The History of Glazer's and the Family Behind It

199 Historically, we have always managed to look at the big picture and focus our decisions on what’s in the best interest of the company. —Bennett Glazer In 1995, the leadership team began noticing some health issues with Robert S. This situation was likely to get worse sooner rather than later. They became worried about the future of the company. Everyone knew it was time for a change. Cary Rossel, Chief Financial Officer, approached Bennett Glazer, now a board member, telling him, “We are in a dangerous situation, and it will not improve. We need someone to assume the CEO position, or this company will unravel. A family member needs to step up… that’s you.” Bennett assumed his day was approaching, but still, this was a surprise. He replied confidently, “If that’s the case, I don’t want to let anyone in our company down. Too many people have invested too much, for too long. I’m in.” This would not be a fait accompli. Bennett had to ensure that the shareholders—all family members— agreed. This would take time; many personalities and interests needed to coalesce around this decision. Bennett went to work soliciting support, and building trust with the family—a delicate web of relationships involving the principals of the extended Glazer family. Over the next year and a half, he passionately and profoundly exhibited traits of the next Glazer leader. When the time came, all shareholders were in agreement. In August 1996, Bennett Glazer was selected as the fourth CEO and president of the family company. Reflecting back on that critical juncture, Bennett recalls: “We had disagreements and conflicts, but we never lost sight of our overall objectives. Historically, we have always managed to look at the big picture and focus our decisions on what’s in the best interests of the company.” Over the next twelve years under Bennett’s steadfast guidance, Glazer’s would add eight states to its area of coverage and more than triple its revenue. It wasn’t easy, and many more trying situations were about to surface. The Glazer’s Board of Directors, 1990: The Glazers - Robert L., Robert S., Bennett and Mike Third Generation of Leadership

200 Chapter 17 Hyper Expansion - Necessary Debt

201 We had to either get in the game or, if we didn’t, then we were going to get picked apart. —Bennett Glazer In 1997, Gallo had an issue in Columbus, Missouri, with a distributor who was financially strapped and losing lines. Gallo wanted Glazer’s to acquire them—which they did. Now in a new state, Glazer’s recognized the need to expand in Missouri to create scale and efficiency. However, this would not be possible. The money well had almost run dry. Any further cash outlays would deplete the coffers inhibiting additional aggressive acquisitions. Strike one. If Glazer’s continued down their acquisition-oriented path to fill in their Missouri footprint, while at the same time expand into additional states opportunistically, using cash generated from current markets would be inadequate. Strike two. There was only one solution.

202 would provide the needed capital to expand. The risks were the costs associated with maintaining a public company and shareholder selling. 3. The stock swap or partnership. The risk would be shared with the partner; there would be the potential to maintain control of the company and provide a conduit for the sale of the company in the future. The downsides were that current management would take on a different posture in operating the company and share fiduciary responsibility. 4. Selling the company would provide immediate recognition of the true value of the company, eliminate the risks associated with expansion and all future industry related risks, as well as the opportunity to sell at a higher point in the future. The flip side was the loss of the company’s future growth. Senior management made these recommendations: x Develop a comprehensive and aggressive plan for growth. x Assume substantial debt in order to proceed. x Take full advantage of the opportunity now. The Decision It was clear that the industry would continue to experience massive consolidations in all tiers. Suppliers looked for progressive partners, aggressive ones, willing to radically change to meet their demands. Glazer’s management understood that if their conservative, careful, steady growth didn’t match the rapid pace of change of suppliers they would be doomed. It was also obvious that the status quo of growing through cash accumulation without debt would only limit the company. It was time to swallow the hard pill of debt. The future was upon them, and they needed decisive direction from the family in a timely manner. Senior management needed to have a clear understanding of the family’s desire, with unanimous support from them. Bennett Glazer told his senior leaders, “Lay out the options.” So in December 1997 these alternatives were presented to Bennett, underscored by a sense of urgency with a small window of opportunity to execute. The options and decision points for the future of Glazer’s were laid out as follows: 1. Expand aggressively through acquisitions—which required debt. 2. Grow the company rapidly through public offering. 3. Swap stock in partnership or alliance with another wholesaler. 4. Sell the company Each was analyzed with pros and cons as follows: 1. The continued operation of the company would be beneficial because an excellent ROI would be maintained, equity would grow, and control would be maintained. The downside would be risk—if equity didn’t continue to expand from growth or because of industry upheaval. 2. The public offering option held upside as well: It “The Lord, my God who maketh Wine that maketh glad the heart of man.” -Psalms 104:15 Hyper Expansion - Necessary Debt

203 x Prepare for growth. x Leverage our intellectual assets. x Be the “wholesaler of choice.” x Aggressively sell our plan to our suppliers. Bennett believed that the only logical path forward was option number one: Expanding aggressively and raising the necessary capital, requiring debt. His decision was based on three interwoven themes: (1) Glazer’s employees had worked too hard to go down any other route; (2) he believed in the capabilities of the employees and that they would ensure Glazer’s success; (3) Glazer’s could prudently control cash to fund the debt. Then Bennett inquired regarding option one: “How much do we need?” The response: “At least $100–150M to start off with.” Somewhat shocked, but certain he could sell this plan, he told his leadership team: “I’ll talk with the family. You’ll have a decision in thirty days.” Bennett and the family knew that maintaining the status quo of growing organically would not suffice. To grow as a privately held company meant taking on debt, something the older generation of Glazers abhorred. The industry consolidations happening at every level pointed the company to the decision they needed to make. Bennett Glazer recalled: “At the time I took over, the industry landscape had completely changed. To be competitive, you had to either get in the game or, if you didn’t, then you were going to get picked apart.” This would become the most pivotal juncture in the company’s history, and a dramatic philosophical departure from the company’s long-standing mantra—No debt! It wasn’t an easy decision by any means. One advantage buoying their ability to change course radically was their robust financial picture in “Wine is life.” - Petronius 66AD 1997: a revenue stream of $700 million a year, no debt, and $40 million in the bank. But the $40 million would only go so far. They had big plans—plans that would quickly erase any cash. There was one factor boosting Bennett’s confidence that a plan could be developed and executed successfully, as Bennett recalls: “We felt we had an excellent organization to back us up, to make it happen, so we went out and rolled the dice.” Some family members wanted a more cautious approach and were unwilling to take on the necessary risk. However, in the end, the shareholders united and finally decided that to stay competitive they needed to become proactive as opposed to reactive. The family returned their verdict quickly. Bennett told his leadership team, “The family wants to grow the company. Let’s proceed.” Since that decision, Glazer’s has grown substantially. Here’s what transpired. Hyper Expansion - Necessary Debt

