149 o Play for something greater than self. Achieve for your company and customers; then you have become bigger than yourself. o Business challenges: You need to make smart, longterm decisions for profitable long-term success. Due to the size of the Glazer’s sales force, it was simply too difficult to manage such a huge effort, and in the late-1990s the era of Glazerama ended. But the many stories live on! 1960’s - Rising to New Heights
Chapter 9 Nolan Glazer
151 Bulldog and Spoon Breaker Nolan Glazer
152 The driving force through the company’s growth years of 1960s through the 1980s was its president, Nolan Glazer. He was a people person, outgoing and witty. With his outstanding people skills, he understood how far to push people and still find a way for everyone to agree and ensure a win-win. He pushed hard, ruled supreme, and he emulated his brother, Max, with his iron-fist approach. He rarely sought advice from other family members, much to the chagrin of Robert S. and Irving Glazer. He could be gruff and sometimes abrasive. But if his temper flared, it quickly melted into an unforgettably mischievous smile and twinkle of the eye. He never nursed a grudge. Nolan worked around the clock, never missing a moment of the day to advance the company, please customers, and handle salesmen’s requests. Like his brother, Max, he worked nonstop, all-in all the time, and was much more vocal, verging on bombastic. He had a bulldog mentality, and nothing slowed him down—certainly not the time of day. At night, he constantly worked the phone, always concerned about the business. He wasn’t a micromanager; he was just vehement about needing to stay on top of his responsibility to advance Glazer’s—and he didn’t want to let anyone down. His general manager, Jerry Leibs, recalls: “The phone would ring at all hours. Finally, I told Nolan: ‘As I told your brother (Max), my family time is sacrosanct.’” They were all family oriented—some were just more consumed with the minutiae, with a sense of urgency, indiscriminant of time or personal needs. He told Nolan: “Unless it’s an extreme life-or-death issue, it can wait.” Nolan apparently never heard his request. He just kept calling, and Jerry kept taking his calls, because, after all, Glazer’s was equal in stature to his family. That’s just the way they rolled. It was all hands on deck, all the time. That’s why they were so successful. Suppliers held the same opinion of Nolan’s passion for negotiating. To him, the give-and-take of business negotiations was a hobby, and few better at this game than Nolan. Said one supplier executive: “One thing to remember going into a meeting with Nolan is that you’d better wear a suit of armor. Go prepared to have blood splatted on you—your blood.” “Nolan is a strong businessman, and he’s got a temper to go with it,” said another supplier. “Just because you’re a friend of Nolan’s doesn’t mean you’re going to get a better break than anyone else,” said another. Nolan Glazer Seated: Israeli Prime Minister Golda Meir, standing on left: Nolan Glazer, standing on right: Jerry Leibs
153 “Don’t ever get caught in a closed room with Nolan,” said a retailer who was a longtime friend and customer of Nolan Glazer. But everyone who had seemingly sharp remarks to make about Nolan Glazer’s negotiation methods always smiled or chuckled when they commented. And they were all unmistakably fond of him. They liked to tell anecdotes about their dealing with Nolan. Recalls Bill Getz, executive vice president of Barton Brands: “Many times I’ve been in a meeting with Nolan when things got heated up. But the discussions always end up with Nolan doing what is best for both of us. And afterward, Nolan has a standing comment: ‘I apologize for what we’ve just gone through—and while I’m at it, I’ll apologize for the next time, too.’ Actually, in spite of the heat in the conference room, Nolan is very realistic and he is always extremely cooperative.” Nolan Glazer
154 Nolan Glazer – Teddy Bear Nolan’s bulldog personality was equally balanced with his teddy-bear softer side. He was always there to give a word of encouragement, a hug, a big grin, along with a nod of approval. As a family man, he held inviolable his relations with his wife Frances and their three children—Robert L., Bennett and Betty. Though he traveled frequently, when he was in Dallas he was home for dinner. When not working the phones afterwards, he kept up with the news on TV, staying atop of national and local news. “Nolan may give you an argument pertaining to business, but he will never let you leave his office angry,” said Raymond Hunter, vice president for American Distilled Spirits. “He might not always give you what you want after a knockdown and drag out, but he’ll never let you leave mad. He’s a tough businessman, but his word is his bond, and he will do anything possible to help a person.” In supplier meetings, Nolan had a habit of gathering discarded plastic spoons used for stirring coffee and slowly breaking them up. Though unable to repair the broken spoons, he always immediately repaired those relationships that might have been on the verge of breaking during these tough negotiations. Nolan Glazer Nolan Glazer (center) and Julius Schepps (holding boots on the right). 1958
155 He was a man locked into a perpetual routine. As an extremely focused businessman, his routine allowed him to free his mind from mundane decisions and to focus intensely on the business. He took the same driving route to his office. His daily weekday breakfast with Jerry Leibs was at the same place, same time, same meal—two eggs over easy, bacon, biscuits, and coffee. Unpretentiously, he drove the same car as the salesmen did. He was low-key, unconcerned about appearances, and held little concern for lavish clothing; he would wear the same three suits with a clip-on tie because it was easier and faster. He enjoyed traveling for business, often joined by his wife Frances on business trips, supplier-sponsored excursions, and industry conclaves. His travel interests for personal pleasure took him on many cruise vacations with his family. Like his older brother, he held a great compassion for employees, treated them fairly, and was always concerned about their welfare. Happy employees were productive workers. Beside his family and the business, his other passions included philanthropy and his faith. An unheralded, behind-the-scenes philanthropist, he strongly supported diverse charities to benefit the young, the needy, and the handicapped. His numerous contributions of time and money benefited hospitals, universities, and the arts. Devoutly religious, he honored the customs and traditions of his faith and was unsparing in support of Jewish organizations. However, he preferred to remain a behind-the-scenes contributor; anonymity added to his pleasure in giving. Nolan Glazer passed away at the age of 77, on March 14, 1991 while undergoing open-heart surgery at Presbyterian Hospital. He left some huge shoes to fill, but one Glazer had been well-trained and was ready to lead the family realm. Max’s son, Robert S. Glazer, rose to the challenge. Nolan Glazer
Chapter 10 Other Glazer Family Members
157 Robert L. Glazer – Nolan Glazer’s oldest son, Robert L., was a key lieutenant in the family business. Staying in the shadows of his domineering father, he mostly handled the flood of special projects his father dished out. Sometimes, these unique assignments were based on Nolan’s whim, but mostly Irving was parachuted into strategic opportunities that developed. In 1966, Robert L. helped open Glazer’s Cactus Beverage in Arizona. He also managed facilities in Lubbock, Texas, and New Orleans. He returned to the Dallas General Office in 1970. He also had a salesman’s bent, and during Glazerama presented a passionate speech on the characteristics of a leader: Other Glazer Family Members
A leader is not a person to lean on, but a person who makes leaning unnecessary. 1. Dream. The day we lose our ability to dream we cannot be effective. We cannot show the same level of enthusiasm through creativity and imagination. 2. Study. There are always new techniques that can help us develop further in our profession of selling. We must continue to study, if nothing else, ourselves and our life experiences. 3. Planning. Managing our business. 4. Act. Get into action. Act on the top three. And, remember this: Never be less than your dreams! Never Be Less Than Your Dreams! It’s easy. You just have to want to be a leader and you can be! Characteristics of a leader: x High standard of personal ethics x Absence of pettiness x Stable under pressure x Tough-minded x Problem solver x Courageous x Dedicated and hard-working x A bit unorthodox, with an urge to create x Goal-oriented x Inspires enthusiasm that is contagious x Decisive and able to organize chaotic situations x Critical: “Know your customer.” x and most importantly: Has a desire to help others grow. The first step toward being a professional sales person in whatever field you choose is to become a leader.
