Formulation of a Sales Program
The Valley Winery
Pat Waller, recently hired as sales manager of the San
Francisco region's chain division, was lamenting the
problems he inherited. Despite favorable sales results for
the San Francisco region, turnover was so severe Waller
could not understand how sales increased during the past
several years. He was surprised to learn the average sales
rep had been with the San Francisco division of Valley
Winery for only seven months and sales force turnover
neared 100 percent a year. In fact, only one sales rep had
more than two years' experience. Waller had heard that
high turnover was a problem nationwide but did not expect such high figures for San Francisco. Waller supervises two area managers, who in turn direct nine district managers. District managers supervise five to six sales reps, of which there are 50 in the San
Francisco division. Approximately 50 new sales reps are
hired each year, but the sales force size remains relatively constant. Waller knew the increased competitiveness in the market would make it more difficult to continue to obtain future sales increases. The excessive
turnover problem would command immediate attention.
The Valley Winery, founded in 1933 inNapa, California,
is the largest domestic producer of wine in the United
States. Started with only a $7,500 investment at the end
of Prohibition, it has become the leading producer of
low-priced, consistent-quality wines. Favorite brands include Santo Key and Valley premium table wines, Astral sparkling wines, Valley brandy, and most recently the
Cool Valley line of wine coolers. As is true with most
other wineries, Valley produces a low-grade, fortified
sherry known in the streets as "Sneaky Pete." This product appeals to a small market niche and receives virtually no marketing support. The Valley name does not even
appear on the label, a practice followed by other wineries
as well. Brand names for this low-end product include
Snake-Eye, 20/20, and Acey-Deucy. Valley also bottles
a line of pop wines, which have never achieved high
sales. Brands in the pop line are California Dream and
Mile-High. The Valley Winery sells more than 40 percent
of all wine produced in the United States each year.
Source: Neil M. Ford.
The Valley Winery is also one of this nation's largest
privately held companies. As such, it is not required to
disclose any financial information. However, according
to financial analysts who specialize in the wine and distilled spirits industry, 2004 sales were believed to have exceeded $1.5 billion. Of the various producers of wine
and distilled spirits, the Valley Winery is believed to be
the best managed and most innovative.
Valley's phenomenal growth and success can be
traced to two broad factors. As already stated, it produces
wines of consistently high quality at relatively low
prices. Second, Valley's sales force, using a push strategy, is considered by many to be the most aggressive and
innovative in the industry. As the manager of a San
Francisco liquor store states, "Turn your back on a Valley
sales rep, and your store becomes a Valley warehouse."
Heading up the sales force is Carl Roman, whose passion
for detail and success is well known.
Valley Winery distributes nationwide through liquor
and beer distributors located in metropolitan areas.
Valley owns roughly 50 percent of these distributors,
mostly those that are larger and more profitable. Valley's
field representatives call on noncompany liquor and
beer wholesalers across the country. Valley uses a major
account system with reps calling on the headquarters of
large chain stores.
The organization of the San Frahcisco division is typical, especially in those market areas where Valley owns the distributor. There are three sales groups. The first
group calls on liquor stores and bars. Career-type salespeople dominate this group and most...
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