Thursday, October 28, 2010

Augustan Wine Imports Philosophy and Organizational Structure: Part II of an Interview with Proal Perry, Founder

I recently interviewed Proal Perry, Founder of Augustan Wine Imports, to gain insight into the company's response to current market conditions and am providing Proal's perspectives on this blog over the course of three posts.  Yesterday's post examined the company founding and subsequent partnership with Premier Beverages while today's post looks at company goals and organizational structure.

Augustan Wine Imports” goal is to be the most-valued company in this space that their upper-tier customers are doing business with. Meeting this goal requires, according to Proal, that the company exhibit the following characteristics: quality of service; knowledge; education; creativity; and innovativeness.

The critical success factors (CSFs) for goal attainment are (i) provision of high-quality wines to the market and (ii) the fostering of an entrepreneurial culture within the organization. The first CSF is of paramount importance and the company has implemented a rigorous screening process to ensure that only the highest-quality wines are offered to its customers. The second CSF is being addressed by giving a strong sense of ownership to the people in the field. The message from management to the field is “We are lending you a $1 million+ business that you should treat as your own. Invest in yourself by continually acquiring wine and industry knowledge and we will give you the support required to ensure your success.” A forcing function for this new management approach was Daniel Pink’s book Drive: The Surprising Truth About What Motivates Us.

According to Proal, “The carrot and stick approach does not work; a perception of mastery of your environment does.”

Proal believes that commissioned sales forces spend too much time “chasing the money” and not enough time servicing the customer. In the Augustan scheme, salespersons are salaried and this allows them to devote whatever time is necessary to ensure a satisfied customer. In addition to salaries, salespersons have benefits packages and expense accounts. Proal sees the latter as an essential element of the salesperson “managing his/her own company.”
Augustan has a strong support structure facilitating the activities of the field force. The General Manager/Sales Manager reports directly to Proal and is charged with balancing responsibilities across the company. Two Portfolio Managers – one responsible for the U.S. and the other for the rest of the world – handle issues such as inventory, profitability, costing, and supplier contact and coordination. The Marketing Specialist handles referrals (The Company only solicits “iconic” wines.). New opportunities as assessed as a group. A prospect wine is tasted blind and assessed both on its own merit as well as against other potential entrants. Price does not enter the assessment until after the wine has been judged to have the type of quality that Augustan is pursuing.

When asked to categorize Augustan’s customers, Proal indicated that this was an issue they have been wrestling with for a while and had not fully resolved. Historically, a disproportionate share of the business had been with the restaurant trade but that is now down to 60% from the 70% level. On the retail side, they only do business with independent fine wine retailers. The retailers who depend on Wine Spectator “shelf talkers” are not their preferred customers. He wants customers who: (i) understand what distinguishes Augustan from the competition; (ii) want to partner with Augustan; and (iii) Augustan wants to partner with. Proal cites Tim’s Wine Market as an example of the ideal Augustan customer. Tim’s has been an Augustan customer from day 1 and, 15 years on, remains one of the company’s best customers.

In tomorrow’s post we will examine wine market conditions and Augustan’s response to the tumult.

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