159 Jerry Leibs – The Steady Quiet Force The most trusted commandant to Max and Nolan Glazer was Jerry Leibs. Undoubtedly, his ability to garner trust and confidence from the brothers was due to his intellect, innovation, and ability to continuously drive the sales force to achieve revenue growth every year. His sixty years of service was simply remarkable. In 1936, after graduating from Texas A&M in petroleum engineering, Leibs’s job search proved difficult; petroleum engineers were a dime a dozen. He walked the streets of Houston knocking on doors, but to no avail. Leibs learned that Glazer’s had an opening in the Houston branch, so he called Nolan Glazer to inquire. “Nolan told me that he couldn’t afford to pay me what a college graduate should earn,” Leibs recalled. “I told Nolan to cut the bull! I had been walking the streets for thirty days and needed a job.” Other Glazer Family Members
160 He hired on for $12 a week at a desk job and was “glad to get it.” Leibs quickly learned that Glazer’s paid its soft-drink truck drivers $35 a week, so he asked for a promotion. Then, he discovered that the beer drivers made more money, so he began driving a beer truck. He soon landed a sales job in Houston. His exemplary efforts moved him to Dallas, where he started selling in Texas, Louisiana, and Arkansas. In 1941, when World War II broke out, he was called into military service. Upon his departure he told Max and Nolan, “I’ll be back soon.” While everyone awaited his return, and unbeknownst to Jerry, Max continued to pay his salary, depositing it in a bank for his retrieval upon his return. That says a lot about the generosity and fierce loyalty of the Glazers to their employees! A particularly interesting note: Toward the end of the war Jerry was one of the two commanding officers who liberated Dachau, the Nazi prison camp. His book, Memoirs of World War II, details this amazing historical event. Upon his return, he became General Manager Sales & Marketing, and eventually Executive Vice President of Sales & Marketing. At Glazer’s, everyone respected Jerry Leibs, and he respected everyone in kind. Everyone called him just Jerry because of his friendly nature. He was the glue when things were coming undone, both in the field and in the executive suite—always the calm voice when yelling persisted between Max and Nolan. With his positive demeanor and attitude, he kept business moving forward in an unobtrusive way when the leadership got mired in argumentative positioning. Unlike his blustery and overbearing boss, Nolan, he maintained sanity and appeased everyone, steering the ship of stormy personalities at the top and keeping the ship on an even keel, managing the storm from within to calm the waters and ensure a safe harbor. Whenever Nolan and Max irritated suppliers, which was often, Jerry would step in and make nice to smooth things over. Other Glazer Family Members
161 Equally important to note: It was always known that Leibs managed the upper echelons of the Glazer family dynamics. He had the personality and professionalism to manage their ring of combative personalities. He became the family’s trustworthy advisor, their consigliere, of sorts. The Glazer brothers trusted him explicitly. Max called him his illegitimate son. As a close, trusted friend and confidant, he became the elder statesman for Glazer’s. In some depictions, he was devoid of ambition, but this passive image did not correspond with the very nature of his job. He was one of the few in the family who could argue with the boss, and he was often tasked with challenging the boss when it was needed to ensure subsequent plans were foolproof. Needless to say, Jerry Leibs was one of a kind and a key contributor to the Glazer’s success. Irving Glazer Irving Glazer (Snookie) was outgoing—a people person like his father, Max, friendly to all. His excellent communication skills and creative ideas were definitely an asset to the company. However, unlike his father, he preferred to stay in the background, handling the many special projects that his father and Uncle Nolan conceived. He provided expertise in designing and constructing warehouses, and also crafting a unique shelving system built with two-by-fours—the first racks in the Glazers’ warehouses. Another of his innovations was the first-of-its-kind plastic holder for six-packs—unfortunately he did not patent this. His easy-going disposition was not to be mistaken as submissive, though. He was a Glazer—competitive and focused on winning. However, he and his Uncle Nolan had equally strong personalities and locked horns on many occasions. This happened so often that Irving quit the company four times, frustrated with his overbearing and unyielding uncle. In the 1960s, Irving began to research and investigate what had been done in the field and to intelligently expand recruiting efforts. His focus: sourcing new employees, hiring techniques, and training. His efforts resulted in a manual designed to organize structural components of the sales organization: the Glazer manual for training salespersons to be the best … the Glazer way. This was introduced at a gathering of Glazer sales managers in 1967. Other Glazer Family Members
162 As Irving wrote, a sales manager has done a good job of orienting and training a new employee if he/she: 1. Feels that he is part of your group; 2. Realizes his importance to the team; 3. Has confidence in you, in the activity, and in his work; 4. Knows the rules and regulations, the policies, and the reasons behind them; 5. Comes to you for information; 6. Has the proper attitude toward his work; 7. Has a desire to train himself and work for a higher position; 8. Is a satisfied, producing person; 9. Gets along well with his fellow workers; 10. Is loyal to you and to the organization. Irving died in July 24, 1972 at 48 years of age, due to a heart attack. Other Glazer Family Members
163 Glazer Women As the saying goes, behind every good man is a great woman. Certainly, the Glazer men had that in spades. After the indomitable force of Ida Glazer, whose formulas formed the basis of both the Uncle Jo and Real Juice companies’ flavored soft drinks, the majority of Glazer women stayed in the shadows of their husbands’ working world, content with being helpful and dutiful housewives. Always supportive of their husbands’ careers, they upheld the virtues of honesty, integrity, and caring in their own public and private lives. These were the values they diligently passed on to their children, ensuring these Glazer character traits would endure for generations to follow. If they did share any opinions, these were mostly concerned about the next generation of Glazer leadership whom they molded with their values and compassionate nature. Keeping a low profile, they maintained family matters in a quiet and responsible manner, ensuring a peaceful household, and creating a restful refuge from their husbands’ daily grind. As the company’s success unfolded, many Glazer women attended business trips with their husbands, as well as industry conventions, always enjoying the lavish gala dinners, and socializing with suppliers and customers’ wives. Other Glazer Family Members