204 Building the Company for the Future The strategy was to assertively strike on acquisition opportunities to expand their footprint. The company’s plan was to focus on one geographic area of the United States for its core business and then dominate it. Glazer’s began by concentrating on the Texas, Louisiana, and Arkansas markets. When Glazer’s was well represented in those territories, they then grew their business north. They were very careful about how they moved forward so that they could control growth. “We never lost sight of our core competency, and as a result, we have built a very good organization.” With the decision made to proceed, the plan was put in place. First, Glazer’s put the word on the street that they were ready to expand aggressively. Visiting their suppliers, Glazer’s presented their new proactive approach and desire to acquire competitors. They asked for their suppliers’ assistance to surface any distributors having issues, and to let these companies know that Glazer’s would like to discuss their interest in being acquired. These suppliers now understood Glazer’s willingness to expand—and they stepped up to help. After all, Glazer’s was their preferred regional supplier, and this would benefit them as well. It was a win-win. Secondly, Glazer’s had to secure capital for this acquisition spree of around $140 million. Bennett and his team thought this would be a high hurdle. Much to their surprise, however, it was much easier than they expected. Bank One and their investment bank, Morgan Stanley, brought in syndications offering subprime investor funding, mostly through insurance institutions from around the country. Glazer’s growth plan was so convincing that all these investors upped the ante to $300 million. Glazer’s was a hot commodity in the market. Wall Street loved them. The final structure was Glazer’s assuming a debt of $100 million, along with a $40-million credit line for inventory, with a total commitment of $300 million, if needed. It was supplied by a syndication of twelve different institutional insurance company funds. The easy part was done. Now, the company had to execute this plan and construct a company that could support the debt, and do it judiciously by allowing aggregated cash flow to determine the speed of further acquisitions and service the debt. It made sense. They could stomach it. The first tranche: Jack Daniels $140 M commemorative investment bottle Hyper Expansion - Necessary Debt

205 It was time for Glazer’s to do what they had always done—continue to build a great company. That’s just what they did. We never lost sight of our core competency, and as a result, we have built a very good organization. —Bennett Glazer

206 The Unrelenting Pace of Acquisitions The pace was indeed unrelenting. Opportunities for acquisitions came faster than they had forecasted. Suppliers were coming to Glazer’s needing help to bail out failing distributors and others who just wanted to cash in for a variety of reasons. Glazer’s had timed the market perfectly. During the late 1990s, Glazer’s had added Missouri, Indiana, Kansas, Ohio, and Iowa to its list of state operations. As well, the company began making strategic acquisitions and establishing joint ventures that would further enhance these market positions. They also merged their Arizona operations with Arizona Beverage Distributing Co., LLC, a wholly-owned subsidiary of Sunbelt Beverage Company, Ltd., creating Alliance Beverage Distributing Co., LLC, a new company poised to capitalize on opportunities in that state. In 1998, Glazer’s formed a joint venture with the principals of Romano Brothers, a distributor based in Illinois, and acquired Olinger Distributing Company, a statewide distributor in Indiana. In addition to territory expansion and wholesaler acquisition, the company began a new acquisition thrust—malt. Noticing the consolidation movement in beer properties, they expanded their portfolio diversification through the company’s first significant foray into beer wholesaling. A key to sustaining these new market successes was keeping the acquired employees as a part of Glazer’s. These employees maintained significant local knowledge within their markets and offered years of experience to benefit the company. Maybe the most significant element of Glazer’s success was the company’s ability to control their debt. They never allowed their financial commitments to get ahead of them; they didn’t get overextended. Having a multiplicity of financial covenants and debt payment agreements—with a lot of fine print—that needed to be managed exactly, they stayed on top of

Relentless Expansion, 1998 -1999 them all and ensured that cash generation from existing operations covered any fiscal obligations. They understood that otherwise they would be working for the bank and not their stakeholders. When the twentieth century ended, Glazer’s was fast approaching the $1.5 billion revenue level. 1998 Glazer’s expands into Iowa by acquiring Messer Distributing. 1998 Glazer’s begins its expansion into the beer industry in July with the acquisition of Mid State Beverage in Waco, Texas. 1998 Glazer’s creates M&M Beverage, LLC, an Indiana corporation, and acquires Olinger Distributors, a statewide distributor in Indiana as well as Columbia Liquors and Heritage Liquors. 1998 In October, Glazer’s continues its expansion in Missouri by acquiring Superior Wine and Liquors as well as Missouri Conrad Liquor Company. The same month, Glazer’s adds another beer distributorship in Indiana by acquiring Miller Distribution. 1998 In December, Glazer’s contributes its ownership of Cactus Beverage Distributors of Arizona, Inc. into Alliance Beverage Company, LLC and creates a fifty percent-owned joint venture with Sunbelt Beverage Company, Ltd. 1999 In January, Glazer’s begins the New Year by acquiring Griesedieck Enterprises No. 50, Inc. in Missouri. 1999 In March, Glazer’s acquires Messer Distributing Company out of Iowa. That same month, Glazer’s expands in Louisiana for the third time in the 90s by purchasing Blue Grass Distributing Company. 1999 In May, Glazer’s acquires Robins Wine and Spirits, Inc. in Ohio. 1999 Glazer’s continues its expansion into the beer industry with the acquisition of Maxwell Distributing Company, an east Texas beer distributor, and Brazos Valley Coors, the Coors beer distributor in Waco, Texas. Hyper Expansion - Necessary Debt 207

