I’ve been getting in at 4:30 a.m. every morning for 32 years. I hang out in the drivers room, go out to the warehouse, do a walk around every day,” says Edward Crowley, president and COO of Dichello Distributors, Inc.

It’s more than a routine for him, it’s a tradition. One of many traditions that guided the Orange, Conn., USA-based distributorship for three quarters of a century now. “The family that founded the company has many traditions and great pride in their business,” notes Crowley.

Dichello Distributors marks its 75th anniversary in the first quarter of 2009, and plans for a low-key celebration befitting a private company that keeps a low profile.

The business got its start at the end of Prohibition in 1933 when Anthony Dichello began selling Hulls beer, brewed locally in New Haven, Conn., USA. He distributed the beer out of a backyard in Wallingford, employing a horse and wagon for his rounds. Several years later the fledgling company became a family business when Anthony’s three sons, John, James and Albert, came on board. During the early 1940s, the Dichellos acquired distribution rights for Anheuser-Busch brands in Fairfield County. Today, Heineken USA also is a Dichello supplier.

Although the original founders have passed on, it’s still a privately run family business. The current ownership includes Gloria Dichello Hall, daughter of co-founder John Dichello, who serves as chairperson and CEO. Crowley came on board as her partner in 1994 when he relocated from Michigan where he had worked for an Anheuser-Busch wholesaler. Keeping the family tradition, his son, Edward Crowley Jr., joined Dichello Distributors three years ago where he currently serves as retail sales manager.

Adhering to family and traditional values doesn’t mean a resistance to change. The company has made a number of strategic changes—including revamping its compensation program, segregating on- and off-premise accounts, adding craft beers and a wine and spirits division to its line-up, updating its warehouse with modern technology and rethinking delivery systems. New traditions are being created for Dichello Distributors’ next 75 years.

Perhaps the biggest break with tradition was the most recent one—instituting a new compensation plan. This past January, the company engaged a highly respected consultant to evaluate the old program and develop a new one.

“For 75 years, we were on per-case commission,” recalls Peter Deane, Dichello vice president and general manager.  “Our reps were looking at their commissions as if they were salary,” he explains. “There wasn’t a lot of incentive because if they grew by 1 to 1.5 percent, it wouldn’t amount to a lot of money, not even noticeable in their paycheck.”

The situation was compounded when new brands came into the lineup, vying for top-of-mind and offering various new incentives. “So, we had a bunch of confusing and sometimes ineffective incentives. Basically, we were allowing some new suppliers to come in and drive our sales force,” says Deane. “The big incentives would cause a sales blip, but then we would lose that volume when the incentive was over.”

The consultant spent weeks developing a new compensation program for Dichello. “He rode with our salesmen and interviewed most of the sales, marketing and management team members,” says Crowley.

That program is now in place, much different from the old compensation setup. The only piece that Dichello retained was Anheuser-Busch’s Impact program. “Impact is untouchable, not just because Anheuser-Busch wants us to do it, but because we believe it’s a great program,” says Deane. So 10 percent of compensation today is still Impact as a monthly situation.
“If they don’t hit their core goal, they lose a lot more than they would if it was a commission—they lose 10 percent not 1 percent,” explains Deane.

Now 40 percent is salary; the rest, 60 percent, is in “buckets” based on growth over a four-month period. Buckets include core, specialty brands from A-B, some new craft brews that were recently added, plus a wine bucket, a spirits bucket and a non-alcohol products bucket.

So far, the new compensation program seems to be working well. “Right now we’re 3 percent up and we haven’t been 3 percent up in a very long time,” says Deane, who concedes that there are other factors for that increase. “But I think at the end of the trimester [the first four-month incentive period], we’re going to see a jump in business.”

Another big change in the way Dichello does business was instituted five years ago and also is making a positive impact. The accounts were segregated into on- and off-premise for greater efficiency. Now the reps specialize in one or the other type of account, not both “because of the complexity of the SKUs in our market,” says Deane.

Dichello’s portfolio has grown a lot over the past few years.

“We’re proud of our affiliation with Anheuser-Busch and with Heineken USA,” says Crowley. “But we’ve also brought on a number of craft beers because retailers were asking for them.”

Three new divisions also were added: wine, spirits and non-alcohol beverages.“One of the big reasons we made changes to our compensation plan was because of the new additions,” says Deane.

Right now these new divisions are small, especially compared with Dichello’s beer lines. There are four suppliers in the wine division with around 40 SKUs. The spirits division is mostly Anheuser-Busch brands. Non-alcohol offerings include carbonated soft drinks, water and energy drink lines.

The Dichello warehouse is 240,000 square feet on more than 29 acres in Orange. In the fall of 2007, radio frequency technology was installed to better manage the growing inventory. From a base of some 300 items in 2003, the current overall SKUs shot up to more than 700.

“Keeping our customers’ ever-changing needs satisfied has forced us to be ahead of the curve where material handling and
delivery practices are concerned,” says Pat Oates, director of  operations, safety and labor relations. “The state-of-the-art warehouse management system helps receive, track and ship the newly added wine, spirits, soda, water and
energy drink lines.”

One thing hasn’t changed—and never will. “It started with the customer 75 years ago,” declares Crowley, “and it’s still about the customer.”

For Dichello, that means giving every account, big or small, the same top-notch service. Because, says Crowley, the relationship is based on a lifetime customer value, not short-term profit. “Those young retailers we’re dealing with today are the customers my son is going to be dealing with when he’s my age.” That’s tradition.

VITAL STATS
DICHELLO DISTRIBUTORS, INC.
CHAIRPERSON & CEO: Gloria Dichello Hall
PRESIDENT & COO: Edward Crowley
HEADQUARTERS: Orange, Conn., USA
’07 CASE VOLUME: 7 million
EMPLOYEES: 215
GOALS: To challenge employees to be the best they can and perform at a level without equal to the norm. There is always one more thing that can be done to better serve the customer.

From Beverage World September 15, 2008