technology and back-office best practices is adding value to supplier and customer relationships—making Southern the distributor partner of choice. 

Southern’s Business Solutions Group (BSG) manages the company’s back-office activities and applies common processes and systems to the benefit of the entire enterprise. BSG’s services are operated and measured like a separate business to ensure internal and external customer satisfaction as well as to drive continuous improvement. The purpose of BSG is to leverage scale and deep functional skills to improve the effectiveness and responsiveness of the company’s back office functions for the benefit of its customers and suppliers alike.

Toward that end, BSG provides quality services at competitive costs—lower than any industry benchmarks. This cost leadership—leveraging BSG’s “separate business” status along with the full size of Southern—has enabled the company to continually enhance the value of all that BSG accomplishes.

It is important to note that BSG did not just “happen.”  Southern’s ownership began investing heavily in the company’s back office functions and capabilities over the past decade. Wayne E. Chaplin addresses the motivation to do this as follows, "One of the strategic ways Southern adds value to its trading partners today is through the offerings of BSG. A key plank of Southern’s corporate strategy is to pursue ‘Operational Excellence’ by sharing best practices and leveraging Southern’s size in the marketplace. BSG, and its sister organization of the Supply Chain Management (SCM) Group, provide all of Southern’s divisions with the deep content expertise, cutting-edge tools, leading delivery service and process efficiencies that they need to win the competition in aisles, back bars and wine lists of our customers.”

Lee F. Hager, Southern’s Executive Vice President, Secretary and Chief Administrative Officer continues, “BSG and SCM—through their ongoing division user groups, invaluable relationships with best-in-class companies in other sectors like food service and the company’s annual internal ‘Meritage’ business conference—foster the spreading of best practices across the Southern enterprise.  They also allow the company to achieve and consolidate internal scale and operational efficiencies to better serve our divisions, suppliers and customers alike.” 

Hager adds, “Most business executives fail to see the competitive value of their back office. Southern’s leading back-office enabling functions—combined with our unsurpassed sales, marketing and brand-building capabilities—comprise our formula for success. Companies that turn a blind eye to back office excellence do so at their peril.”

Conclusion

Harvey R. Chaplin, Chairman and CEO of Southern Wine & Spirits, Inc., sums up Southern’s philosophy for success in one succinct statement:  “Hire the best people, compensate and treat them fairly, and success will follow.”  Southern—applying this approach to all aspects of its business from its inception—has grown from its early, humble beginnings to more than 14,500 employees, over 180,000 customers, and more than 100 million cases shipped across the 35 U.S. state markets in which it operates today.