208 Chapter 18 Bennett Glazer

209 Bennett Glazer, Chairman, CEO and President Glazer’s Inc.

210 As a young, eleven-year-old entrepreneur, Bennett Glazer began selling soft drinks to construction workers in his neighborhood for five cents from a self-made stand. He eventually put his other neighbor competitor out of business–who was selling soda pop for ten cents—because Bennett’s cost of goods sold was zero, getting supply directly from his family’s bottling plant! His youthful entrepreneurship held lasting lessons. Little did he realize that his destiny would be leading the family’s multibillion-dollar enterprise in the future. Armed with a business degree from the University of Texas, Bennett demonstrated that he was more than capable of leading the company into a new era. The proof: Since Bennett became CEO and president in 1996, Glazer’s has expanded from four states into fifteen, while increasing annual revenue from $700 million to $4 billion. After graduating from college in 1968, Bennett began his career as a salesman for Glazer’s in Houston, handling sixty accounts in his training territory, all pieced together from the other salesmen’s failing accounts. They threw him into the deep end. Would he sink or swim? For over two years he absorbed the business. As a salesman, he pounded the pavement, visiting package stores and supermarkets, seeing the business from the customer’s perspective, learning what can make or break a sale, and building relationships. Bennett Glazer, 1969

211 It was a rude awakening for him in every aspect of the business; he learned a lot by being exposed to the real world—especially how to handle rejection. “It’s hard to make a sale, and it doesn’t come easy. All of a sudden, you’re handed a territory, and you’re going out and calling on customers, positioning products that you’re trying to sell, and you have to deal with rejection.” He quickly learned that the business was primarily about building relationships and taking care of customers. He became a master at working “on premise” accounts, building rapport with restaurants and clubs, making sure they poured Glazer’s brands, and then tying in his retail customers, working with them all in tandem. He enjoyed building those accounts and making those connections. He was proud of the success he created. But it wasn’t easy selling unheralded brands. “We didn’t have the Cinderella brands back then, so everyone who made a sale back then had to be a good salesman.” Bennett started to envision a dream—that one day Glazer’s would have the luxury of representing high profile, premium brands. “I dreamt, hopeful in the future, Glazer’s would represent those prestigious brands.” Bennett worked diligently to make this dream come true. He began working in many capacities to learn as much about the business as possible—soaking up knowledge and gaining experience. Along his journey he handled many yeoman duties, always willing to learn, improve, and challenge himself, because he believed, and hoped, that one day he could become the successor to his father, Nolan, and his cousin, Robert S. Glazer, to lead the family enterprise. He proved more than worthy. As a troubleshooter on certain projects, he headed up various corporate initiatives, and was always available to handle special projects for his father, Nolan, the CEO and president of Glazer’s at the time. These numerous projects helped Bennett learn the intricacies of the Glazer’s businesses, not only in the distribution side, but also in other enterprise entities owned by the family. Bennett Glazer, College Years Bennett Glazer

212 Bennett at Hiram Walker training, 1970 Bennett Glazer

213 Glazerama with Left to Right: Robert L., Robert S. and Bennett Glazer. Bennett Glazer

214 Nolan with his son Bennett In 1996, the family voted Bennett to be CEO and president when the health of his cousin, Robert S. Glazer, began to fail. It wasn’t a difficult decision. Bennett’s strengths, his fairness, compassion, people-centric personality, ability to mentor and motivate employees, and his most important asset, the passion for the business and the company, were exactly what the family was looking for—and needed. As his wife, His mentors trained him well but, surprisingly, in diametric ways—teaching him what was good to emulate and what was best not to. His father, Nolan, mandated absolute control and micromanaged every aspect of every project and staff member of the company. “I learned not to be like that. I know what I know, and I know what I don’t know. I count on qualified people, and trust them.” Conversely, his other mentor, Jerry Leibs, taught young Bennett to be a good listener, and to “seek advice from your people whenever you can.” Recalls Bennett, “I greatly admired him for his professionalism, loyalty, ability to find areas of compromise, and to motivate the teams to execute.” Bennett with his mother Frances, 1978 Bennett Glazer

215 Marion, mentions, “There is not a person alive who is more passionate about the company and its employees. You can see the passion his employees have for him, and he for them.” Bennett had nearly twenty-eight years’ experience at Glazer’s when he took the helm at the age of fifty. However, he took some years to get his footing. He admits, “I was very green at that time, so I worked hard to get myself up to par.” His salesman’s blood never left him. Whether he’s at friends’ homes or in restaurants, he will examine Left to Right: Sam, Paige, Marion and Bennett Glazer their spirits, wine, and beer supplies. He will inquire about this brand or that, and if they’re not Glazer’s brands he then softly positions Glazer’s brands! His other character qualities that fit superbly in his role leading the company are his ability to listen, a photographic memory, ability to react timely, take decisive action, and his fairness and compassion to all. Once again, he was the right leader at the right time. Bennett Glazer

216 Chapter 19 Malt Maneuvers

217 There were a lot of efficiencies to having different beverage types. Our total beverage alcohol strategy has been a significant competitive advantage for Glazer’s. —Louis Zweig, Senior Vice President, Glazer’s Two pivotal turning points occurred in 1999 and 2002. The first was Glazer’s entry into beer distribution, and the second was their strategic alliance with Diageo. The company realized that acquiring beer franchises would open new channels, expanding significantly their presence and penetration in convenience store and on-premise locations. As well, with beer expanding their portfolio mix, new placement for their wines and spirits would increase—something many of their competitors couldn’t offer. This comprehensive thrust to broaden their portfolio and market presence became known as their total beverage alcohol strategy. This marked a new strategic focus for Glazer’s, and the company initiated an aggressive campaign acquiring beer distributors. The acquisition in 1999 of Maxwell Distributing Co., an East Texas distributor, began their beer foray. “We have acquired a lot of knowledge Malt Maneuvers

