Analysis

Allied begins North American transition

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Allied Domecq unveiled its North American "Move to Market" strategy last year, and its new structure was in place by January 31. Tom Wilen, president of Allied Domecq Spirits & Wine North America, tells just-drink.com's Anne Brockhoff what to expect.

Allied revamped its management structure to create three new US divisions for northern, southern and control states. Those units and the executives who will lead them (with the exception of a commercial director) are in place and will begin operations this week.

Wholesalers and distributors will start feeling the changes in February and March as Allied continues adding more regional account managers to each division. The company created about 100 new jobs, of which some 70 are front-line positions that will put "more feet on the ground" and increase interaction with customers, Wilen says.

The idea, he says, is to build truly transparent partnerships based on joint investment, information management and strategy. Allied can then leverage its brand expertise against the market knowledge of partners like Sunbelt Beverage and Glazer's Wholesale to make better, quicker sales decisions.

"In this day and age, when you're dealing with a three-tier system, you have to have true partnerships. It's really got to be something where you're in harmony with your distributors," says Wilen, who declined to say how much the changes are costing.

"The distributors are helping us become better suppliers."

One thing the reorganization hasn't done, Wilen says, is to distract
Allied from its main objective: to grow sales and market share.

"


"Any time you go through a big restructuring, the key thing is for you to make sure the business keeps on performing"
Any time you go through a big restructuring, the key thing is for you to make sure the business keeps on performing," Wilen says. "At the last half of the year, most of our brands were doing double-digit depletion growth and Nielsen growth."

That momentum continued into the new fiscal year for Stoli and Stoli flavours, Sauza, Makers Mark and Courvoisier, Wilen says. Kahlua and
Beefeater have also seen gains, though Canadian Club remains what he calls "a challenge."

Allied expects the results of a 15-month, £10m global consumer segmentation study to fuel continued brand growth in the US. The study, completed last year, was designed to better define who drinks what when and why. Answering those questions should help Allied better target its growing marketing budget (total spirits and wine advertising and promotion spending rose 21% in fiscal 2002) in countries like the US, where unconventional campaigns have proven successful with consumers.

Allied teamed up last year with designer Diane von Furstenberg to create a holiday gift wrap for Stolichnaya vodka, and Wilen points to the popularity of rapper Buster Ryhmes' "Pass the Courvoisier" as evidence that efforts to reach urban Cognac consumers are paying off.

"It's no longer looking at one age, gender or household income and saying 'here's the magazine we're going to buy,'" Wilen says.

But two elements of the US environment remain unpredictable: the sluggish economy and a continually evolving industry structure. On the economy, Wilen is pragmatic.

"The economic situation is clearly a challenge, but we took that into account when we did our budget," he says.

He's more optimistic about industry conditions. He does expect to see mergers and acquisitions continue over the next 12 months, but declined to speculate on what could be for sale or who the buyers might be.

Change will also continue throughout the supply chain as Allied's biggest rival, Diageo, switches to a single distributor in each market.

That could prove a boon for Allied by making the No. 2's portfolio more important to those distributors left out of the Diageo network, Wilen says.

"


"Diageo went through a process that polarized the industry. That creates a lot of opportunities for us"
Diageo went through a process that polarized the industry," he says.
"That creates a lot of opportunities for us."

To that end, Allied aims to become the first-choice supplier for distributors and to build multi-market relationships that will help double its US business within five years, Wilen says.

"This business is about brands, and it's about people, whether they're your own sales force or the distributor's," he says. "If you have the right brands and the right people, who are motivated by the right ideas and the right compensation, they will do their utmost for you."


Companies: Allied Domecq, Diageo

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