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Marley Lead Investor: We Were Never Asked for Sales Help

Written on:October 24, 2013
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By Max Rothman

The lead investor in Marley Beverage Company denied claims that he had failed to supply financial support for his previous management team, leading to the eventual resignation or departure of much of the company’s senior leadership.

In a wide-ranging interview with BevNET, Gary Shiffman gave his side of the story: that the former management team, run by CEO Kevin McClafferty, had left the company with too small a staff to satisfy a wide network, and that it had only been in the past six to seven months that Shiffman and other investors had absorbed the details.

“When the numbers are good and the growth is good, you accept things,” Shiffman said. “When the budget starts being challenged and the answers and the action plans aren’t solving it, then you start asking the questions.”

And things had seemed good over the two-year period leading up to that scrutiny, Shiffman said. The company had expanded its network to 140 distributors and this year had entered 2,400 Walmart stores, 7-Eleven and other chains, leading Marley’s investors to be initially satisfied with the results. Sales were meeting expectations, so Shiffman didn’t pry — he left the power in the hands of management. Shiffman explained that the initial structure of the company was one in which a veteran team had been hired to provide the experience needed to launch a new company, and that the investor group had relied heavily on that experience.

When he did start asking the questions, Shiffman learned more about the company’s disorder, he told BevNET. He realized that 80 percent of the company’s business was rooted in 20 percent of its distributors. He found that regional sales managers were responsible for 20 to 30 distributors on their own. Because of this difficult ratio, he said that many distributors had no communication with Marley after signing their initial contract. In many markets, this led to an inventory shortage.

“We didn’t identify the importance of coming in with that two-wheeler two times a week, three times a week,” Shiffman said.

He also discovered that the company had been using Vermont Information Processing, a software system that allows the company to monitor the accounts from more than 90 percent of their distributors.

“No one at our company had really been familiar with it or brought it to our attention,” he said of the software.

Shiffman said that management never made it clear that they needed more of what the industry calls “feet on the street” — the marketing support that brings the brand to life in stores and with distributors. Instead, he said, it was simply never brought up — but that the investors have always been willing to spend the necessary capital.

Sources within Marley have told BevNET otherwise, and that the previous management had requested sales and marketing help, only to be rebuffed for budgetary reasons.

“That comes as a surprise to me,” Shiffman said of that claim of a closed wallet.

Regardless of who’s right, the company plans to move forward with a more regionally-focused plan, as previously reported. Shiffman said that, in hindsight, this is how the company should have done it in the first place.

Now Marley will invest in that aforementioned 20 percent, it’s core points of business. These include six markets: the Northeast, the Mid-Atlantic, Florida, the Midwest, California and the Northwest. The company will maintain its national footprint, but markets outside of the key six, which could receive three to four sales managers per market, will be serviced by a hybrid model of distribution, Shiffman said. Marley won’t be able to provide these markets with its full attention, however, he said, the plan will be clearly explained to the respective distributors. Shiffman said that the company is working on improving its communication with distributors.

Marley also recently added about 40 new staff members. These hires will primarily cover the sales and marketing departments in the company’s six key regions. As for McClafferty’s replacement, Shiffman said that the company is still interviewing for a successor and there’s no projected timeframe. He wants to find the right person who has previous experience at this platform level. It’s a measured process, following the company’s altered approach.

“Taking a step backwards would yield many steps forward,” Shiffman said.

BevNET editor-in-chief Jeffrey Klineman contributed to this report.

Source: Beverages

    

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