218 about the beer side of the business,” says Louis Zweig, Senior Vice President, Glazer’s. “We figured out that in all markets, there were a lot of efficiencies to having different beverage types.” Soon, Glazer’s acquired other beer distributors within their footprint, many of which were brought to them from their strategic beer suppliers: Coors and Miller. Initially, Coors was skeptical about partnering with Glazer’s. They were concerned that a liquor and wine distributor would push those brands while dwarfing Coors’ expected growth. When Glazer’s next planned to acquire Waco Brazos, a Coors distributor, Coors agreed—with one caveat: stand down for two years on further acquisitions. Coors wanted to monitor and ensure that Coors’ interests would be a priority and meet their expectations. It worked out perfectly, and soon Coors opened up to other opportunities for Glazer’s, as did Miller. The Diageo / Moët Hennessy Request for Proposal 2002 marked the second turning point advancing Glazer’s. London-based Diageo realized that their distribution channels were too fragmented, so they issued a “Request for Proposal” (RFP) to their top distributors with the goal to consolidate and become more efficient. This was an RFP for the ages with over $1 billion in revenue annually for the winner. If victorious, this would energize Glazer’s market position, put Glazer’s on the map as a long-term player in the industry, and significantly boost revenues. It was a must win. But, winning would come at a cost… The victor would have to commit to unthinkable volume quotes–five times greater than any previous commitment Glazer had made. Additional resources in manpower across the board would be required. Margins would be squeezed. Confident in their organization’s abilities to execute, Glazer’s emphatically pursued the business. Undoubtedly, Glazer’s was the underdog as they held a smaller share of Diageo brands, whereas their competitor—Republic National—held much larger positions because of their Seagram and Heublein portfolios. All wanted in on this $1 billion in business, and it would be a battle royal. In 2002, over Memorial Day in New York City, Glazer’s pitched for the business. It became evident to Diageo that Glazer’s had the knowledge and team to grow their brands. After six months of negotiations, Glazer’s committed to $1 billion in volume in two tranches. Glazer’s had won all Diageo’s brands in their markets, with their competitors losing lines. It was a major coup. Malt by the Numbers Glazer’s thirsting for beer distributors has continued to the present. Since 1998, Glazer’s has made eighteen malt beverage distributorship acquisitions. In 1998, Glazer’s sold roughly 1 million cases of beer. In 2014, Glazer’s shipped 31 million cases of beer. Glazer’s senior division managers have on average twenty-five-plus years of experience in the malt beverage industry within both the supplier and wholesaler levels. Malt Maneuvers

219

220 Malt Maneuvers

Malt Maneuvers 221

222 Chapter 20 The New Millennium — 2000’s

223 Buoyed by the Diageo strategic vendor supply agreement, and a well-planned expansion and acquisitions strategy, Glazer’s continued to grow the business at a voracious pace during the 2000s. In 2003 and 2004, Glazer’s entered Ohio, Illinois, Iowa, and Oklahoma. In 2005, Glazer’s further expanded in Mississippi with a brokerage operation and in Illinois by acquiring Union Beverage Company. As the company grew, its leadership was careful also to augment and invest in core internal areas: technology, human capital, and supplier relationships. Another key to their enviable market expansion was their keen financial acumen to ensure that cash generation covered all debt obligations. 2000s The New Millennium - 2000’s

224 2000 May - Glazer’s acquires Missouri distributors, Paramount Liquor Co, Mid-Continent Distributors, Ozark Wholesale Company, and Manhattan Distributing, making Glazer’s the leading distributor in the state. Glazer’s purchases Bologna Brothers in Louisiana. 2001 February - Glazer’s acquires Ohio distributor, Bauer & Foss, Inc. 2001 Glazer’s makes its way into the heartland of Kansas by purchasing Premier in July and then Famous in September of that same year. 2002 March - Glazer’s is appointed as the exclusive broker and distributor for Diageo and Schieffelin & Somerset in Ohio and Iowa. 2002 July - Glazer’s acquires The Hammer Company, an Ohio distributor. 2002 August - Glazer’s is also appointed as the exclusive distributor partner for Diageo and Schieffelin & Somerset in Texas, Louisiana and Arizona. 2002 October - Glazer’s acquires Longhorn Liquors, Ltd. in North Texas. 2003 February - Glazer’s becomes a joint venture partner with National Wine & Spirits in Union Distributing in Illinois. 2003 May - Glazer’s acquires Montana Beverage, the Coors/Miller distributor in El Paso. 2003 December - Glazer’s acquires Strauss Distributors, an Arkansas wholesaler. 2003 August - Glazer’s acquires Valley Beverage, Inc., the Miller-Coors distributorship in the Lower Rio Grande Valley in Texas. 2004 January - Glazer’s acquires Reliance Wine & Spirits Co., an Oklahoma brokerage company, and Hirst Imports, Co., an Oklahoma spirits brokerage. 2004 January - Glazer’s raises its partnership in Union Distributing to 80 percent. 2004 February - Glazer’s acquires assets of Dudley Haas Distributing. Company, the Miller distributor in Waco, Texas. 2005 February - Glazer’s acquires the Miller/Coors distributorships in Abilene and San Angelo, Texas. 2005 March - Union Beverage is awarded the Brown-Forman spirits line. 2005 May - Glazer’s opens up a brokerage operation in Mississippi. 2005 August - Union Beverage absorbs the Johnson Brothers’ operation, acquiring the Gallo and Kendall-Jackson lines. Acquisitions throughout the 2000’s The New Millennium - 2000’s

225 San Antonio, Texas Distribution Warehouse The New Millennium - 2000’s 2006 May - Glazer’s combines its Mississippi brokerage operations with the Tonore Brokerage, Inc. 2006 December - Glazer’s acquires the assets of Union Beverage Company, becoming the sole owner of the Illinois-based distributorship. 2008 July - Glazer’s combines its operations in Illinois with Wirtz Beverage Group. 2008 August - Glazer’s exits Illinois. 2008 Revenues eclipse $2.9 billion with 5,100 employees. 2009 January - Glazer’s Distributors announces the completion of its acquisition of Odessa-based Keg 1 LLC, DBA Permian Distributing Company, a MillerCoors house in West Texas.

226 Century Celebration Our family company is built to last, and the century of excellence that we have enjoyed is a testament to our employees’ achievements and their dedication. —Bennett Glazer In celebrating the company’s 100-year anniversary, a grand fete was held at the Dallas Cowboy Stadium in August 2009 where Bennett Glazer gave this passionate speech to employees and guests.

