Harvey Chaplin Delivers Keynote Address
 

Harvey R. Chaplin Speech at Impact’s 26th Annual Marketing Seminar
Plaza Hotel
New York, New York

March 6, 2003

"The Southern Difference"

“I am delighted to be here today. I would like to thank Marvin Shanken for the invitation
to address you here at the  26th Annual Impact Marketing Seminar.

Marvin, I was wondering when -  after all these years of loyally attending and paying these outrageous prices - you would finally invite me to speak!

My big question is - do I still have to pay?

I must tell you that after receiving Marvin’s call, I started to think how I would go about explaining how our 7,000 employees at Southern Wine & Spirits of America add value within America’s three-tier distribution system.

The short, and truthful, answer is that Southern Wine & Spirits of America has built its reputation by having the most professional, best trained, honest, and hardest-working executives and sales force in our industry.

I would like to thank each and every one of them for helping to make Southern Wine & Spirits of America what it is today – the largest and most professional distributor of alcoholic beverages in the world.

By the way, as we do every year at the Impact Marketing Seminar, I am joined by a large number of our senior executives. I’d like them all to stand up, be recognized and I’d like you to join me in giving them a round of applause.

Thank you, guys.

OK, how does Southern Wine & Spirits add value to the distribution system in America?

It’s a very timely question, especially right now as we all confront the forces of consolidation sweeping through the industry.

The best approach, I think is to take a few moments to recall what our industry was like back in 1944 when I first started working in the mailroom of Schenley Industries, then located just 25 blocks from here in the Empire State Building.

At that time, I was still attending Boys High School of Brooklyn. Looking back at the way business used to be conducted, you’ll be able to get a much clearer picture of what I call – “The Southern Difference.”            

It’s the way we have built Southern into what it is today.
         
I’ll share with you our vision of the future and how we plan to continue to add value to everything we do on behalf of  our supplier partners and their brands along with 130,000 customers we serve in 11 states… and counting.

Now everyone knows the expression: “The good old days.”

Well, I am here to tell you something else. As far as suppliers and wholesalers were concerned, the old days weren’t all that great. I know, I was there!

Back when I started - wholesalers were inefficient, small-scale players.

By that I mean a typical wholesaler’s sales territory amounted to part of a city, maybe even an entire town or community. Certainly not an entire state! That was very rare!

From the suppliers’ perspective, wholesalers were viewed pretty much as a “vehicle” to push out their brands to bars, restaurants and retail shops. That simple.

Wholesalers were certainly not perceived by suppliers, or anyone else for that matter, as real brand-builders.

Just recall Jimmy Cagney, where he’s playing a tough-guy, prohibition-era beer distributor in  “Public Enemy,” which was filmed in 1931.                

But the movies don’t tell the whole story.
 
Let me tell you how things really worked; I’ll give you some true-life examples. About four of the most important lessons I learned in my first couple of decades in this business.

Lesson Number One: “Suppliers always employed ultra-sophisticated sales Techniques….”

Since the statute of limitations has long expired, I can now tell you how sales used to be conducted…

Once, when I was in Louisiana in 1953 working for Schenley, I called on a wholesaler in Tallulah, Louisiana.

Now, I am reasonably sure none of you have ever been in Tallulah, Louisiana.

Well, maybe Billy Goldring over there would be the only one who knows where Tallulah, Louisiana is. 

That wholesaler was the “bootlegger’s stop” for the State of Oklahoma, which was a dry state at the time.

Soon a parade of big Cadillac’s came in with their rear ends high in the air and when he asked to fill it up with half pints of  Old Charter Bourbon, the trunk leveled off.

The bootlegger said to the wholesaler “How much is that?” and the wholesaler said “$68,000.00.” 

When the bootlegger reached in his pocket and whipped out cash and counted $68,000.00, I said “This is wholesaling, what a Business.”  And I was hooked.
 
Now here’s Lesson Number Two: “Suppliers Were Recognized As Savvy Brand-builders.”    

When I was in New York, I was with a supplier for a brand called Wilken Family Blended Whiskeys. We used to have a deal with the White Rose bars, which had about 10 bars in New York City.

