Allied Domecq Spirits, USA was formed late last year with the merger of two of Allied Domecq’s operating companies, Hiram Walker and Domecq Importers. The new spirits company will soon relocate to a site in Fairfield County, CT. A sister company, Allied Domecq Wine, USA (formerly known as The Wine Alliance), whose President is Jon Moramarco, remains headquartered in Healdsburg, CA.
Martin Jones, the 46-year-old President of Allied Domecq Spirits, USA, spoke recently with Editor-at-Large Nicolas Furlotte about the restructuring and a wide range of related issues.
Q. Let’s start with the big picture. What is your vision and the overall strategic direction for the company within the context of your new organizational structure – the merger of Hiram Walker and Domecq Importers?
A. If you take a big step back and take a look at what we’re really trying to do here, it’s really about becoming closer to the consumer and becoming a world-class marketing company. That is consistent with what we’re doing globally throughout Allied Domecq. If you look throughout the organization on a global basis, we’ve made great strides in the last three or four years in terms of becoming a more marketing-oriented, more consumer-driven business. And the way we’re going about that is really bringing the business closer to the marketplace and increasing the focus on the core business – the key brands that really drive shareholder equity.
So this latest announcement and restructuring initiative – I hate the word, restructuring – but this merger of operations, is really the continuation of initiatives that began back in the early to mid-1990’s where we acquired the Pedro Domecq organization and all its various holdings around the world, we began to integrate and assimilate that business and now have begun to target in on a complete integration and focus the business on what we’ve determined to be the future core brands. So it’s really about bringing a greater intensity of focus on our core business. What we’ve been able to do is create a single management team that is fully coordinated behind a very focused portfolio. The structure is much closer to the business; it’s de-layered from the standpoint of all the various levels within the organization and it’s really about being a consumer-driven business.
Q. How will the new structure you’re implementing at Allied Domecq function?
A. What we’re doing here is not just merging Hiram Walker into Domecq Importers, we’re creating a new entity, a new organization called, Allied Domecq Spirits U.S. We will take the best of Hiram Walker and the best of Domecq Importers but we will also introduce new talent, new practices, new disciplines into the new organization that don’t exist in either one.
The new organization will be closer to the market. We’ve established four divisions across the country (north, south, east and west) and we have divided each of those four divisions into two portfolios: We’ve created the Equity Division, which is our world premier brands and the Alliance Division which is a lot of regionally-oriented products that require a fair degree of tactical support and represent significant opportunities in some of the emerging ethnic markets. It’s quite a different approach than the way we’ve gone about business in the past.
Q. Among suppliers there seems to be a new focus on the consumer, which is a change from what has typically been a sales-driven business.
A. I think this industry has suffered from a lack of consumer vision, for probably the last generation. And we are, unfortunately, dealing with the results of that today. Many of us are recognizing that if we don’t begin building a stronger relationship with the consumer, then we’re going to continue to recess into the background and be subordinated by all of the other adult luxury goods industries. What we have to do is make our products more relevant to the public. That means understanding the consumer and addressing him in his language and making sure that our brands represent something of value to that person. That’s really what it’s all about. And we’re no different than any of the other major players in the industry in recognizing the need to really solidify a position with the consumer.
Q. It’s as if the industry has almost missed a whole generation in the way it conducts business.
A. We had a very, very successful industry through the 1960’s and 1970’s and then all of a sudden the population stopped expanding in the way that it had been. At that point in time, we really didn’t understand the importance of consumer relationships. So it’s taken us about 10 years to really recognize that if we don’t build stronger relationships and create greater relevance to the consumer then we’re going to be in big trouble.
Q. The days of the heavy-handed supplier push, versus more of an enticing consumer pull, are over? That flooding a distributor with a ton of goods is not a real, long-term proactive strategy; it’s short term tactical gimmickry.
A. And it doesn’t work. And it doesn’t work when you just flood them out of the distributors and into the retailers either. With the consolidation that we’ve seen in the retail industry, especially in the chain markets out West, that sort of thing doesn’t exist anymore. And it is just that – short term. If there is no good consumer reason to acquire a product, then it’s going to sit in the retailer’s store or the wholesaler’s warehouse and not turn over.
Q. You have a large portfolio and there’s always a question of balance and emphasis between brands you own and those you represent. Everybody wants their fair share of attention and support, how do you handle that?
A. Clearly there are brands that represent the corporation’s future and significant opportunity for growth; and that isn’t necessarily just growth in volume, it’s growth in value. It is those brands that we have chosen to put into the Equity Division, those are also world brands that span the globe in terms of their development and are not necessarily regionally-oriented. Those brands include Kahl