227 Wearing Glazer’s Blue Commitment - Culture - Core Thank you for being here today to celebrate this huge milestone for the Glazer’s Family of Companies. I am often asked, “How long has your family owned the business?” I answer, “There are days where it seems like 100 years.” In all seriousness, I couldn’t be prouder—but not like you might think. Rather, I am so proud of all that we have accomplished together at Glazer’s. Our family’s century of excellence is a testament to our achievements! You take the bow! We’re the ones applauding. One of the core values of Glazer’s I learned early in my career is that when we put our employees first, then we give them what they need to be successful, and then we challenge them to improve. This management style provides the best opportunity for our company’s success. If I had to describe the successful employee, I’d say she or he wears Glazer Blue. In my mind, wearing Glazer Blue involves three words. The first word is Commitment. Commitment begins when a person recognizes his or her dedication and loyalty. The employee who fits extremely well here believes that Glazer’s is a special place. These employees are totally committed to work toward making Glazer’s the best. Our family and employees at Glazer’s 43 branch offices in 11 states and our G.O. are committed to being THE preferred provider of beverage alcohol products. I continue to be amazed at just how many employees— and how often these employees—dedicate themselves to fulfilling this commitment. Here at the G.O., we are blessed with a mixture of highly seasoned professionals along with recent arrivals who bring new ideas and competitive spirit to our company. I’d like for those of you who have been with the company for 10 years or more to stand. The next word for wearing Glazer Blue: Culture. The culture of Glazer’s focuses primarily on competing and winning. We drive high performance and that’s what enables us to grow. Our culture asks and seeks to answer one question on a daily basis: “How can we improve today to do better tomorrow?” Louis Glazer set up shop in Dallas 1909, and christened his business the Jumbo Bottling Company. Distributing a line of flavored soda waters from the back of a horsedrawn wagon in its early years, the company became known as Glazer’s Distributors in 1933 under the leadership of Louis’ two sons, Max and Nolan. It was the same year the company began distributing spirits, following the Repeal of Prohibition. By 1966, Glazer’s had expanded beyond Texas to three additional states. In 1996, under the leadership of current chairman, Bennett Glazer, the company embarked on a major expansion and has gone from a $600 million operation in four states to a $3 billion business across 11 states and 5,200 employees. “Consolidation across all tiers of our industry has triggered every major event of the last 25 years,” explains Bennett Glazer. “And while this creates a lot of uncertainty, it also creates a lot of opportunity. We have been very proactive about expanding over the last two decades, but we are also very systematic about it. We typically keep the current teams in place when we expand into a new market—in fact, we have over 20 managers in place today who were former owners and operators—and we also deploy our corporate teams into the local markets so that we can better understand the market nuances.” But growing larger is not the key to staying in business, Glazer maintains. In fact, the company recently terminated their much-publicized plan to form a strategic collaboration with Southern Wine & Spirits of America, Inc. “Following more than a year of wideranging planning efforts with Southern Wine & Spirits, we made the decision that it is INDUSTRY PROFILE I n this industry, there are long-lived family businesses, and then there is Glazer’s. At 100 years old, Glazer’s Distributors is one of the oldest and most successful companies in the beverage alcohol business today, and it is still owned and operated by the same family. CEO Bennett Glazer (right), speaking at the 100th Anniversary Celebration with Dallas Cowboys' owner Jerry Jones (left) looking on. The Glazers in the 1950s: Nolan, Irving, Max, Robert and Jerry. ONE HUNDRED YEARS AND COUNTING Glazer’s celebrates a century of being in business By Kristen Wolfe Bieler

228 Bennett Glazer and Roger Staubach Texas State Senator Florence Shapiro, Shelly Stein and Roger Staubach Troy Aikman and Jerry Jones, Dallas Cowboys Owner Roger Staubach, as Master of Ceremonies, had a makeup artist whiten his hair and opened the ceremonies by introducing himself as Bennett Glazer’s twin!

229 Our culture tells our customers, suppliers and other partners that “Good is never enough. There is always more to accomplish.” The third word is Core. Making it 100 years in business means our company was built to last and successfully survived the test of time. But it’s the core values of a company that determines the quality of its performance. Over the years, we’ve grown a lot of branches and tried a lot of different things. We carefully evaluate everything that we do so that we keep only the healthy parts of the business that will help us win in an ever-changing environment. But prosperous branches emerge only if the trunk of the tree is healthy. At Glazer’s our core values don’t change—even as the rest of the world around us does. Our values dictate that we put our team of employees first. We respect our employees and we treat them fairly. Visionary leaders who deeply believe in, and are guided by, our values and purpose lead our employees. All of us share the desire to grow our business to be the best in the industry. Everyday, we demonstrate our values to our customers, suppliers and other partners. We are service-minded brand-builders who help our customers achieve growth and success. We work in a spirit of partnership fueled by high levels of integrity. We invest in our people and in our infrastructure. What does it take to wear Glazer Blue? Commitment. Culture. Core. Today, we pause to celebrate a Century of Excellence. Tomorrow—and together —our journey continues. Go Glazer Blue! President George W. Bush sending congratulatory wishes The New Millennium - 2000’s

230 Chapter 21 What They’re Thinking About Drinking GVN

231 What is my FAVORITE drink? . . . The one that sells the most! —Bennett Glazer

232 Wine is sunlight, held together by water. —Galileo There can’t be a good living where there is not good drinking. —Benjamin Franklin I drink to make other people more interesting. —Ernest Hemingway Good people drink good BEER. —Hunter S. Thompson Once, during Prohibition, I was forced to live for days on nothing but FOOD AND WATER. —W.C. Fields Tell me what brand of whiskey that Grant drinks. I would like to send a barrel of it to my other generals. —Abraham Lincoln Without question, the greatest invention in the history of mankind is BEER. Oh, I grant you that the wheel was also a fine invention, but the wheel does not go nearly as well with PIZZA. —Dave Barry I would give all of my fame for a pot of wine and safety. —William Shakespeare DRINK TO ME. —Pablo Picasso’s last words Wine is the most CIVILIZED thing in the world. —Ernest Hemingway My Grandmother is over eighty and still doesn’t need glasses. Drinks right out of the bottle. —Henny Youngman

233 During Prohibition in the United States, Winston Churchill referred publicly to the Constitutional amendment banning alcohol as an affront to the whole history of mankind. WHAT contemptible scoundrel has STOLEN the CORK to my LUNCH? —W.C. Fields I always take Scotch whiskey at night as a preventive of toothache. I have never had the toothache; and what is more, I never intend to have it. —Mark Twain Never wine about yourjob. —Glazer’s Wine is bottle poetry. —Robert Louis Stevenson NEVER CRY over spilt milk. It could’ve been WHISKEY. —Pappy from Maverick When I drink, I THINK; and when I think, I DRINK. —Francois Rabelais In wine there is WISDOM, in beer there is FREEDOM, in water there is BACTERIA. —Benjamin Franklin There comes a time in every woman’s life when the only thing that helps is a glass of champagne. —Bette Davis A bottle of wine contains more philosophy than all the books in the world. —Louis Pasteur If you drink, don’t drive. DON ’T even putt.—Dean Martin Come quickly, I am tasting stars. —Dom Perignon on first tasting bubbly The problem with the world is that everyone is a few drinks behind. —Humphrey Bogart

