Constellation Brands Distills Data

There is an underlying challenge in the alcoholic beverage industry around data, which, of course, comes from its three-tiered distribution model and leads to a fragmented view of both the customer and consumer. Shipping data is constant so companies do know what product they're shipping and to which distributor, but the story has delays from that point forward.

Now, there is another layer of data available involving depletions and retail account data that is provided by the distributor and shows where the shipments end up -- at hotels, restaurants and bars, big box merchants and small independent store owners. A third party cleans up this data, and the manufacturer has a monthly and sometimes weekly understanding of what product went where beyond just the distributor.

What happens after that is the question on hand. How can a company make intelligent business decision based simply on shipment data? The story needs to evolve to an understanding of product and promotion performance, and actionable consumer insights. Chris Dorsey, vice president of IT and business strategy for Constellations Brands Inc., says, "It's something we have been very passionate about getting resolved and driving, not just within Constellation, but in the industry itself." If anyone can change this segment of the market -- wine and spirits -- it makes sense that the largest wine company in the world could do so.

Constellation Brands evolved from Canandaigua Industries, which was formed in 1945. When it went public in the 70s, the name was changed to Canandaigua Wine Company Inc. After years of acquisitions and growth, Canandaigua Brands Inc. was created as a parent company in 1997, and in 2000, Constellation Brands Inc. came to be. According to the company, "The new name better reflects the scope of the company and its broad range of products to satisfy a wide range of consumer preferences."

Under the Constellation umbrella, there are now three main business units: Constellation Wines North America, Constellation Beers and Spirits (Barton Incorporated) and Constellation International (see sidebars on Pages 13 and 14 for brands). Within each business unit are operating companies that serve their brands and have varied "go-to-market" strategies depending on product. Each company tends to have its own "entrepreneurial spirit" when it comes to how the company is run.

However, at the same time, Dorsey says, they want to draw the most synergy and collaborate as much as possible with all of the operating companies, leveraging the entire scale of the organization. Thus, the North American operations share an IT organization as well as other functions and services. Dorsey says, "We are committed to delivering solutions that not only support collaboration, but actually encourage it. By doing this we clearly continue to align ourselves very closely with the business."

A few years back at Constellation, IT was perceived in a more traditional manner as more of an overhead cost. As the company evolved, reorganized and positioned itself as a premium wine company, Dorsey points out it has taken steps to change this thinking. "Nearly everything we do in technology is aligned with what the strategic objectives of the organization are. We obviously have to 'keep the lights on' too, but we focus a great deal of time looking at where we can help improve the business and move initiatives forward."

 In fact, Dorsey's position was created to fill the gap between business and IT. "I'm more of a technology strategist, tying IT enablers and strategies to the business plan. I act as the liaison between the business and IT." Interestingly, his background is in finance with a 10-plus year stint at Wegmans Food Markets Inc. He credits having a strong financial discipline as critical to his success, enabling him to understand where to best make technology investments. A credo he lives by, picked up from his retail experience at Wegmans, is, "If you don't understand the business benefits you'd better not do it because technology is pretty darn expensive."


Data Dilemma

Thus is the case in point as Constellation Brands begins to rollout IBM Cognos 8 BI. "There also are other activities going on such as promotion and product allowance, and we have to be able to match the event with the performance of the product in a timely fashion to determine whether or not it's a successful activity," says Dorsey.

He further indicates that the goal does not end here. They need to discern what is happening at the retail outlets to understand how a product is moving through the supply chain. "We have to be able to tell a complete story -- from product creation to consumption -- to truly make the best business decisions possible," says Dorsey.

"And because of this, there is still a fair amount of work to do around data structure and standards within this industry. It is difficult to tie this all together because we don't have comprehensive data synchronization compliance within the alcohol/beverage space," he adds. While some companies are in "test" mode and some are doing it on a trial or limited basis, the greater challenge, according to Dorsey, is that if there is not a critical mass in the industry performing these initiatives, it is difficult for retailers to see the value.

Beyond data synchronization, another challenge lies in the data itself because in non-regulated industries the point-of-sale (POS) data that comes back from the retailers and/or brokers and distributors isn't standardized. This all leads to latency issues, since a third party is necessary to decipher the data, which in turn, makes it impossible to react effectively. "Once we're truly in a data synchronization mode, we can seamlessly share data with the distributors," he concludes.

The next challenge is at the retail level and invites questions such as: "How effective are promotional activities? Are promotional dollars getting to the shelf?" Getting retailer POS data, integrating it and relating it to these events will lead to such understanding. Dorsey provides an example of the opposite: "Without visibility into the retail outlets, your volume may go up, but it may just be because your orders went up with the distributor. It doesn't necessarily mean that all of the products got to the retailer and, even more importantly, that it has sold at that retail outlet."


Road to BI

To begin to go down the path of data synchronization, Constellation Brands has turned to consortiums, like the Alcohol Beverage Industry Electronic Commerce Council (ABIEC). It has been an active member of the council and produced a video to further the initiatives in the industry. Dorsey believes both the industry and the company's challenges are related.

