Distributor Profile: Reyes Holdings

FILED NOVEMBER 8, 2012

Dear Client:

After reestablishing peace with MillerCoors, which paved the way for Reyes to not only close on their Chesbay deal but to make other acquisitions, I was invited by Jimmy Reyes, coo Ray Guerin, and John Zeltner (chief of Premium Distributors of Virginia, Maryland and Washington D.C.), to visit their Premium operations in Virginia to see exactly how Reyes Beverage Group goes to market.

Yes, they use voice-to-pick technology. Yes, they use the Tygard claw to pick layered orders. And yes, they use GPS to track drivers and salesmen. But there are some additional things Reyes does that may be of interest.

"There are some misconceptions about us, Harry," said Ray Guerin. "People call us a logistics company. Martin-Brower, another Reyes Holdings company, is probably the best logistics company around, but that's not all we are at Reyes Beverage Group. We are also great at building brands in our markets. We don't talk much; so maybe shame on us for not taking the time to demonstrate and explain to the industry how we actually go to market and how that very systematic way we go to market not only builds brands but protects the quality of the brands we represent."

One of the most persistent myths about Reyes is that they have delivery minimums. "We don't have them, Harry," says John. Then why does the industry think you have delivery minimums? Explains Ray, "We had them years ago but not anymore." Ray says they do encourage their salesmen and accounts to consolidate their orders for efficiency, but if somebody calls or requests an order it's always delivered "even if it's two cases."

But perhaps the biggest differentiation is their use of shared services, and that they measure everything. Reyes utilizes centralized insurance, banking, benefits, training and development, accounts receivable, tel-sell, accounts payable, legal, IT, purchasing, risk management and routing, all of which are taken care of by trained folks at the home office outside Chicago. "It took years of work and millions of dollars," said Jimmy Reyes, "but the payoff is that guys like John [Zeltner] can focus on one thing: selling beer." Ray acknowledged that there are cost savings in consolidating these functions but the "real benefit is that the quality and level of resources we can provide [their distributorships] is so much better than trying to do it locally." Ray said they can attract, hire and retain better talent while keeping the GM focused on selling beer rather than dealing with an insurance claim.

John said that it wasn't any easy transition, "We had been doing things a certain way for years, the way most distributors historically have done business." Previously John ran it all and relinquishing control in some areas didn't come easy. John said having an expert in Chicago take over something you used to do required a change in culture. "But once you change the culture, the benefits are clear. The money we save doing those things, not to mention doing them better, is invested back into the local business to sell beer," said John.

A key enabler for Reyes Beverage Group is technology. Jimmy said, "We invest in technology to make us better beer salesmen and better distributors." As an example, Gavin White, Premium's vp of sales showed me RBG mobile, a proprietary iPad app that provides his salesman with instant sales presentations including information on how that account, supplier or package is doing compared to everyone else. Similar to A-B's Mobility, the app allows salespeople to create charts on the fly showing an account's sales history, non-buys, trends, and trends for other accounts in their zip code. It integrates data from their route accounting system (VIP), IRI, margin minder and product ratings making anything and everything available to the salesman while he's on the street, and it's email-able to the account at any time. Reyes salesmen also use their iPads to complete weekly draft and account surveys. "We strive to know our retailers better than our competitors do," says Ray.

If it's important and it can be measured, it is. They regularly survey their customers and their employees, scorecarding their own performance in addition to their suppliers. John expanded: "We incorporate our suppliers' distributor standards into our monthly retail audits which we use to measure our success both on and off-premise. We look at our shelf space to share, check for out of date beer and draft handles. We measure every display in the market against every ad for every supplier. Everything that a supplier would want to know is measured monthly. And we reach out to everyone; with at least seven and as many as 10 retail audits completed every month for each salesman's territory. One month the supervisor will audit his salesman's A accounts, the next month he'll visit his B accounts and the next month he'll audit 10 of the salesman's C accounts. Through their surveys, they found that accounts are more responsive to new shelf space with more merchandising. Now merchandiser support is based on days of supply, with many accounts getting merchandised seven days a week, and twice on weekends.

They don't just audit performance for the brand; they want to know how they are doing on serving the customer. In each audit, they ask the retailer, How did our salesman perform? How did the merchandiser perform? How did we do with delivery? And how did we do on our overall service? Benchmarking themselves against other beer distributors and the entire DSD industry. John summarized it, "Harry, we always know if we are winning or losing at retail because we measure everything. We prefer to win."

MILLERCOORS POSTS BIG PROFITS, TO UP SPENDING ON "BRAND INVESTMENTS" IN Q4

MillerCoors on Wednesday reported a big 74% increase in profits on continued growth of Coors Light and Tenth and Blake brands. Net income increased to $306.9 million in the third quarter ended Sept. 30, compared with $176.4 million in the prior-year period. Net sales increased 1.5 percent to about $2 billion.

BIG SPEND TO "TRANSFORM" MC. In the Molson Coors conference call, chief Peter Swinburn said that in the fourth quarter for MillerCoors, "incremental spending for marketing and business transformation" will increase to the tune of $20 million. MillerCoors marketing, general and administrative costs "driven by brand investments in the range of $20 million higher than last year along with a substantial increase in business transformation spending, which is designed to transform the way the U.S. team works to improving core capabilities, simplifying business processes and building information systems," says Peter.

MillerCoors will also reduce distributor inventories in Q4. "U.S. sales to wholesalers have significantly outpaced the sales to retailers, resulting in higher distributor inventory levels at the end of September versus prior year. However, given MillerCoors plan to shift to consumption for the full year, we expect distributor inventory levels to be close to 2011 levels by year's end."

Until tomorrow, Harry

"My definition of an expert in any field is a person who knows enough about what's really going on to be scared."
-P. J. Plauger


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