Gulf Distributing Co.

Source: Food and Drink Digital

Date :8/7/2007 3:49:04 PM

Beverage distribution involves a lot more than just on-time deliveries for Gulf Distributing; they also have to partner with suppliers and retailers to facilitate sales

Written and produced by James Buchanan & Michael Mango

Managing a distribution business can sometimes feel like a juggling routine with one too many items in the air.

This is only made all the more complicated if the products your company distributes contain alcohol, as there are a plethora of state and federal regulations that have to be complied with.

For nearly 33 years, Gulf Distributing Company of Mobile, Ala., has managed to keep its many balls in the air, as the world around it has changed and the company has expanded.

“We’re a distributor of beverage products in three states and we do a number of things in the course of that, which is primarily to work to bring value to the retailer based on leveraging the brand portfolio we carry,” says Elliot Maisel, chairman and CEO of Gulf Distributing.

Maisel is the second generation to run the company, which was founded in 1974, when his mother Frieda Maisel purchased the assets of the Jax Distributing Company — which itself was founded in 1935. Frieda acts as chairman emeritus and as an advisor to her son, who has been chairman since 1986.

In recent years, according to the company’s website, Gulf Distributing has expanded its original territory through the acquisition of a number of family-owned and operated distributorships.

Today, the company has three operating distribution entities, functioning as separate companies with distinct operational areas.

Gulf Distributing works in the greater Mobile area, which includes six southwestern Alabama counties; GoldringGulf Distributing Company operates in the Florida Panhandle in 12 counties; and Energy Beverage Management covers the greater Jackson, Miss. Area, totaling fifteen counties in Mississippi.

The company’s largest portfolio is beer, adds Maisel, but the company also carries wine (Gallo is its primary supplier) and a number of whiskey lines led by The House of Sazerac brands. Red Bull is also a leading supplier.

The company’s main beer suppliers are Miller Brewing, Coors Brewing, Heineken, Corona, Yuengling Brewery, and Sam Adams, as well as many other craft breweries and imported beers.

As well as delivering these products to retail outlets, Gulf Distributing acts as something of a branding agent for the products it carries, the largest of which is Miller Lite.

“You can’t assume that everyone has tried that product because they haven’t,” says Maisel. “We have to continually reintroduce the product and sell the brand everyday.

“Our territory is conducive to this sort of thing,” Maisel says. “We have 170 miles of beach front in Florida and Alabama, and we have a number of military bases we sell to as well.”

Maisel adds that the company pre-sells to its customers based on the expected demand for its products. For example, Gulf Distributing will sell to a restaurant or bar on Monday for delivery on Tuesday or Wednesday.

This means that the company must always have accurate and focused sales data for each of its customers in order to anticipate what sales will be that week.

“The sales guys have the sales history for each customer on their handhelds,” says Maisel. “Every occasion is a beer occasion, but we also have special times of the year when sales increase — such as holidays and special events like spring break at the beaches. We are able to know when those days are, and can use the sales history to help the customer have a better understanding of what they need.”

Aiding this effort, he adds, is software from Vermont Information Technology that enables the company to break down day-to-day sales in a variety of ways to help create the best picture of its customers’ needs.

Efficiency is further enhanced by loading each truck based on each stop, rather than loading so much of each product and forcing the driver to pull orders together at each location.

“We load exactly what the order is — the number and types of items — on pallets and shrink wrap it and load it in reverse order so the driver can pull each account’s order at each stop all at once,” says Maisel.

“We are moving toward robotic order-pulling in our warehouse, which means that robotic arms will pull orders from computerized conveyors, and after an order is put together it is sent to a staging area where our guys load it onto the trucks.”

He adds that this technology has existed for five years and is being produced by a company named Vertique Inc. According to the company’s website, Vertique creates custom vertical case picking and conveying systems based on the individual requirements of its customers that can handle up to 10,000 cases per hour. The company also says that its system can save delivery drivers one to two hours per day in delivery time.

Given that Gulf Distributing often has to meet the logistical requirements of its customers, such a system could provide a needed edge.

“If we are delivering to a grocery store, for example, they will have a schedule for when its suppliers can bring their orders in,” says Maisel.

“We may have, say, a 20 minute slot on that schedule when we have to bring our truck in and unload it.

“These kinds of dynamics play into our business because we are not just branders and distributors, but we’re in the logistics business as well,” he says.

Further, the locations of the company’s facilities are also designed to make its delivery process more efficient. Maisel says that the concentration of population and road system within Gulf Distributing’s and Goldring Distributing’s service areas requires the company to maintain six warehouses.

“We are not a hub-and-spoke operation,” he says. “We deliver to geographic territories from separate warehouses. We would like one building in the middle of the territory, but that is not possible — in part because we cannot cross state lines with alcoholic products.”

Asked about the challenges his company faces, Maisel says that escalating costs outside of the company’s sphere of control is having an impact. He lists those as the increasing cost of gasoline, health coverage for employees and human resources. On the latter issue, he says that the younger generation of employees brings a different attitude toward their work life.

“They don’t look at getting a job as a long term prospect where you stay with a company,” says Maisel. “We are working to control the things we can control, and learning to be flexible and understand the things we can’t control.”

Maisel also lists the changing taste of the consumer as a perpetual challenge for the company.

“We have to be on our toes and develop our brands while looking for new and developing trends,” he says.

The company must also contend with shrinking profit margins for the products it sells. Maisel says that Gulf Distributing sets the prices for its products, but so to do its suppliers, which can tend to push prices up. On the other end, retailers will pay only so much, he says, so the company gets pinched in the middle.

Lastly, there is the fluid nature of state and federal regulations on alcoholic beverages.

“What we sell is an intoxicant, but we must be able to provide access to it because beer is the choice of moderation,” says Maisel. “We are fighting the neo-prohibitionists who would regulate it and eliminate it, so we want to make sure these products are available and accessible so that people can enjoy them.”

At the end of the day, though, Maisel says growth will come from increasing its products profiles, increasing the territory it serves, and adding to its facilities to increase the company’s capabilities.

Making all of this happen, he adds, is the company’s employees.

“We are a people culture and the guys on our team really make us what we are,” says Maisel. “They are committed to representing our company.”