164 Frances, Nolan’s wife, a constant at her husband’s side, interacted with all the industry participants and always lived up to the Glazer sense of style and graciousness. In addition, the wives enjoyed entertaining at their homes. Often Max, Lottie, Nolan, and Frances would invite customers, suppliers, celebrities, and friends to share and enjoy Glazer hospitality. Some of the women in succeeding generations participated in the business as well. In the 1980s, Robert S.’s daughter, Barbara, and Nolan’s daughter, Betty, joined the enterprise. Today Betty Glazer Silverman serves on the Board of Directors. Frances and Nolan Glazer Marion Glazer Other Glazer Family Members
Other Glazer Family Members 165
166 Chairman of the Board Bennett Glazer’s wife, Marion, is very active in attending many corporate functions and always carries out her role admirably. Worthy of particular note among her peers would be Fonda Glazer who still today is active as Glazer’s Ambassador in the marketplace. Other Glazer Family Members
Other Glazer Family Members 167
Chapter 11 1970’s
169 1970’s We believe we are fortunate to be in an industry that commands the finest type of people that any industry enjoys. They are all a credit to their communities and we are proud of our long association with them. –Nolan Glazer We are a unique family in that respect. We are united, which helps us focus on the company’s goals. –Robert S. Glazer
170 The seventies decade was a relatively quiet period. The company and the family maintained a low profile, building quietly on a foundation of old-fashioned perseverance, and the coffers grew handsomely, primarily through extending their footprint. In 1975, the company revenues eclipsed $120 million, having doubled annual revenue in just 10 years. Glazer’s had the brands customers wanted, and they continued to exceed suppliers’ and retailers’ expectations, all with a remarkably energized staff of loyal and dedicated employees. The Glazers managed an all-for-one kind of dedication that conveyed an unmistakable impression that the esprit de corps at Glazer’s sprang from the grass roots. They hired discriminately, recruiting good people who desired a career and not just a job. Retention of employees was another key priority, a de facto policy, and promoting from within the ranks was paramount. Likewise, preparing family members for leadership in the company was paramount. Those in the upcoming generations who exhibited interest were placed in various entry-level positions to learn the business and gain experience. Nothing was given to them. They had to prove their worth. When they were prepared, and new openings in leadership became available, they filled slots while continuing to demonstrate themselves capable. The family leadership was securely under Nolan’s capable hands in the 1970s. When Irving Glazer, Max Glazer’s oldest son, passed away unexpectedly in 1972, Nolan began to consider the family’s next generation of family leaders. Though Nolan was still in his prime at 57 at this time, it was clear that few options were viable. His oldest son, Robert L., was pleased to handle various special projects, but his on-going health issues prevented him from the arduous daily grind of a top leadership position. Nolan’s next oldest son, Bennett, was only 23 and just now entering the Glazer enterprise—he was not yet ready. The most qualified was Robert S. Glazer, Max’s remaining male offspring. He was fourteen years his Uncle Nolan’s junior and superbly qualified. Though of quiet disposition and slight build, Robert S. was as volatile as his bigger-than-life and bombastic uncle, Nolan. Being equally passionate about the family business, they fought unceasingly, often over nothing. One minute the world would be coming to an end, and the next minute they were happy-go-lucky, smiling. What they both agreed on was an underlining family axiom: no debt. Cash was king, and it ruled the family’s dominion. They believed that financial outsiders, such as bankers, should not mandate the company’s long-term interests, whether in assets, employees, or future plans. Being debt-free had been a family tradition, and leadership wasn’t about to expose the family jewels to anyone. Being unencumbered by financial restrictions, the enterprise had the good fortune to invest for the future, plowing money back into operations and infrastructure to improve the quality of service of the brands and retailers they represented. President Nolan, ever vigilant to preserve cash, invested in short-term assets. Having lived through the Great Depression when many banks failed, he invested cash in $100,000 CDs in banks all around the country. This would bode well in the upcoming decades when opportunities surfaced for acquisitions. Glazer’s had financial stature to pursue these without taking on debt. 1970’s
171 Soon tectonic shifts began changing the industry. The family enterprise, however, was loaded with liquid assets and well prepared. They seized upon opportunities that presented themselves, propelling the company to a dominant force in the adult beverage industry. Cash was king. But, so was necessary debt to expand… Nolan’s Fuzzy Math – Lines of Credit: 1970s to 1990s According to documentation in the company archives, Nolan Glazer did pursue additional lines of credit for expansion purposes, or so most people thought. Beginning in 1976, he requested a $6.4 million unsecured line of credit from Mercantile National Bank in Dallas, Texas. With the bank’s letter in hand, offering a consideration of a commitment of this nature, Nolan viewed it as a firm commitment and proudly assured himself, and his chief financial officer, of the financial strength of the company. It was a mark of success. It made him feel good. Cary Rossel, Glazer’s CFO, attempted to explain the inconsequential nature of these noncommittal letters, but stopped after a few years, not wanting to ruin Nolan’s contentment. Nolan was more impressed and excited by these lines of credit granted than ever executing them. As the company’s valuation increased over the years, Nolan requested additional millions based on his fuzzy math calculation as a firm commitment. It became a ritual, and this annual financial examination boosted his conviction in the strength of Glazer’s. Here are just two of the many bank’s considerations: x January 1978 – $10 million from Mercantile Bank. x May 1986 – $50 million from Mercantile / MBank Nolan used these as a badge of honor proving to himself the financial strength of Glazer’s. Robert S. Glazer 1970’s
172 Chapter 12 Robert S. Glazer