The deal was one free case with ten. Sounds like some things never change. I used to get a cab…stop at 6 or 8 bars and drop off the free case. By the way…it was split in two paper bags 6 bottles in each.

I’d walk in and say, “The Wilken Man is Here.”  Then, I put the bags on the bar and leave. By the way….. I was underage at the time. But that was an early example of
Brand-building.

Now, I will now give you Lesson Number 3:  “Wholesalers Possessed State-of-the-Art Delivery and Billing Technology.” 

In 1960 I worked for Erie Liquor Company, A distributor in Buffalo, NY. A woman named Rose did all the billing.

She used a Frieden Automatic Calculator. She used to type all the invoices but everyday she brought her Bible, put it on the machine and prayed it would work.

The distributorship in Buffalo was a great, efficient warehouse. A 6-story building, wine in the cooler basement of the building, and the same one bay for in and out deliveries.

During Thanksgiving and Christmas when it snowed and blowed, I stood there pushing cases by hand into the delivery trucks.

As you might imagine, I could tell you a million stories like this.

But the truth is -- From 1946 to 1960 with Schenley, and then from 1960-1969 as an independent  Schenley distributor in upstate New York -- all these years constituted my college and graduate school education.

Thanks to these invaluable experiences, and to the people and suppliers that had confidence in me, I was able to develop my own ideas about how to better operate a distributorship. 

All of my early work served as a terrific foundation for the kind of company that we envisioned that Southern Wine & Spirits could be.

This has come to be known as,  “The Southern Difference,” which translates in to a corporate culture that is committed to customer service, to our unrelenting support of our suppliers’ brands, and our vision, for still more growth.

Many people have asked how we got to be where we are today. Here’s the abbreviated version.       
                                                    
Early on, we were like any other distributor. Our future and our ability to make a living, was dependent on our primary supplier which in our case was Schenley.

Since our establishment in 1968, our Founders Walter Jahn, Jay Weiss and Eliot Dinerstein, had all grown Schenley’s business and market share successfully in Miami.                    

At the same time, Mel Dick joined Southern and he literally started our wine business from scratch. A task that Jay handed him and just said-GO.

And Today Mel is a living legend.

He was and remains a genuine brand-builder. There’s nobody who comes even close!

At first our growth, like other distributors, was driven by our suppliers. But as the process of supplier and wholesaler consolidation began to accelerate in the ‘70s and ‘80s, we aggressively seized a number of opportunities.

As we grew in our own markets -- first in Florida, then later in California and Nevada --  we gradually cultivated a strong reputation for building wines and spirits on-premise.     

All these developments began to attract the attention of other suppliers.                           
                                                         
Our own accomplishments, taken together with the growing confidence suppliers showed by appointing us as their distributor, set the stage for a period of extremely rapid      
Growth in the 80s & 90s for our company.                            

With our entry in 1996 in Hawaii, we became a true coast-to-coast distributor, covering over 6 time zones from Miami to Honolulu.

As many of you know from your own personal histories, many second- or third-generation family members at both the supplier and wholesale tiers decided for a variety of reasons to leave the business.

For those individuals and firms that stayed in the game the work only became harder and ever more competitive.

So with equal amounts of paternal pride and professional admiration, I would like to recognize my son, Wayne, who, as you know, is President and COO Of Southern Wine & Spirits of America.

I can honestly say that in our almost 20 years of working side-by-side, Wayne has made invaluable and ongoing contributions to our success. Boy, am I lucky.

And I think Wayne would agree that by the late 1980s, thanks to a combination of our own determined drive for growth, the reality of ongoing industry consolidation in all three tiers, combined with a little bit of luck, Southern Wine & Spirits of America started to develop a unique approach to the way that we do business.

While there’s no denying we started in the late 1960s conducting business like most everyone else… 20 years later, something changed. We knew we wanted to lead not follow; we wanted to innovate, not practice business-as-usual.

We wanted to do things The Southern Way!