234 Chapter 22 The Darkest Moment

235 It may seem that all was good within Glazer’s. However, it wasn’t always smooth sailing. Storms were brewing—internal and external. Holes began forming in the Glazer’s once sturdy hull—holes that almost sank the ship. Since the company’s founding in 1933, Glazer’s had been fortunate to have the right leader at the right time. Max Glazer was both a visionary and an expansionist—key leadership qualities needed at Glazer’s inception. As the company matured, cofounder Nolan Glazer’s abilities in sales and marketing drove relationships with suppliers, expanded brand offerings, and extended Glazer’s footprint. Upon Nolan’s passing in 1991, Robert S. Glazer assumed the family leadership position and became equally valuable during the company’s initial acquisition thrust in the late 1980s and early 90s with his financial acumen. In 1996, when Bennett Glazer took the reins, consolidation at the supplier level was in full swing. Many good moves in Texas and Louisiana were coming Glazer’s way. Things seemed to be heading in a good trajectory. However the Glazer’s culture, along with the leadership, became complacent. Decade long relationships with vendor partners were deteriorating. It came to a head in Indiana when seven major vendors departed within a two-month span. Finally the straw that broke the camel’s back is when Diageo—Glazer’s largest supplier—wanted out of their current distributor in Indiana and Glazer’s was never considered as an option for them to move to. Diageo used this as a wake-up call with Glazer’s. Robert Qualls, Vice President, was worried about the future direction of the company. He asked Bennett, “Why don’t you sell the company? You and the family members would be set free. No worries. No sleepless nights.” Bennett, ever concerned about the Glazer’s loyal and passionate employees, responded in kind, “What would the four thousand families do?” If this situation wasn’t remedied, it would become a death spiral. Difficult decisions regarding leadership personnel needed to be made. Moreover, they needed to determine the best path for the future of the company. One thing Bennett Glazer was sure of—it was time for a change! Bennett paused to consider: Are we better off trying to go it alone, or should we align with another player? He threw caution to the wind, and began considering a merger. Fortunately, the suppliers liked Glazer’s in general, and offered Bennett Glazer their help. Diageo stepped in and suggested a merger between Glazer’s and Southern Wine & Spirits—the industry behemoth, three times larger than Glazer’s. The deal never materialized. The Darkest Moment

236 When the final hand was dealt, the deal structure changed. “We didn’t have to think about it very long. We knew this last-minute change was not favorable to Glazer’s,” recalls Bennett. Glazer‘s walked away from the table, certain that their best interests were not being considered. Maybe that was the easy decision. The more difficult one was: Glazer now faced the question: What to do now? One thing was crystal clear to Bennett: Going alone meant ramping up Glazer’s leadership to stabilize, reinvigorate, and guide the company into the future. In order to hit supplier goals, expand with strategic suppliers and markets, and implement more financial rigor and business fundamentals, it was time to bring in seasoned professional managers. Now north of $3 billion in annual revenue, only by upgrading management horsepower could Glazer’s continue along their path to excel in operational excellence from acquisition, to logistics, to human resources. Bennett knew what to do now. The Darkest Moment Glazer now faced the question: What to do now?

237

238 Chapter 23 A New Era of Leadership GVN

239 Get the right people in the right jobs, and listen to them. Then give them the rope and the slack to do their best… and they will. —Bennett Glazer There’s usually a better way to do almost everything. —Shelly Stein, President and CEO, Glazer’s Distributors Co. A New Era of Leadership

240 Bennett Glazer always understood that any best-inclass organization needed solid leadership to achieve greatness and to attract people of equal stature. It was time to propel Glazer’s to the next level. Sheldon “Shelly” Stein, a Harvard law graduate and powerful investment banker, had been an advisor to the Glazer family on many strategic fronts since 2006. In 2008, during the Southern Wine strategic alliance discussion, Shelly was again an instrumental force, guiding the company with his expertise and thoughtful analysis. When the deal collapsed, Bennett requested Shelly’s advice and assistance to source a new CEO for Glazer’s Distributors Co. Unfortunately—or fortunately!—after vetting many potential candidates, the right one continued to elude them. Finally Bennett asked Shelly, “Would you consider running the company?” Shelly’s remarkable investment banking career had taken him from partner in a major law firm to Senior Managing director at Bear Stearns to the top ranks of Merrill Lynch, working alongside his long-time friend, John Thain, the CEO of Merrill Lynch. When Bank of America emerged from the national economic collapse in 2009 and purchased Merrill Lynch, Thain departed. With Thain gone, Shelly began pondering his next move. It was then that Bennett approached him. Bennett’s timing was perfect. Shelly’s response, “I’ll consider it.” Reinvigorating Glazer’s Shelly Stein came aboard Glazer’s in July, 2010. What Shelly faced was a difficult situation with potential for real problems. What he knew concerned him. What he didn’t know surprised him. He wasn’t the only one concerned. With Glazer’s disengagement from Southern Wine, the fallout spread throughout the industry. Suppliers wondered where the company was heading, and specifically: Was Glazer’s astute enough not to just survive, but to turn the company around? Shelly found plenty of good news to alleviate his concerns. First and foremost were the passionate employees who had understanding, knowledge and expertise in the liquor industry, and were extremely loyal to Glazer’s. However, employees were frustrated by the lack of investment in information technology, the loss of suppliers, and their inability to advance their careers. Within the company, stagnation and disillusionment were rampant. And worse, the magnitude of the problems were deeper and more complex than Shelly first thought. What Shelly faced was daunting and multifaceted. As he surveyed the organization, it was abundantly clear that just plugging holes in Glazer’s would not suffice. A major overhaul to rebuild Glazer’s would be required across the board. 1. The company was not a centralized, unified organization but a collection of independent operations. 2. The corporate infrastructure was bloated throughout the company. 3. A new leadership team was desperately needed. 4. Market share was deteriorating due to mis- aligned supplier relations. 5. The finance and supply chain teams needed new technology and systems. 6. The company needed to grow and needed addi- tional talent on acquisitions and mergers. 7. The Human Resources Department was grossly understaffed. 8. Companywide systems and tools were antiquated. A New Era of Leadership