173 Robert S. Glazer - U.S. Navy service “Our attention and our energy are devoted to our people. We are dedicated to our employees and want to do everything possible to reward their efforts and offer them opportunities to build a career and enrich their lives.” —Robert S. Glazer Robert S. Glazer Robert S. Glazer
174 Succeeding generations of the Glazer family had grown up in the business, taking their turns working at various positions and assuming responsibilities they were capable of handling as they matured. The cofounders, Max and Nolan, had instilled in them the Glazer culture, work ethic, and always planned for success. Undoubtedly, the most seasoned leader at the family enterprise was Robert S. Glazer. He had spent forty-two years working in numerous leadership positions. Robert S. began his career at Pepsi-Cola Bottling Co. in 1949. He was a longtime executive vice president at Glazer’s prior to becoming president in May, 1991, upon Nolan Glazer’s passing. He had served as a Navy enlisted man during World War II and was discharged in 1946. From 1950 to 1957, he served as a Navy Reserve officer. The second son of company cofounder, Max Glazer, Robert S. quietly worked in the shadow of his father and his uncle Nolan for four decades after returning from military service. He graduated from the Southern Methodist University School of Business and went on to earn his graduate degree from Wharton (the University of Pennsylvania’s renowned school of business) in 1949. An intellectual and financial wizard, Robert S. keenly guided the company through many turbulent storms, especially regarding fiscal matters. As a numbers man, he assisted Nolan Glazer in conserving cash and growing investments for the company, allowing Glazer’s to acquire assets for expansion and successfully compete with other distributors because of its strong cash position. His financial acumen was especially important in the early 1980s when interest rates climbed to twenty-one percent. His conservative nature allowed Glazer’s to seize upon investment vehicles in order to grow their reserves. During this same period, being risk adverse like his predecessors, his fiscal acumen buffered Glazer’s while many competitors assumed too much monetary risk and failed. Seated Max Glazer. Standing Right to Left: Nolan Glazer, Jerry Leibs, Robert S. Glazer, Irving Glazer and unknown. Glazer’s Leadership 1992 – Seated–Robert S. Glazer. Standing Left to Right: Michael Glazer, Bennett Glazer and Robert L. Glazer Robert S. Glazer
175 Continuing education for Glazers’ employees He believed that a deal-maker should be judged just as much for the deals he doesn’t make as for those he does. For example, Lone Star Company was a competitor and available for acquisition. However, after analyzing this opportunity, Robert S. declined. Lone Star was acquired by Quality Beverage, but, over a short period of time, unraveled and Glazer’s absorbed much of their business. Preferring to analyze the company’s monthly numerical results rather than visit with suppliers or divulge in the operations, sales, and marketing departments of the company, he promoted other leaders to direct these functions and ensured that they maintained good relations with everyone. He strongly believed in the intellectual capital of Glazer’s personnel: “Our attention and our energy are devoted to our people. We are dedicated to our employees and want to do everything possible to reward their efforts and offer them opportunities to build a career and enrich their lives.” To that end, he was instrumental in implementing continuing education at Glazer’s expense, and encouraged all employees to progress their careers through these educational endeavors. He equally understood the powerful nature of Glazer’s relationship with suppliers: “We are dedicated to our suppliers, who honor us by allowing us to represent their products.” Again, as was demonstrated by the leaders of Glazer’s who preceded him, he was the right leader at the right time. Robert S. Glazer
176 Chapter 13 Industry Consolidation 1980’s
177 In the late 1980s, it was time for the next generation of Glazers to step up. Nolan Glazer’s health had begun to fail, and Max’s son, Robert S. Glazer, who had been with the company for over thirty-nine years, was prepared to pick up the reins. Becoming the de facto CEO in 1986, he initiated an era of growth that would transform the company within a decade. During Robert S.’s tenure, Glazer’s would rise to a new level of prominence in the world of alcoholic beverage distribution. Under his ten years of CEO stewardship—from 1986 to 1996—the company tripled its revenues, growing from $235 million annually to $700 million. Many forces were at work here, and it seems they all worked in Glazer’s favor. Was it luck? Not a chance! Rather, it was the inevitable outcome of abiding by the Glazer principles that had served them so well: a culture of excellence and commitment, maintaining fiduciary responsibility, developing a clear vision of the future, and seizing upon market opportunities as they arose. 1980’s Industry Consolidation 1980’s
178 To understand this dazzling triumph, it’s important to go back to the 1980s and the unique economic conditions of the day. The early 1980s saw interest rates in the U.S. rise to twenty-one percent. This created a crushing atmosphere for businesses that relied on loans to finance growth. Many of Glazer’s competitors felt the sting of these burdensome interest rates—and some did not survive. A few, like Glazer’s, thrived. In fact, surprisingly, these high interest rates worked to Glazer’s benefit. First, the Glazer family had religiously followed the family’s guiding principle of avoiding debt and accumulating cash reserves. This conservative fiscal policy turned out to be their “lucky charm.” It positioned the company so well that when a buying opportunity arose, they could seize upon it without hesitation or undue risk. Second, with interest rates at an all-time high, the company’s significant accumulation of short-term certificates of deposit could be extended, thus taking advantage of the high interest rates. Their liquid financial position just kept mounting. Third, market dynamics were shifting, and the liquor industry began trending in a consolidation mode. These developments reflected an underlying tectonic shift in the industry landscape. This new paradigm that was slowly emerging dictated that Glazer’s reposition the company for what lay ahead. By the time Robert took the helm, and the consolidation trend had become apparent in the liquor industry, Glazer’s was well-positioned to respond with energy and resolve. When the right opportunity came along, they had the financial muscle to move decisively and quickly. Judiciously, they began seeking out buying opportunities. For many of their competitors, however, staying alive required financing