Internally, Dorsey says it examined how to serve up the data to the sales and marketing teams in the most meaningful and efficient way. Excellent internal data comes from Constellation Brands' marketing and consumer insights groups (channel management group) and includes consumer behavior information, panel data and knowledge about industry trends. However, it tends to be analyzed in fragmented systems and shared in spreadsheets with manual processes that make it difficult "to be out in front of opportunities."

The business people understood the data limitations and different systems from which to extract data, and many created their own solution to get the whole story. "Before you know it your internal business folks have relationships with multiple vendors and they're all serving them up only a piece of the puzzle. I think it's very common in a forward-thinking organization that people try to figure things out if the right process is not in place," says Dorsey.

"But, at the end of the day, sales people should be focusing on selling wine, not on whether pivot tables were updated, and if so, were they correct?," affirms Dorsey. This is where IT knows technology can be the enabler to get information when and how it is needed. He says, "That's our mindset, especially in this area because we know that technology can solve these issues."


Solving the Problem

Dorsey says the company first dealt with its third-party providers in a more proactive way, making sure that the data obtained was scrubbed correctly and had the right coding. Together, they set new standards and agreed to service levels around the data.

He knew from his experience that all the data could come together in a timely and orderly fashion with the right technology solution. Dorsey says, "We examined our business intelligence framework and quickly realized that spreadsheets were a thing of the past. Today, it's about people logging into an intuitive system, setting their dashboard and tolerance levels, and having actionable insights delivered by that system in one very simple view."

IT looked at all of the activities going on, observed the third-party systems and relationships and studied the fragmentation that existed in the environment. Dorsey says they built a comprehensive, robust, data warehouse. The repository is now taking in all the data, such as shipment and depletion information and other internal data; retail account level information; and third-party data.

The front-end tool is aptly named the "BAR" (Business Analysis and Reporting), and it will be the "one-stop shop" for Constellation Brands' teams to get their information in a highly intuitive and action-oriented format. "The data is finally all brought together telling a complete story rather than just chapter one, and then having to go find chapter two and having to go find the conclusion elsewhere," illustrates Dorsey.

He goes on to say, "We also built a proprietary tool named 'ATLAS' (Analysis Tool Linking All Systems) where we are able to obtain retailer POS data and link that to other data points providing the retailer with greater understanding of product trends and opportunities. This enhanced relationship fosters category captain relationships since we are now able to provide intuitive formats for not just Constellation Brands' folks, but also for our retail partners."

Constellation Brands' vision is that these two systems will work collaboratively. Why not just bring the two systems together?

When considering retailer data, Dorsey prefers to be cautious. "You want to have the right security in place to make sure that the data is as or more secure than when it is within the retailers' systems. It should be segregated so the retailer doesn't have to worry about it getting co-mingled with your data or somebody else's data." Coming out of retail, Dorsey is very conscientious about what a retailer needs.

The BAR solution (excluding the retailer data) is currently in pilot mode. There is an active user group testing out the system, and Dorsey says that everyone is anxious go live and finally move to "one version of the truth." A comprehensive rollout and bigger launch in North America will happen in the next couple of months.

On the ATLAS front, the solution is up and running at some key strategic accounts. The objective is to continue to roll it out to all of strategic accounts both on and off premise.

In addition, Dorsey says the data will be shared and fed into sales and operations planning (S&OP) and supply chain processes that are in development -- though this has been an added challenge.

He explains, "You better have a master data management (MDM) strategy in place when you start doing this or the same issues that you faced externally with data, quality and cleanliness and ease of use, will resurface internally when you start trying to leverage the data within your ERP backbone."


Expected Benefits

On the top line, enhanced volume from better decision making will be an obvious ROI, and Dorsey says they anticipate cost savings as well. "We believe that as this information becomes timelier to the organization, there is a great opportunity to better align events with results. And where those events are not generating results, we will either shift to a different strategy or not do them again," he explains.

They are already realizing soft savings. Internal studies revealed that people were literally spending days creating spreadsheets to provide monthly views. Building this process into the BAR and dynamically refreshing it each time there is a data dump has opened up all that wasted time. "We see less time spent updating spreadsheets and more time spent analyzing data," Dorsey says.

Bringing in R&D and innovation is another opportunity this initiative will enable. Dorsey says, "As we roll out, get some successes under our belt and obtain critical mass, it will be a natural progression to then start serving this up to and offering insights into multiple groups within the organization."

Originally, the focus was solely on sales and marketing, but as the company started to get deeper into the project, there was a fast realization that the tools would have to eventually span the entire organization, including operations and an S&OP framework study going on today. "That's why we structured it to be one comprehensive data repository. We're using best practices MDM strategies to make sure that the data is clean and consistent," he notes.

Going forward, there will be one data repository as well as one set of tools for all operating companies with the first focus on Constellation Wines North America. The next plan of the process is to bring in the spirits and beer businesses.

"One of the challenges companies have, once they get past the hurdle of being able to get the right data, is providing it in intuitive fashion," Dorsey explains. "It's hard, for example, for sales people to know what they need in a solution until they get to 'see it and touch it.' You have to walk in a sales person's shoes for a little while to truly understand what they need."

Dorsey says that Constellation Brands has "gone to great lengths to do this" and make sure that the solution delivered exactly meets and/or exceeds everyone's expectations.