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Speakeasy: The Passed Baton

Posted on  | May 26, 2015   Bookmark and Share
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In March, Rocky Wirtz handed the reigns of his family’s $2 billion Chicago-based beverage alcohol distribution company, Wirtz Beverage Group, to his 38-year-old son, Danny. Operating in Illinois, Iowa, Minnesota, Missouri, Nevada, Wisconsin and Canada, Wirtz employs over 3,000 people. We sat down with Danny to hear about his strategy for growth, the significance of craft spirits, and what it takes to keep a family business thriving into the fourth generation.

DANNY WIRTZ, PRESIDENT, WIRTZ BEVERAGE

 

On Transition

The Beverage Network: Previously, you served as Executive VP, and prior to that you worked at a creative agency. How has your background prepared you for this new role?

Danny Wirtz: It has been a transitional role for me at Wirtz Beverage in many ways, since I was in charge of the company’s commercial teams, leading corporate strategy and supplier relations as well as overseeing finance and HR functions. Before I joined the business in 2007, I worked in marketing in New York and London in music promotions. I worked on a music platform for Smirnoff in Boston and did global PR for Johnnie Walker, which was the universe telling me it was time to come home and work for our family company. There is a big difference between agency work above the line and what wholesalers do on the floor, and it’s valuable to understand both sides. I have a great appreciation for marketing when I see it go from the conceptual state in a boardroom in New York to something that makes sense for a retailer in rural Illinois. An agency can make anything look good, but will it move the needle?

TBN: How will your working relationship with your father change, now that he has moved into the position of Chairman?

DW: My dad provides tremendous guidance, but he does not micro-manage. He offers great insights and advice, and we work together on major strategic initiatives. That said, he knows I need to make my own decisions. Having this transition take place when everyone is still healthy and engaged has been really positive.

TBN: What would your father say are your greatest strengths that you bring to the organization?

DW: I like to think I bring a different perspective to the business, particularly when it comes to the importance of technology and digital and how we implement this in our supply chain, front end, our engagement with consumers and mobilizing our sales force. My dad has a great conceptual understanding of this, but he is happy to have me to dive into the details of it. He is tremendously supportive of our technology innovations and provides great air cover for us to explore the things we think we need to explore.

On Distributors’ Role

TBN: How has the role of the distributor changed over the last decade?

DW: We are much more involved in activating brands than we were in the past, and this is a big shift. We put a much greater emphasis on pull-through and are more engaged in promoting brands after they are placed in accounts. Suppliers today want us to think about more than just depletions; we are measured on cases-on-the-floor and bottle facings on the back bar. They want us to be part of this process.

TBN: The coasts tend to get a lot of the attention, yet the Midwest is a robust market for wine and spirits. What should we know about Midwest drinking habits?

DW: There are certainly things that pop faster in the east coast. We’ve had so many conversations about rosé: it’s on every table in Manhattan, so why hasn’t it taken off here yet? Other trends are incredibly strong here, particularly craft spirits. It makes sense that this would be big in the Midwest, since this is where many of the raw materials are made. It also complements the farm-to-table movement which is huge, particularly local meat concepts. Cities like Milwaukee and Madison are home to really curious, highly adventurous consumer bases now, and we are seeing lots of exciting new on-trade concepts.

On Market Trends

TBN: How has the cocktail culture impacted Wirtz?

DW: Nevada is our showpiece. There is such professionalism there—if you’re running a beverage program on the Strip, you know what you are doing. And we’ve learned a lot. We are working to bring this expertise to bars and restaurants beyond Las Vegas for those accounts looking to elevate their programs. We hired former Bellagio bartender Drew Levinson to be our first Beverage Development Manager many years ago. We have since expanded our beverage development platform across all markets. We are breaking the perception that mixology is long, slow and involved.

At the Bellagio, Levinson proved that you can crank out thousands of mojitos every night with fresh ingredients. Mixology can be done at all scales. We aren’t going to tell The Violet Hour in Chicago how to make cocktails, but we can help a couple hundred other accounts that may want to use fresh juice for the first time, or learn how to make more money with their cocktail program.

Very quickly, the cocktail culture went from being something that a small number of people enjoyed to being something mainstream. Consumers are enjoying superpremium spirits on-premise, then buying them at retail, and this is a big change. Just 20 years ago, it was a commodity game—no one was talking cocktails.

TBN: How have you seen wine culture evolve in your markets?

DW: It’s exciting to see consumers coming into wine earlier, and there are a lot of Millennial-driven products that have a lot of energy behind them. We have to balance those offerings with many other great brands that have tremendous heritage, like Trefethen and Cakebread.

Similar to spirits, I believe the definition of value is changing, and at it is our job to add a different kind of value to the retail trade. I think all three tiers are in a really unique position right now to have to change and adapt and it’s all because of the consumer. If the consumer stayed the same, we could too. But suppliers are changing the kinds of brands they are putting out, the retailer is changing the way they engage with consumers, and we are in the middle of that. Ultimately, the consumer will decide which brands will be viable.

TBN: Wirtz created Tenzing, an independent fine wine & spirits company. What are the advantages of this model versus having a separate division?

DW: We made a decision to create an independent and unique company, which we feel is a more interesting proposition for the trade. Led by Ken Fredrickson, Tenzing has created a really great portfolio and culture. They are very education- oriented, with high-end, small-production wines and spirits. They are the tech start-up version of a distributor and they work alongside Wirtz, in some cases competing but ultimately increasing our total market share. It is a successful model, since Tenzing uses our back end, our systems and HR. Tenzing is just in Illinois right now, and we are evaluating what makes sense in terms of expansion.

TBN: How else can a large wholesaler manage craft spirits and boutique wines?

DW: Each of our operations has developed a market-specific approach around how to sell craft spirits. It can be difficult to evaluate just what to bring in when there is so much coming at us. We ask questions like: ‘What volumes are possible?’ ‘What will our points of distribution allow for?’ ‘Will the brand be around in the future?’

There are easily 100 fine wine wholesalers in Chicago, and many of our major accounts order from them, so it’s a very competitive space to be. We try not to let our size get in the way by being nimble and flexible with our delivery and service policies, but there are some realities to being big. Hopefully, we put the right people in the market who build the right relationships.

TBN: Finally, what are the core corporate values at Wirtz which you attribute to your family’s longstanding success?

DW: We are truly a family that always tries to do the right thing for the long term of our business, and to do the right thing for our employees. We are very accessible; we don’t believe in pyramids and ivory towers and we work alongside our people day to day. Another critical belief we share is that while we are rooted in values based on our family and our history, we need to be really progressive with how we operate. I believe we have a great balance between honoring our past and looking ahead toward the future. 


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