major debt, and they were unable to weather the high-interest albatross of finding capital. While their debt-laden competitors hesitated, sought buyers, or collapsed, Glazer’s viewed these new industry developments with a keen interest, and had the ability to take advantage of them. Ironically, what had caused the consolidation trend in the first place was lagging liquor sales—beginning in 1981. The recession that gripped the U.S. economy in 1981 dealt a serious blow to the American distilled spirits market. The worst year was 1982, when shipments declined four and a half percent, to pre-1975 levels. Even the relatively healthy categories of wine and beer got walloped. Industry suppliers had to scramble just to achieve minimal growth. This lack of demand actually turned out to be more than an American problem—it was a global concern. Worldwide liquor consumption was in decline. Plummeting sales propelled the alcoholic beverage industry suppliers into a seismic shift, setting the stage for a massive wave of realignment by suppliers: They turned to consolidation as a way to prop themselves up against sagging sales. There was a flurry of brand-holder takeovers, mergers, and strategic alliances. An era of multinational conglomerates was about to begin. Industry suppliers felt that relief could only be found in the clout that would come from commanding complete control of their products—from supply, to manufacturing, to marketing, to point of sale. They felt as well that they would need to exercise this level of domination over a range of brands wide enough to assure them a major presence in the overall alcohol beverage ecosystem. This spree of activity fed on itself. As brand-holders were gobbled up, their competitors worried about being left out—a one-brand company would find it very difficult to compete. On top of that, other conglomerates were wary about their market share inevitably shrinking and didn’t want to be left out in the flurry of acquisitions. So they too got caught up in this movement to ensure that their market presence would not be diminished. By the end of the 1980s, only a handful of liquor conglomerates were left standing. This created a soIndustry Consolidation 1980’s
179 phisticated new breed of behemoth suppliers. They were experts in marketing, sales, logistics, and market data analysis. With their comprehensive licensing, bottling, and distribution networks, they commanded extremely favorable bargaining positions with distributors. They sought—and received—increased concessions from their wholesale partners. Those preferred distributors received the biggest orders, accrued the best brands, and were able to demand the highest visibility in retail stores. Though it was difficult for Glazer’s management to ascertain the long-term impact of this new paradigm, they understood that to deal with much larger global suppliers, they too would have to change. It was clear to Glazer’s senior leadership that to defend their turf and negotiate with these new bigboy brand holders they would need to become equally aggressive about growing their brand. They’d have to present themselves with a level of sophistication, and command the kind of impressive territory that would mark them as a preferred distributor. To grow and stay relevant, they decided on a multipronged strategy, each facet of which fed on the other. First, in order to grow in larger increments— instead of just organic growth—one of the options available was to consider acquisitions within their existing footprint—namely, in Texas, Louisiana, Arkansas, and Arizona. Second, the successful acquisition of key competitors would drive more product sales and thus enhance their position with suppliers. This in turn would enable Glazer’s to acquire more and better brands—premium and super premium brands—as well as broaden and balance their portfolio of offerings. Third, to handle the increased volume, they would need to become more efficient in operations, supply chain management, and order execution. Fourth, they would need to expand beyond their four-state footprint and launch into new states—and then extend deeper into each new territory. They needed to adopt these tactics to become more significant and relevant to their suppliers, to Glazer Leadership team. (Left to Right) Robert S. Glazer, Mike Glazer, Bennett Glazer, Robert L. Glazer, and Jerry Leibs. 1987 advance their position with retail customers, and to expand the company’s value. In order for Glazer’s to stay in the mix, they had to face some very difficult decisions. Could they execute successfully? It was an enormous challenge, and it required new levels of ambition. The actual implementation would have to be planned meticulously. Like a battle plan, it would require multiple layers of confident leadership acting coherently under a central command, following a well-thought-out master plan. One question remained: Could Glazer’s successfully fulfill such a grand plan without taking on debt? They all knew the answer: They could—until debt was absolutely required. Glazer’s understood the road they needed to take. They rose to the challenge with outstanding courage, and garnered spectacular results. Industry Consolidation 1980’s
180 Industry Consolidation – Overview The large-scale mergers and acquisitions that have been taking place in the global drinks industry since the 1960s have consolidated the ownership of some of the world’s most significant spirits, wine, and beer brands into the hands of a few very large companies. This is partly the result of increased globalization in the industry; and it is also due to the usual strategy of companies continuing to deliver increasing returns to their shareholders as their corporations matured and growth slowed, as well as to the increasing pressure on companies to diversify their portfolios and geographic presence. These industry consolidations occurred in four major waves. The first wave of international mergers started in the late 1950s and lasted into the early 1960s. Its geographic scope was restricted to mostly U.K. brewers and wine companies, which were consolidating their positions in various domestic markets. Allied Breweries acquired Harvey’s in 1964; Gilbey’s and United Wine Traders merged in 1962, forming International Distillers and Vintners. A second wave of mergers occurred from 1968 to 1972. Its characteristics were similar to the first wave but mostly involved leading breweries from European countries: Amstel, in Holland, was acquired by Heineken; Tuborg, in Denmark, was acquired by Carlsberg; the French champagne producers, Moët & Chandon, merged with Hennessy. The third merger wave from 1985 to 1988 was motivated by the globalization of markets. Firms with spirits brands with global potential became targets for acquisition. During this period, firms also tried to acquire distribution channels, hoping this