241 Working alongside Shelly were his soon-to-behired executive leaders—Rob Swartz, COO, and Thomas Greenlee, CFO. Here are just some of the major restructuring requirements they uncovered: It was eye-opening, to say the least. Shelly started thinking…What have I gotten myself into? What motivated Bennett Glazer, Shelly Stein, Rob Swartz, and Thomas Greenlee, however, was the tremendous opportunity to modernize the company through implementing best-in-class processes and systems, while improving people, technology, finance, sales, and marketing. This would take time—and major investments. He quickly garnered support from the Glazer’s board members and began erecting a new foundation for long-term growth and prosperity. As a collaborative problem solver, and unwavering at making tough decisions, Shelly wasted no time. During his first thirty days on the job, Shelly began visiting all departments and scoping challenges and opportunities by functional areas, with an eye not only to repair but also to transform. 1. Lack of Company Wide Coordination One issue that surfaced quickly was that a number of critical company leaders had disengaged from the team concept—the “one for all” Glazer’s mantra. They had become more concerned with personal gain, counterculture to the Glazer family ethos of teamwork and solidarity. At the same time, there were many talented managers throughout the organization who were either disillusioned with corporate management or simply not in the right job, and this was creating a capabilities gap. This was remedied by reassigning top-shelf lieutenants, promoting many, and hiring other industry leaders, all with new direction, focus, and enthusiasm. Those misaligned with Glazer’s restructuring were scuttled. This began a reinvigoration at the managerial levels that filtered throughout, and Glazer’s historic culture began to reappear. 2. The bloated infrastructure Staffing throughout the company had swollen; inefficiency and ineffectiveness was rampant. Employees in the same department were doing the same job. The number of employees disinterested in their job caused subpar performance. Some had retired but just never told anyone. Friday had become part of Saturday and Sunday. Shelly and his new team needed to recalibrate the organization and institute a performance-oriented culture, one that motivated employees to innovate, excel, and be rewarded accordingly. A company-wide evaluation of each employee’s human capital—talent and skills—was conducted. This led to the discovery that many were not focused and diligent in their jobs because few of their managers provided direction. Shelly made this request to top management, “Give me a list of employees that if they left tomorrow no one would know.” It wasn’t hard to make this list and it numbered well over 100. A number of employees were dismissed. Realistically, though, it was more about sending a message throughout the organization. Everyone got the message! 3. Strengthening Leadership Team The plan was to bring aboard seasoned leaders from various fields inside and outside the beverage industry. Glazer’s board and Shelly realized that the company— and the industry in general—was very incestuous. The board members all agreed with Shelly that fresh sets of eyes with unfiltered vision, greater energy, and more experience running operational and administrative functions were required. A New Era of Leadership

242 Within six month after Shelly Stein’s arrival, key executives were brought in replacing the top leadership structure. They were the big guns that Shelly and Bennett needed to renovate and reinvigorate the company. Thomas Greenlee, a University of Chicago MBA, came aboard from Merrill Lynch as Executive Vice President and Chief Financial Officer. Rob Swartz, a CPA with tremendous operational experience in private equity, came on as Executive Vice President and Chief Operating Officer. Now, the big guns were in place to take Glazer’s to the next level. 4. Deteriorating Supplier Relations The immediate focus was to rebuild supplier relationships. This would be a monumental task. The message received was that Glazer’s was not meeting supplier needs in terms of brand building, volume goals, and communicating. Shelly, Shawn Thurman, head of sales, and Rob spent the first year visiting with suppliers, rebuilding relationships, and regaining their trust. Of particular concern was Diageo, the granddaddy of global brands. If Diageo departed, so would other suppliers, creating a snowball effect and decimating Glazer’s. Fortunately, Shelly and Bennett were given a second chance to prove their worth at Diageo. Glazer’s responded quickly by forming a new group to focus on Diageo and brought in Pete Carr, a senior Diageo executive to oversee the Diageo business. In addition, Glazer’s developed a new “Supplier Performance Team” which was constituted to concentrate on the top twenty suppliers. A corporate vice president was assigned to each supplier and responsible for understanding their goals and improving communication. All information was to be coordinated jointly, improving product launches, providing updates on current volumes, joint marketing programs, and collaborative marketing investments, and sharing general market knowledge. The establishment of the Supplier Performance Team was a winner from the getgo, and it reestablished Glazer’s as a trusted partner to their suppliers. 5. Finance and Supply Chain needed new Technology The finance team from the previous administration was reactionary, undisciplined, and was not able nor did they have the tools or expertise to forecast accurately. Exacerbating their conundrum was the crude analysis of profitability; the arcane math they used was not based on each brand’s true profitability, and this provided the corporation with a macro view that was holistically unrealistic and inaccurate. In addition, the company could not allocate cost per functional area. Thomas Greenlee astutely remedied his finance organization by bringing on capable talent—individuals skilled in complex financial systems and analysis. This ensured that Glazer’s not only had the right data but the skills to manage financial modeling more accurately and delve into the intricacies of their suppliers, brand profitability, and predictive modeling. Greenlee also restructured the budgeting process, set a new goal for closing monthly financials from two months to under ten days, and changed Glazer’s auditing team. In addition, Mike Adams, the existing and outstanding head of technology, was given the support and tools he needed to take Glazer’s to a new level. It was just what Glazer’s needed to intelligently and proactively perform financial measurements and to apply metrics across the organization. It soon became a well-oiled financial and operational machine. 6. New Talent in Mergers and Acquisitions Historically Glazer’s had acquired companies and formed strategic alliances yet, all too often many of these deals had inherent issues which should have been discovered during due diligence prior to consummating the deal. The previous financial team simply did not have the right skills to manage the due diligence for these complex structures. A more thorough, upfront vetting process was required. Shelly, Rob, and Thomas Greenlee ramped up this group and brought in Todd Newman and Orman Anderson, two seasoned veterans in the mergers and acquisition arena. Together with Alan Greenspan, the A New Era of Leadership

