Hensley & Company

views updated

Hensley & Company

4201 North 45th Avenue
Phoenix, Arizona 85031
U.S.A.
Telephone: (602) 264-1635
Fax: (602) 247-7094
Web site: http://www.hensley.com

Private Company
Incorporated: 1955
Employees: 600
Sales: $162.4 million (2002)
NAIC: 424810 Beer and Ale Merchant Wholesalers

Hensley & Company is one of the largest beer distributors in the United States. Hensley & Company's operates exclusively as a wholesaler for Anheuser-Busch Companies, Inc., controlling the largest contiguous Anheuser-Busch territory in the country. The company maintains a fleet of more than 400 trucks that rely on three warehouse facilities in Arizona. The facilities are located in Phoenix, Tempe, and Prescott Valley.

Origins

Hensley & Company's founder, Jim Hensley, gave his company a single-minded focus from its inception: the distribution of products made by St. Louis, Missouri-based Anheuser-Busch Companies, Inc. Before entering the wholesale business, Hensley fought in World War II, serving as a bombardier on B-17 aircraft. He flew a dozen missions before being shot down over the English Channel. After his return to the United States, Hensley worked briefly in the beer and liquor industry. In 1955, he reached an agreement with Anheuser-Busch to distribute the brewer's products in the Phoenix area, forming Hensley & Company to act as an exclusive Anheuser-Busch wholesaler.

Anheuser-Busch celebrated its 103rd anniversary the year Hensley wed his professional career to the massive brewer. His close association with the company, whose future success would largely determine the success of Hensley & Company, began at a favorable juncture in the brewer's development. Anheuser-Busch towered as a brewing giant before Hensley began distributing the company's products, producing more than five million barrels of beer each year during the early 1950s. Rather than exhibiting any complacency, however, the company was intent on building upon its well-established prosperity, demonstrating an aggressiveness with respect to expansion that worked in Hensley's favor. In 1951, Anheuser-Busch opened a brewery in Newark, New Jersey, a moment of significance because it represented the first time a brewer opened a brewery outside its home city. The opening of the Newark facility led to the establishment of an Anheuser-Busch brewery in Los Angeles in 1954, one year before Hensley formed his company. The opening of the Los Angeles facility, capable of producing one million barrels of beer per year, was an extension of Anheuser-Busch's national, expansionist mindset first demonstrated by the opening of the Newark brewery. For Hensley, the opening of the Los Angeles brewery, which most likely factored heavily in his decision to form Hensley & Company, provided his company with a supply of beer to distribute. For the remainder of the 20th century, Hensley & Company received the bulk of its Anheuser-Busch products from southern California.

The year Hensley formed his company also marked the beginning of Anheuser-Busch's renewed interest in its wholesalers. In 1955, August A. Busch, Jr., embarked on a lengthy tour of the country one year before being named chairman of the brewing company. In a tour akin to a whistle-stop political campaign, he used the railroad to visit Anheuser-Busch wholesalers, endeavoring to strengthen the relationship between the brewing company and its distributors. August A. Busch was intent on making Anheuser-Busch the country's leading brewing company, a distinction it had lost several years earlier. In 1957, a year after August Busch, Jr., was elected chairman, Anheuser-Busch regained its leadership position, ranking as the country's largest brewing concern in terms of annual production and annual sales. The company did not relinquish its lead for the remainder of the 20th century.

Hensley & Company started as a modestly sized business, operating as a locally oriented company that gradually developed into a regional powerhouse. Hensley hired 15 employees during his first year of business, selling 73,000 cases of Anheuser-Busch beer products during his first year in operation. The amount of beer distributed by the company was a small fraction of the annual total Hensley & Company recorded later in its history, but it was a beginning for Hensley. His stature within the ranks of Anheuser-Busch wholesalers rose as the territory he controlled increased according to a gradual, methodical process whereby his tiny operation grew into one of the most vital facets of Anheuser-Busch's sprawling operations.

Hensley was one of a legion of distributors used by Anheuser-Busch, but his close attention to managing his business distinguished Hensley & Company within the Anheuser-Busch organization. In 1970, 15 years after establishing the company, Hensley established Anheuser-Busch's first controlled-environment warehouse, or CEW, a facility designed to keep beer cool while in storage. Hensley & Company's CEW set a precedent after test marketing in Phoenix revealed that chilling the beer while in storage increased sales by 7 percent. Anheuser-Busch executives looked at the market study and ordered that all its beer be stored in warehouses tailored after Hensley & Company's Phoenix facility.