would enable them to increase value in the supply chain: Grand Metropolitan acquired major U.S. alcohol beverage distributors, including Heublein, in 1987. The most recent wave of mergers, which started in 1998, involved not only spirits companies but also breweries and wine producers, which had remained principally domestic. Several major mergers and acquisitions took place: the merger of Guinness and Grand Metropolitan in 1997; Diageo and Pernod Ricard acquired the Seagram spirits and wine business in 2001; South African Breweries merged with Miller Beer in 2002; and Ambev from Brazil merged with Interbrew from Belgium in 2003. More recent developments include consolidations in each of the three major sectors: In the wine sector, there was the Foster’s Group takeover of fellow Australian Southcorp; in the spirits sector, we saw the acquisition of Allied Domecq by Pernod Ricard and Jim Beam; and in the beer sector, SABMiller acquired Latin America’s number two brewery, Bavaria. A glimpse of this initial wave of consolidations in the 1980s was telling, and it foreshadowed a very difficult world that Glazer’s had to carefully analyze for its go-forward market strategy. Industry Consolidation 1980’s
181 Industry Consolidation - Highlights 1960s – 1970s • Amstel, in Holland, was acquired by Heineken. • Tuborg, in Denmark, was acquired by Carlsberg. • Moët & Chandon merged with Hennessy. 1980s • 1980 – Grand Metropolitan acquired Liggett Group Inc., the American distributor of J & B Scotch. • 1980 – Britain’s Guinness enters joint marketing agreement with Moët-Hennessy, who had acquired its own distributor, Schieffelin & Company. • 1987 – Guinness purchased its United States importer, Schenley Industries. • 1987 – Guinness formed a joint operating agreement with the Bacardi group in Spain. • 1987 – Grand Metropolitan acquired major alcohol manufacturers including Heublein. 1990s • 1994 – Allied Domecq created through a integration of Hiram Walker (1987) Allied Vintners (1989) and Pedro Domecq (1994) • 1997 – Diageo formed through an integration of Grand Metropolitan, Guinness and United Distillers & Vintners 2000s • 2001 – Diageo and Pernod Ricard acquire Seagram’s spirits and wine business. • 2001 – Future Brands, a joint venture between VNS (Absolut Vodka) and Jim Beam Brands • 2002 – South African Breweries merged with Miller Beer. • 2003 – Ambev from Brazil merged with Interbrew from Belgium. • Foster’s Group acquired Australian Southcorp. • Pernod Ricard and Jim Beam acquire Allied Domecq. • SABMiller’s acquires Latin America’s number two brewer–Bavaria. By 2006, the distilled spirits suppliers had consolidated as follows: • Brown Forman • Bacardi • Constellation • Heaven Hill • Pernod Ricard Industry Consolidation 1980’s
Chapter 14 Tripling the Size of the Company 1986-1996
183 Seizing on the industry consolidation, Glazer’s began taking advantage of these unsettled times to also begin an aggressive expansion mode by acquiring distributors and forming strategic supplier partnerships. From 1986 through 1996, the company boosted revenue to $670 million from $235 million, tripling the company in just ten years and increasing the employee base to 1,200. Four key events occurred during this period, setting the stage for their tremendous growth and an acquisition mind-set. Helping sustain Glazer’s and propel it through the turbulence of mergers, acquisitions, and line-shifting that struck the nation’s wine and spirits trade in the mid-1980s was its performance in the spirits field. Glazer’s developed from scratch some highly prestigious and profitable spirits brands in newly emerging categories, notably liqueurs, imported vodkas, and U.S.-bottled Canadians. Though they had become a formidable player regionally, still the question remained: Could Glazer’s adapt to these newly forming suppliers who continued to consolidate and create ever-increasing demands? First to challenge the strength and capability of Glazer’s was Brown-Forman. Tripling the Size of the Company 1986-1996
184 In 1986, Texas had seventeen distributors when Brown-Forman decided to consolidate this market. They approached Glazer’s regarding a plan to combine their core brand offerings to one distributor in each Texas market. Their question to Glazer’s was: Why should Glazer’s be that enviable distributor? At the time, Glazer’s had a relatively small position with Brown-Forman, only serving West Texas, so the opportunity to secure their entire core-brand portfolio across the Glazer’s Texas footprint would be a remarkable feat, vastly expanding Glazer’s. It was a deal they had to win. First Turning Point: The Brown-Forman Strategic Alliance - 1986 Like all the global brand-holders, Brown-Forman (BF) had been aggressively and successfully acquiring their competitors’ brands. To further enhance their market position and create greater business model efficiencies, they sought to consolidate their distributors as well, seeking higher penetration across their markets and, inevitably, producing higher margins with more scale and effective operations. Tripling the Size of the Company 1986-1996
185 The team worked tirelessly to create a presentation like no other. They spared no expense—they purchased a new, high-end computer for creating an elaborate graphical presentation, and congregated for weeks to assemble not only a stellar presentation, but also a great show. When Nolan Glazer walked in to see what all the fuss was about, he was flummoxed. Not pleased with what he deemed extravagant spending and inefficient time management, he bellowed, “What are you doing? Remember when we got that first electronic typewriter? I didn’t like that either. In fact, this place wouldn’t have ballpoint pens unless the bank gave them to us!” Upon his departure, they closed the door and got back to work. Their presentation was a success. BF agreed to consolidate their markets to Glazer’s in Dallas and Fort Worth. That was the good news. The bad news: BF further consolidated with their existing distributors in Houston and San Antonio. This created a problem for Glazer’s, one that soon escalated into a major issue. Other suppliers viewed the fact that Glazer’s had not been awarded BF’s Houston and San Antonio markets as weakness, creating a major gap in these markets. So, other suppliers started pulling brands from Glazer’s Houston. In the next three years, Glazer’s Houston market share fell substantially. Being in a money-losing position, the company considered shutting down Houston. Robert S. Glazer held steadfast that the company would not walk away from a market—even if bleeding red. He told the team, “We may lose money, but we stay the course.” Robert knew that pulling out of any market would not be strategic. Staying the course was the best option. Hopefully, this decision would bear fruit. Eventually, the situation did reverse—and it did so in a big way. Tripling the Size of the Company 1986-1996