243 newly hired general counsel who was at the top of his law school class at Vanderbilt, they aligned the necessary structures to ensure a more systematic analysis of potential deals. Acquisitions and alliances now proceeded at a dazzling pace but now with more accomplished personnel who made sure long-term strategic and profitable opportunities would be scrutinized comprehensively. Of particular note was the 2013 joint venture with Caribbean-based Premier Wine & Spirits, Glazer’s and the industry’s first acquisition outside the United States. Soon thereafter, a strategic venture was consummated in the U.S. Virgin Islands. These were extremely complex deals, involving foreign laws and tax considerations. 7. Understaffed Human Resources In 2011, Glazer’s headquarters only employed six people in human resources to handle a centralized function for over six thousand employees. Understaffed and underfunded, the initiatives they implemented fell far short of expectations. Without a comprehensive incentive and compensation structure, with no common job descriptions for personnel, and with little clarity on career advancement, employees remained aimless and disillusioned. Rob Swartz hired Wilemia Shaw as Senior Vice President of Human Resources, and she tackled the issues with vigor and expediency. Ramping up her staff, she created the necessary organization for becoming accountable to all. They implemented needed processes and structures quickly. This included incentive packages, compensation plans, job descriptions, and employee surveys. Now, with a staff of forty-six located at headquarters and within branches, the company had a professional human resource organization and stability. Impressed with the work ethic of Glazer’s employees, Shaw stated: “Employees want to work hard for Glazer’s because they know how good Glazer’s has been to them.” Glazer’s new organization was proof of that concept. Human Resources Glazer’s is investing in world-class talent from inside and outside the industry to drive the change needed to be a long-term industry leader. Glazer’s Human Resources priority is the recruiting and retaining of the best talent, not just the best talent available. Glazer’s is proud to employ over three hundred people with twenty-five or more years with the company. A New Era of Leadership

244 Chapter 24 Moving Up the Technology Curve

245 Our goal is to provide the best possible service by continually upgrading technology systems that provide value to our business partners. —Rob Swartz, EVP and COO, Glazer’s The eighth finding from Shelly Stein’s initial overview of Glazer’s was that systems and tools were antiquated. The company’s legacy systems lacked accuracy in forecasting customer demand, inventory supply, delivery route efficiency, and market trends, and in projecting future directions. Any information they needed took days to accumulate and report. Glazer’s needed real-time information—data now, not in a week. It was abundantly clear as well that their homegrown systems would not support Glazer’s growth rate due to the complexity of maintaining such outdated systems. This needed to be fixed—and fast! Glazer’s needed forward-looking tools to ensure that supplier products would create value, and to provide information both internally (to business units) and externally (to suppliers)—all with the goal of improving customer satisfaction. Stein tasked the teams with adopting a comprehensive strategy that would meet local demand with centralized fulfillment and provide management with the data analytics needed to drive the business. Stein told his team: “We will make significant investments to drive efficiencies and to enhance our ability to collaborate with suppliers and customers.” Moving Up the Technology Curve

246 Glazer’s believes in reinvesting in the company. More than $70 million in new technologies has been committed. More than $100 million was invested in facilities in 2011 to become the most efficient distributor in the industry. Rob Swartz had the expertise and experience to delve into this. He understood the path forward and teamed with Mike Adams, SVP and CIO, to establish a ninety-day plan organized by functional areas (finance, human resources, payroll, warehouse operations) to define a plan with goals and objectives, benchmarks, and critical metrics. Glazer’s needed a common platform, one that would allow company leaders to have complete visibility into all aspects of the business, from the vendor community to procurement, from operations through to customers—all with real-time visibility. A progressive solution to meet Glazer’s requirement now and into the future was sought out. The company selected SAP, the leading ERP software package in the world, and used extensively in the wholesale distribution industry, as well as by suppliers and other top distributors in the Alcohol Beverage Industry. As part of its ongoing commitment to better serve its customers and suppliers, Glazer’s made significant investments in these technological initiatives and assigned more than a hundred people to this team with the task of defining, planning, and executing this herculean task. The budget: $100 million. Due to Glazer’s status as a private company, they didn’t worry about the financial impact of this huge expense, whereas a public company would have stretched such an investment out over ten years. “One of the company’s core values is to provide customers and suppliers the best possible service by continually upgrading the systems that provide value to its business partners. Glazer’s had the foresight to upgrade quickly. It was costly, but we feel it was in our best interest, it added value, and it was a competitive differentiator,” states Mike Adams, adding that his team “is very talented at value stream mapping—identifying problems in the field and solving them. It was a heck of an effort by a lot of people.” Moving Up the Technology Curve

Moving Up the Technology Curve 247

248 Our investments in technology, and the results, are another proof of Glazer’s market leadership. —Shelly Stein, CEO and President, Glazer’s Distributors The company also invested in distribution and sales technology to ensure fast and efficient services, with its IT department developing custom applications specific to the alcohol beverage marketplace. Now, all can view inventory and track shipments from supplier to customers in real time and drive better decision making and better activation of brand opportunities. Mentions Adams: “Sales knows exactly what was shipped and what was not, so they can call the customer immediately to discuss any misses.” Though many quantitative results have been made, qualitative benefits are just as important as Glazer’s plans to keep improving, to constantly and deliberately reengineer processes to advance their efficiencies, and to differentiate themselves based on sophisticated tools to achieve higher levels of vendor collaboration and customer satisfaction. As a result, Glazer’s new technology has provided: x Visibility to data in real time. x Processes that are more connected across all of our functional areas. x Highly trained employees on SAP that are more effective. x Precise demand planning capabilities and supply chain forecasting with a cost-effective, overarching fulfillment strategy that lowers error rates, increases productivity, and improves service levels. x Metrics for measuring performance and exception-based processes and procedures. x Driving routes that are optimized for more efficient cost and timely delivery. x Market data for suppliers and customers in a collaborative partnership to monitor and forecast consumer trends. x Improvement in replenishment-based inventory turns by more than sixty percent. x A seven percent increase in fill rates within the first year. x Inventory reduced by twenty-one percent year over year. x Improvement in customer service by two to three percentage points. x A customer fill rate of 96.5 percent. Glazer’s operational visibility has created operational excellence. Adds Stein: “We now understand the profitability not only of all our suppliers, but we have the granularity by convenience store chain, by grocery store chain, by package store. Our investments in technology and the results are another proof of Glazer’s market leadership.” Moving Up the Technology Curve