Knowledge, Service and Friendship

Samuel Smith and Son

The company was officially established as Samuel Smith and Son in 1923, growing over time to service the liquor industry of Australia with its blue chip portfolio of national and international wines, spirits and premium ales.

“All of the brands that we are the major representative agency for and all of the brands that we produce ourselves have a real history, story and substance behind them,” Nick Waterman, Director of Strategy and Trading, explains. “I think that for consumers, particularly the younger consumers, their thirst for knowledge is so huge and they have access to information that they maybe didn’t have ten or twenty years ago, and authenticity is very important.”

This approach appeals to new clients in their mid-twenties or thirties, who are quickly becoming the primary target market for liquor and spirit companies as they face significant declines in sales with the baby boomer market. Younger customers are more likely not only to appreciate the history and ethics of a company, but to factor this is when making purchasing decisions.

At the same time, marketing to a younger consumer offers certain challenges – or opportunities, as Samuel Smith and Son prefers to see it – in particular, in the area of technology. The company has opted to step ahead of the game with its introduction of field organisation systems through Salesforce.com. Through this new iPad-based system, employees are able to have all of the relevant information right at their fingertips – from product descriptions and reviews through to detailed order histories and documents.

“We view it as a long term game,” says Mr Waterman, “and whilst it’s very important for us to hold onto our history and heritage, we have to be contemporary as well. So we’re in this transition where we need to bring ourselves into the future and address the requirements of the marketplace of today.

“Having ninety plus years of history as a distributor,” he continues, “we have a strong tradition of value and quality. The way that that manifests itself is the way that we manage the business or the way that we look at the future.”

As a family company, Mr Waterman says that Samuel Smith and Son takes a longer term view than many of its competitors – who, as public corporations, are beholden to a twelve month cycle of management in order to please their shareholders. He adds, “We understand that the wine industry as an agricultural industry is subject to the vagaries of climate and therefore we manage the business in terms of the best interests for the brands that we produce and that we represent, rather than short term economic gain.”

In taking such a view, the company is able to make more strategic choices which will ultimately result in higher levels of profitability versus higher volume of sales. In fact, at present the company reports being a fair bit behind this year – with 2009 having been its peak year for business in Australia over the past twenty years. “We don’t chase growth for the sake of growth,” explains Mr Waterman, “but still our brands are healthy and the owners aren’t panicking; they understand it’s a long term game.”

That being said, Samuel Smith and Son has retained a strong hold on the marketplace – both within Australia and internationally – and is currently ranked within the top five wine producing companies in Australia. Perhaps most remarkably, it is one of the only companies within the top 10 that is still a proudly owned and operated family business.

At the same time, being a family business allows for a rather flat business structure, which nurtures a strong sense of camaraderie and loyalty within the company. Says Proprietor/Director, Robert Hill-Smith, “We’ve got a team of wily, long-serving successful people in key positions driving the business, whether it be in wine making, sales, marketing or distribution. We’re very lucky with staff loyalty and the ability to recruit good quality people and keep them, so that stands us in good stead.”

Boasting a very low staff turnover rate, Samuel Smith and Son has cultivated lifelong relationships with its employees – many of whom have been with the company for more than fifteen or twenty years. This loyalty is supported through significant in-house training – including a mandatory six-week wine education course – as well as through further education supported financially by the company.

“It’s a fairly unique place to work,” says Mr Waterman, citing several years’ experience at a variety of other international companies by way of comparison. “Everyone is treated with respect and Robert is actively working in the business. Anybody, from a worker in the warehouse to someone in customer service, could ring him up and talk to him. It’s a very flat business structure and we encourage our people to have fun – in fact it is part of our company philosophy, being ‘knowledge, service and friendship’… and fun!”

This philosophy of course translates into exceptional customer service, with the same type of valued relationships nurtured between the company and its customers. Samuel Smith and Son forgoes the typical centralised model of operation in favour of a more customer-friendly system of State-based customer service centres. Explains Mr Waterman, “We’ve avoided doing [the former] on the basis that we like to have state offices staffed with people who are local to the area who can speak knowledgably to the local trade. They really set the standards; they know where places are and what’s been happening in the community. So it’s people-based rather than an automated call centre.”

Furthermore, each state has its own local warehouse from which Samuel Smith and Son deliveries are made – including its unique urgent delivery service. Typically, delivery service within the industry is limited to weekly routes, but Samuel Smith and Son has gone the extra step by offering its clients a call-in line with delivery available daily within twenty-four hours of the request.

Another way in which Samuel Smith and Son has adapted to meet its clients’ evolving needs is through its relatively new endeavour – a division called Free Run Juice. Over the last five or so years, the industry has experienced a significant shift, as consumers hit by the GFC have begun seeking out more budget friendly wines. To capitalise on this trend, retailers have begun to offer their own in-house brands, fuelled by the over-supply which has occurred in recent years, brands which have become a large force within the industry, offering significant competition. To address this new threat, Samuel Smith and Son introduced Free Run Juice as a custom labelled house wine – a complement, rather than a competitor to third party principal or equity brands.

“Our strategy,” explains Mr Waterman, “has been about managing the channels, in as much as we try to manage our portfolio of products so that we have an offer that applies to each channel… we also have arguably the broadest offering of imported wines; we don’t just rely on Australian wines. That also helps give us a diversified offer.”

In fact, a large part of the history of the company was built on representing third party brands – both in the wine and spirits industry. Through its distribution arm, Negociants Australia, the company serves as Australia’s largest importer of fine wines. Established in 1984, Negociants imports and represents the finest wines from throughout Australia and around the world. Through the two distinct arms of the company, Samuel Smith and Son brings the finest quality to the Australian marketplace.

Explains Robert Hill Smith, “Even though we were wine makers as a family, we had a rather heavy dependency on our third party representation business. By the time of the 1970s and mid 1980s we had a mixed bag of international spirits and cocktail brands to represent the market so it was really a hybrid of wine and spirits living together in the same portfolio which as we know today is quite unusual – they’re not really proven to be over time very good bedfellows.”

After a number of takeovers and mergers in the 1980s and 1990s, Samuel Smith and Son regrouped as a fine wine distribution house at the distribution point, but as a winemaker it has continued to grow, with Robert Hill Smith sitting at the head of the family business as its proprietor and vigneron.

“Yalumba in the Barossa is the cultural heart and soul of our business,” he concludes with pride. “We have many other wine related business activities we undertake, but we must not forget what Yalumba means to this little mini-universe that we have created.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 5:12 AM AEDT