186 Second Turning Point: Lone Star Company - 1989 Sometimes, as important as doing deals could be, it was equally important not doing them. As Robert S. Glazer was fond of saying, “As a deal maker, it’s just as significant to be known for the deals you don’t do.” This was the case with Lone Star Company. It was the decision not to buy Lone Star Company in 1989 that prevented a major misstep by Glazer’s, and, ironically, eventually benefited Glazer’s. Lone Star, a faltering Texas statewide competitor, came up for sale at a pivotal time in the consolidation of the wholesale industry. Big, profitable lines of spirits and wine were up for grabs. Glazer’s badly needed some of those lines. It had lost major brands during the line-shifting realignment during the supplier consolidations in Houston, seeding the necessity for Glazer’s to fortify their position through brand accumulation. Industry predictors speculated that Glazer’s was the logical entity to acquire Lone Star. However, after further analysis, Glazer’s management determined that this acquisition did not support their growth strategy. They already held a significant statewide Texas footprint, so the Lone Star properties would be mostly duplicative, and, in many instances, having to assume all their brands would likewise be redundant. Quality Beverage Company made the decision to spread its Houston-centered dominance and move statewide by acquiring Lone Star. However, this became a win for Glazer’s three years later when Quality Beverage went under. Glazer’s was there to pick up lines and revitalize many markets. With Quality Beverage’s misfortune, Glazer’s moved aggressively by acquiring those needed brands with BF leading the way. Tripling the Size of the Company 1986-1996
187 Again, just as other suppliers had removed Glazer’s when BF awarded their business to another competitor in Houston, now these same suppliers saw this turnaround as a sign of Glazer’s strength. With this, Houston was back stronger than ever, and with a host of new suppliers and brands—Schieffelin and Somerset, Hiram Walker, and E. & J. Gallo. “These events solidified our market presence and enhanced our stature with suppliers elevating Glazer’s as a dominant player in Texas,” Bennett Glazer recalled. These developments also positioned the company well for when other opportunities arose in the premium and super-premium spirits and wine categories. They had stayed true to themselves and their customers, and their crusade to augment their brands continued. Because of this amazing reversal in their markets— proving Glazer’s to be a trusted and capable partner— suppliers began to view Glazer’s as their distributor of choice, one who could fix their problems, expand their share, and create a win-win for all. This became Glazer’s path forward to further solidify their alignment with their suppliers. Whenever a distributor was known to be interested in selling, or having financial burdens, suppliers would advise Glazer’s, hoping their favored distributor would come to the rescue. With disruptive market forces changing the landscape, and suppliers aggressively challenging the status quo and upending the market place, Glazer’s knew the time was right to strike. With a horde of cash, no debt, operational excellence, and the industry’s most capable people, Glazer’s set their focus on acquisitions. This set the stage for Glazer’s meteoric growth. As a deal maker, it’s just as significant to be known for the deals you don’t do. Robert S. Glazer Tripling the Size of the Company 1986-1996
188 Chapter 15 Becoming Acquisition Oriented
189 Third Turning Point: Max Golman Wholesale and Schenley With Glazer’s success in forming a strategic partnership with Brown-Forman, the industry took notice. Suppliers began positioning Glazer’s to assist them in acquiring distributors. The Schenley Company helped Glazer’s take that next big step. Schenley was a large distiller of bourbons and the importer of Guinness. In 1987, they wanted their Dallas-Fort Worth distributor, Max Golman Wholesale, to make a move. With industry consolidation transforming the marketplace, and Max Golman Wholesale having only regional presence, Schenley recommended that either Golman go statewide or sell the business to a larger distributor with greater reach. Martin Golman, son of Max Golman, viewed expansion—with its associated debt and risk—as undesirable. With the encouragement of Schenley, Golman approached Glazer’s about being acquired. The Golman and Glazer families had been friendly competitors since 1964, so it didn’t take long for the parties to agree on Glazer’s acquiring Max Golman Wholesale. After the deal was consummated, Glazer’s picked up new lines, and within three years became one of the largest distributors in Texas. These three successes—securing additional Brown-Forman brands, acquiring the lines from Quality Beverage’s demise, and the acquisition of Max Golman Wholesale—launched Glazer’s into an acquisition mindset and propelled the company on a journey that has continued to this day—one that has significantly impacted the company’s scale and standing within the industry.
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Fourth Turning Point: American Wine Acquisition 1992 Through the years the company had been expanding its wine portfolio very successfully. However, similar to their early years of marketing spirit brands, they had mostly amassed popular mass-market brands. Over time Glazer’s began acquiring higher-end wine brands, moving up the vintner value chain. Seeking to further expand their presence in restaurants and retail stores with a more robust wine portfolio, a key lynchpin was the premium wine category, a limited class in Glazer’s collection. An opportunity surfaced in 1992 for Glazer to acquire American Wine and Importing Company, a formidable company that effectively controlled the fine wine distribution throughout Texas. The acquisition of American Wine put Glazer’s in the fine wine business. Then in 2010, the company inked a deal to acquire Prestige Wine Cellars, a fine wine distributor, furthering their strategy to expand its footprint in the fine wine category. “These special classes of wines are sold only in certain high-end shops and restaurants,” mentioned 192 Becoming Acquisition Oriented
193 Bennett Glazer. To further promote these exclusive wine brands, Glazer developed a highly trained sales team that specifically targets them. “Our aim is to have as broad a product portfolio as possible to cover any need that the customer might have,” expounded Bennett. Still though, one beverage category still needed to be filled to complete a comprehensive beverage strategy: Beer. Developing a malt culture would be a challenge but paramount to complete Glazer’s comprehensive alcohol beverage strategy. That they soon did.
