Talk about the hangover after the party. For years, E. & J. Gallo Winery has been one of the world's largest wine...
makers, and today accounts for roughly 25% of the $19 billion worth of wine consumed annually in the U.S., according to its own internal estimates. All cause to toast, but the price the 70-year old vintner has paid for such success is one that's pretty familiar to any company in the consumer-packaged goods (CPG) industry: an increasingly complex distribution system.
From its Modesto, Calif. headquarters, Gallo's direct relationship is with its 481 distributors, who supply 300,000-plus retailers with the company's line of approximately 600 different products. "We've always had a total view of everything we ship to our distributor network, but that in itself wasn't helping us manage our business," said Peter Abate, Gallo's VP, sales and marketing analytic solutions. "We would lose sight of our shipments once they got to those distributors." That disconnect made it difficult for the company to effectively plan, execute and measure retail marketing campaign success. In the late '80s, Gallo rolled out a proprietary information distribution system, called the Sales Management Information System (SMIS). The SMIS connects the organization's data warehouse with its domestic distributors' operating systems, so that on a weekly basis, it can extract account-level data on all the business those distributors did with the Gallo brand.
Still, problems lingered on the vine. The data driving Gallo's business was coming from distributors, and consisted of a vast array of disparate systems that didn't all integrate well with Gallo's legacy database. Exacerbating that, Gallo was faced with the daunting requirement of updating a constant stream of retail-outlet openings and closings, as well as keeping up with changes caused by mergers and acquisitions. The company needed timely store sales information, yet by some estimates, about 6,000 stores nationwide open, close or change ownership every month.
"We've invested a great deal of time and money developing a data warehouse. But in our initial planning, we failed to include a scalable plan that would allow us to maintain the database," said Abate. "Over time, the integrity of what we were looking at was eroding."
The solution: integrate and synchronize
After investigating available options, three years ago, Gallo discovered retail information provider Trade Dimensions' (tradedimensions.com) TDLinx retail-location database and coding system. The system provides a unique ID code for retail entities at every level-store, account, buying office, supplier, distributor, distribution center, company, corporation and holding company. Through TDLinx's RetailSync process, each of Gallo's customer files was linked to TDLinx codes. Gallo's internal data remain untouched and intact, with a link file becoming Gallo's translator and data organizer. Trade Dimensions monitors and maintains any changes taking place within these respective owner hierarchies. Each month, Kristine Pierce, Gallo's senior manager, sales and marketing analytic solutions, uploads Gallo's customer file to Trade Dimensions. There, through an automated matching process, the file is cleansed and updated, then sent back for Pierce's review, and re-synchronized with Gallo's customer database.
A bushel of benefits
The system allows Gallo to organize and better manage a customer master file for which, in times past, the data would often come in incomplete and/or inaccurate from distributors. The end result? Analyzed in conjunction with data from market-research outfits such as Spectra, ACNielsen and IRI, the vintner's marketers can now develop shopper characteristics and chain profiles to launch sales, marketing and advertising campaigns that are exponentially more targeted than in the past. "The system gives us the ability to understand where our efforts will have the biggest impact," said Abate. "It helps us manage resources and focus on value-added activity."
For instance, when Gallo introduced Turning Leaf wines in a 1.5 liter bottle, having specific account-level information helped the company think about and act on retail customers' needs and value. "My initial reaction used to be, 'Let's see, 84 stores in the division, I guess I want 84 displays.' In the real world, he says, "There are going to be stores that don't fit the profile necessary to sell a 1.5L MPC (mid-price cork) product. This gives us the ability to understand where our efforts will have the biggest bang for our buck."
For Gallo, that's meant a measurable increase in efficiencies-by at least 5%, Abate estimated. "We're able to do projects much more quickly now," confirmed Pierce. "Before, we would have to pull data from different sources and then put them together manually. Now, we can simply create a query and pull the data that we need in a matter of minutes." Passing that information on to its regional marketing and distributor partners has also meant increased satisfaction in some valuable corners. In the case of the latter group, Abate said, "Sometimes, they ask, 'How do you know so much about our business?'"
More cause to celebrate
From this platform, Gallo's "next round" involves using TDLinx to keep tabs on activities with on-premises accounts (i.e., places such as restaurants and bars, where alcoholic beverages are consumed at the purchase site). The relationships underlying such an establishment can be "five to 10 times more complicated" to stay on top of than with traditional retailers, said Abate. "You go to, say, a Marriott, and there are six restaurants within that big property," he explained.
"Two might be owned by one company, one might actually be owned by Marriott, and three are independent."
Through data collection, analysis, and business intelligence that allow Gallo to understand needs, preferences and behaviors across all channels, the company is seeing some fruitful gains-and that's an advantage that folks there expect to see grow sweeter over time. Trade Dimensions contributed background information to this story.
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All materials copyright 2002 Peppers and Rogers Group - 1:1 Marketing.