We wanted to redefine the ways a multi-state wholesaler adds value to the distribution system. We created our own 7 commandments:

1.   People – Hire the best and pay them well.                                                                       

2.   Relationships – Never stop working with and serving your suppliers and your customers.  

3.    Build Wine and Spirits Brands On-Premise, then aggressively grow them off-premise.

4.    Be Innovative – Always look for Growth Opportunities.

5.    Train, train, train – There is absolutely no substitute for a well-trained sales force.

6.    Invest in your operations and your back office.

7.    Invest in the future, Be prepared to build Your own  “Field of Dreams.” Our newest   
 Warehouse in Chicago, possessing the Latest, state-of-the art capabilities is 
 Only the most recent example of our Optimism about our future.

Now let me expand briefly on each of these seven commandments:

As I do, I think that we will be able to make a Most persuasive case about many of the ways Southern, our own brand, adds value to the distribution chain.

Let’s get into 7 specific reasons why.

Point Number ONE: People – Hire the best and pay them well. This is such a critical point and it can’t be overemphasized.

Point Number TWO: “Relationships – Never stop working with and Serving your suppliers and your customers.”  

Not surprisingly, like Jimmy Cagney’s Character, the old ways, the old days of doing business are gone.  Forever.

Today, Southern possess unmatched sales, merchandising, promotional and marketing capabilities on a nationwide basis, including National accounts, On- and off-premise.           
 
Point Number THREE: “Build Brands On-Premise, then aggressively grow them Off-premise.”

Today it is not unusual for Southern to account for -60 percent if not all of a bar owner or retailer’s total business. How did we get there? By building brands, starting with the all-important on-premise sales arena, bars, restaurants and hotels. No one understands these challenges better than Mel Dick.
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Point Number FOUR: “Be Innovative.”

Not surprisingly, our guys are always looking for growth. Here’s just one example of our relentless drive to come up with imaginative ways of growing the business.

Point Number FIVE: “Train, train, train.”

Southern makes unrivaled investments in educating and training its staff. In having specific product knowledge, and to make sure they understand the unique needs of the different trade channels. Nowhere is this dedication to education and training more evident than in our Las Vegas, Nevada operation. No distributor employs this many Master Sommeliers anywhere on the planet!

Point Number SIX: “Operations should be second to None!”

Invest in your operations and your back office. Remember that Freiden Automatic Calculating Machine, well it’s now in a museum, where it belongs! Today, Southern offers unrivaled Information Technology and operational capabilities second to none.
                                
Point Number SEVEN: “Invest in the future, be prepared to build Your own ‘Field of Dreams’.”

We have a proven track record of being adventurous…and hungry for long-term growth. Since moving north in California in 1984, Southern bet on the future. Boldly, ambitiously, and, I am happy to add, successfully!
                                                       
These seven points, and many more besides, truly differentiate Southern Wine & Spirits of America from our competition.

At Southern we are never satisfied. I consider our “fair share” 100 percent of an Account’s business.

Now I understand that will never happen in the real world, but everyone at Southern  has that as their goal.

We always want more business and we won’t ever rest on our laurels or past achievements.

This is fundamental to who we are as a distributor and as a culture.
                                                                   
To summarize exactly how Southern adds value, we sweat the details on:
 
Hiring the best people, cultivating a service-oriented business ethic;

Maintaining an optimistic outlook on the future;

Holding a firm belief in the industry’s Three-tier System and our role in adding value;

Being a positive role model for promoting effective Social Responsibility programs;
 
Always contributing to every community where we do business….and give back;

Treating each supplier individually with respect.

That’s The Southern Difference in a Nutshell.
I would like to end On a personal note. 

It has been an absolute privilege to work in this great industry for close to sixty years now. 

I have seen a lot of changes, and I have truly enjoyed sharing a few of my war stories with you here today.

But if there is one thing I would like to leave you with, It is my heartfelt thanks to my business Associates at Southern – all of whom deserve the lion’s share of credit for making this company what it is today.

I‘d also like to thank my wife and family; my son Wayne, who was crazy enough to join in this adventure; and last but not least, to all my Supplier friends.

I can tell you honestly that I would not be here talking with you today without the support and the confidence all of you have shown me during my career.”

So to all of you thanks, and I will leave you with my guiding philosophy “Take care of brands. And your brands will take care of you.”

Speaking of brands, and I can’t leave this room without saying If any supplier here is interested in moving a line, a product or an entire division, come talk to me after we’re done here. You see we never let up!

Thank you all very much.”


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