194 Job Orders, 1977 Dallas, 1946 -IBM Type 032 (Alpha Printing Punch), IBM Type 80 (Electric Punch Card Sorting Machine) Technology Uplift – Michael Glazer to the Rescue By the mid-1980s, the company’s technology systems had not kept up with Glazer’s needs. No one was able to determine the status of inventory company-wide, nor could they provide customer-by-customer sales histories. If a branch wanted historical customer data, Glazer’s General Office ran a report and then mailed it back to the branch. Moreover, they faced increasing demands from their suppliers for market analysis, which would also improve Glazer’s ability to predict trends. Monthly financial reports compiled at the General Office in Dallas were impossible to complete on time. Without the ability to transmit data to the G.O. electronically for monthly aggregation purposes and reporting, each branch mailed in a twelve-inch floppy disk, along with computer-paper printouts which they transported in box after box by Greyhound bus to Dallas. There, teams painstakingly sifted through the numbers and merged them into monthly reports—all of which might take six weeks to complete. By the time these monthly reports were completed, it was old news and irrelevant. Making matters worse, the IBM System 32 computers that each branch used for inventory visibility and monthly revenue reporting had become antiquated—to Becoming Acquisition Oriented
195 the point where IBM no longer supported them. And the same was true for the G.O.’s IBM System 34. It was the blind leading the blind. It became readily apparent to Michael Glazer, son of Irving Glazer, that to create efficiencies both at the G.O. and in the field the company desperately needed to upgrade these systems. Mike had worked throughout Glazer’s in almost every functional area so he understood the technology concerns and requirements needed. Also assisting him was Cary Rossel, VP Finance, along with various department leaders. The solution was clear: They needed a single hardware and software solution throughout the company. With this singular goal, he began the process of upgrading Glazer’s technology across the board. At the time, the software packages available for wholesale liquor distributors were designed for single-branch operations only, not for massive distributors the scale of Glazer’s, with multiple locations carrying a vast array of brands and quantities of inventory. In addition, Glazer’s needed this software to handle multistate regulations with summary capabilities. With no software to accommodate Glazer’s needs, Mike and Cary sourced a company to write customized software for the company’s purpose. The project, which involved converting existing code into a new flexible-control file system, which would accommodate each state’s rules, was completed within a year. Every branch upgraded to IBM System 36 computers, and the G.O. installed IBM AS400s. Now, every branch could run their own report—placing customer information at their fingertips—and no longer be dependent on the G.O. for the data they needed to properly run their business. All data was accumulated and transmitted electronically back to the G.O. for accurate and timely financial reports and market analysis. This was a significant step forward—another efficiency IBM 32, 34 Systems IBM System 36 Workstation at General Office, 1988 Mike Glazer Becoming Acquisition Oriented
196 to propel the company—and it was another innovation further highlighting to their suppliers that Glazer’s advancements and innovations lead the industry. Around this same time, the company upgraded its field technology for sales representatives by purchasing Telxon devices. These were data and transmission field-ordering units for speeding up the order entry process. Prior to this, all orders had been completed on paper, after which branch personnel would input each order into a computer. The Telxon devices allowed the sales personnel to transmit data through a direct-connect modem to a branch office PC, thereby eliminating redundant and erroneous data entry, and accelerating the order placement and delivery processes. To implement this technology, every branch required a PC. Mike Glazer and Cary Rossel purchased PCs and installed a memory chip and card to connect each to the branch IBM36. In order to stay away from the cost-conscious Nolan Glazer, these were assembled in the G.O. basement, then shipped to each branch. Another major step and innovation for Glazer’s! These systems were upgraded throughout the years until 2014, when SAP was implemented. Accelerating Acquisition Mode The stage was now set for the growth-oriented Glazers, who had now tasted the tonic of profitability through acquisitions, to thirst for more. Their quest for deals became insatiable. Through the 1990s, they acquired competitors and formed strategic partnerships with major suppliers, boosting revenue to $670 from $235 million in 1986, tripling the company in just ten years and increasing their employee base to 1,200. Recognizing the fast-changing business climate in the distribution segment of the beverage alcohol industry, Glazer’s continued to evaluate expansion that offered long-term strategic and profit opportunities. By forming strong, lasting partnerships with the suppliers they represented, while attracting and Sales Order Sheets Telxon device Becoming Acquisition Oriented
197 retaining the highest caliber of employees, Glazer’s developed a clear-cut formula for success. This success, though, did come with a price: the heavy price of financial leverage…debt. Here is a summary of Glazer’s deals and industry rankings in the 1990s: 1992 Glazer’s acquires American Wine Company, the largest Texas statewide distributor of fine wines. 1993 Schieffelin and Somerset and Hiram Walker both align statewide with Glazer’s, and E&J Gallo Winery appoints Glazer’s as its distributor for the Houston market. 1995 Glazer’s purchases F. Strauss and Son, Inc., in Louisiana. 1996 Glazer’s expands again in Louisiana by purchasing Church Point Wholesale. 1996 Glazer’s enters the state of Missouri in November with its acquisition of J&J Beverage Company/SJL Beverage, Inc. 1997 Glazer’s expands its Texas operations. The E&J Gallo Winery appoints Glazer’s as its distributor for the Dallas/Fort Worth market. In June, Glazer’s acquires American Spirit Beverage Company, Inc., the Jim Beam Brands distributor in San Antonio and Corpus Christi, Texas, and is also appointed the Jim Beam Brands Distributor for the Houston market. 1997 Year end revenue: $740 million. When Nolan Glazer passed away on March 14, 1991, the company CEO leadership passed on to Robert S. Glazer, who had been leading the company for several years while Nolan battled health issues. Upon his passing, all of Nolan’s voting shares were controlled by his wife, Frances, who immediately passed these onto her children—RL, Bennett, and Betty—telling them “I know you will do the right thing.” They too supported Robert S. Glazer’s leadership. It was at this time that Bennett realized he would be playing a more significant role at the company. Explaining this to his good friend George W. Bush on the steps on the Aerobic Center in 1991 before a jog together, George W. responded, “Bennett, it’s our turn to lead.” Little did either of them realize the prophetic nature of Mr. Bush’s comment. For in just five years, Bennett Glazer would become CEO and president of Glazer’s Incorporated, and in 2001, George W. Bush would become the forty-third President of the United States. Clearly, it was their time to lead. It’s our turn to lead. —George W. Bush to Bennett Glazer George W. Bush jogging and leading Becoming Acquisition Oriented
198 Chapter 16 Third Generation of Leadership