Beam Announces Structural Changes

FILED OCTOBER 1, 2009

Dear Client:

Beam Global announced this afternoon some major organizational changes to its US business that they hope “will enable faster decision-making and sharper focus on customers and consumers.” Firstly, it’s aligning its US commercial marketing sector into three integrated category business teams: bourbon, mixables (including rum, tequila vodka and cordials) and classics (including cognac, Scotch and Canadian whisky). Each business team will have its own brand management, trade marketing, finance, operations and human resources functions with its own profit-and-loss responsibility.

Secondly, its US sales organizational will no longer operate on a regional basis. Instead it will be separated by three main distributor groups: Southern Wine & Spirits; other independent distributors (including Glazer’s and Republic National Distributing Company); and Control States.

Both the category business teams and sales organization will report to Bill Newlands, president of Beam Global’s U.S. business.

INTERNATIONAL CHANGES. Beam also plans on uniting its two current European regions into a pan-European region. As a result, Beam’s international organization will be divided into three business teams based on geography: Europe, Asia/Pacific and emerging markets/travel retail. Each has its own profit-and-loss responsibility. The international units report to Donard Gaynor, senior vice president and managing director – international.

“Implementing better ways of working to sharpen the focus of the organization is the logical next step in the evolution of Beam Global,” said Matt Shattock, who became president and chief of Beam Global in April. “We’ve successfully developed our next-generation routes to market, including a wholly-owned sales organization in the U.S. We’ve developed a compelling vision of ‘Building Brands People Want to Talk About,’ and we’ve enhanced our new product development program. The steps we’re now taking will build on that progress and make the organization more effective and efficient, while freeing up resources that we’ll reinvest to grow our brands. Taken together, these steps will better enable Beam Global to drive our biggest brands and best market opportunities.”

LVMH SEES IMPROVEMENT IN Q3 ALTHOUGH CHAMPAGNE STILL WEAK

In the first 9 months of 2009, LVMH attributed revenue declines of -3% to distributor destocking in sectors that do not sell directly to the consumer, which includes wine and spirits. The third quarter experienced some improvements, “implying that the end of this phenomenon may be approaching,” said the company, as “all business groups recorded better performances than in the first half.”

Wine and spirits organic revenue declined -18% in the 9 month period compared to the same period last year. LVMH again pointed to distributor destocking although “there was a notable improvement in performance in the third quarter.” Champagne continued to be the most negatively affected, while Hennessy cognac had a strong performance in emerging markets and recorded an improvement in the United States.

WALMART BEEFING UP SMALL FORMAT STORES

Walmart is hiring a new team of managers and buyers who will focus exclusively on improving the company’s small format Neighborhood Markets and differentiating them from the Supercenters, according to a report in the Financial Times. Their goals include displaying groceries in a way better suited to small stores, and developing “a more local flavor” that appeals to their communities. Walmart’s grocery business has been traditionally weaker than the rest of its store categories but the company has focused on improving its image in recent years. There are now over 150 Neighborhood stores in the US and they currently represent only a fraction of Walmart’s total US sales. Similar to rival Fresh & Easy, the Neighborhood Markets are around 42,000 sq ft which is less than a quarter of the size of Walmart’s Supercenters.


Until tomorrow, Megan

“You miss 100 percent of the shots you never take.”
Wayne Gretzky

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