By the end of the 1980s, more than 30 years had passed since Hensley established his distributorship. In the intervening years, Hensley & Company had grown dramatically, ranking by the end of the decade as the largest beer distributor in Arizona. In 1955, the company sold 73,000 cases of beer. By 1989, the company was selling one million cases of beer every month. The volume of business was aided by recessed rail tracks at Hensley & Company's warehouses, which enabled forklifts to offload the beer from trains arriving from southern California. Hensley, whose daughter Cindy had married U.S. Senator John McCain, presided as president and chief executive officer, occupying an influential position within Arizona and within the Anheuser-Busch organization. His decision to keep Hensley & Company private left industry observers limited to guesswork about the company's financial stature, but the business press estimated that Hensley's distributorship generated approximately $100 million in annual sales. Roughly 70 percent of the company's business at this point was derived from sales to chains of supermarket and convenience stores. For the rest of its business, the company relied on sales to bars, restaurants, and hotels.

Reorganization in 1994 Breeds Success

As Hensley & Company entered the 1990s, it faced a critical juncture in its history. The nearly 40-year-old wholesaling business built by Hensley was a major force in the western United States, its long-standing and solid relationship with Anheuser-Busch underpinning a seemingly sturdy organization. To industry observers, the privately held Hensley & Company appeared to occupy solid ground, but company officials began to grow concerned during the early years of the decade. "It was a tough time in our industry," a Hensley & Company executive reflected in a July 2, 1999 interview with The Business Journal—Serving Phoenix & the Valley of the Sun. "There was an inability to increase our price and we were still recovering from a doubling of the excise tax," the executive continued. "We were in the middle of a downsizing by corporate America. A lot was going on at the time."

As the mid-1990s neared, Hensley & Co was forced to redefine itself. Recessive economic conditions during the early 1990s coupled with a substantial increase in excise taxes conspired to stagnate Hensley & Co's financial growth, but the company also faced a more daunting threat as retailers were presented with the opportunity to receive beer shipments directly from the manufacturer. The advent of direct shipping portended the eradication of wholesalers from the supply chain, or at the very least a major change in the wholesalers' relationship with both manufacturers and retailers. The prospect of direct shipping in markets such as California prompted Anheuser-Busch to look at its wholesale system from a new perspective, which, in turn, also forced Hensley & Company to rethink the way it operated. A Hensley & Company executive, in a September 15, 2002 interview with Beverage World, recalled the central issue discussed in the early 1990s. "We asked ourselves: 'Do we just put beer on a truck and deliver it to the back of a store, or do we add value beyond that?' At that time we looked inward and decided that we had to become an indispensable entity."

Hensley & Company's crucible occurred at roughly the same time another momentous change occurred. In 1994, Hensley relinquished day-to-day control over the company, vacating his post as president but remaining chairman of the company he founded 39 years earlier. The plans for Hensley & Company's recovery were developed while Hensley presided as president, but the responsibility for the execution of the plan fell to his successor, Robert Delgado. Delgado joined Hensley & Company a year after his graduation from Bowling Green University in 1974. When he was hired as a staff accountant, Delgado foresaw his stay at Hensley & Company as only temporary, but promotions followed, seeing him rise to controller, vice-president, senior vice-president, and executive vice-president. By the mid-1980s, Delgado was being groomed as the company's future leader, and he accepted the post just as Hensley & Company was preparing to adopt a new identity.

The changes enacted added new dimensions to Hensley & Company's role as a wholesaler, and they ran counter to the corporate trend sweeping throughout the country. While other companies embraced the idea of reducing their payrolls, Hensley & Company, its profits declining, expanded its workforce by 30 percent to increase its level of service to retailers. "It was a gutsy, gutsy move," Delgado remembered in a July 2, 1999 interview with The Business Journal—Serving Phoenix & the Valley of the Sun. "And it hurt for a few years," he added, "but it was the way to go."

Company Perspectives:

While Hensley's business is to sell fresh Anheuser-Busch beers and provide excellent customer service, its philosophy is to do much more. As a longstanding member of Phoenix and its surrounding communities, the company expends great effort to sell responsibly—and promote responsibility. At the forefront of finding, supporting and implementing effective awareness efforts—such as designated drivers, cab rides home, server training for those who work in bars and restaurants—the company continues its development of awareness and education programs. It is a nationally-recognized leader in campaigns to reduce alcohol abuse, underage drinking and drunk driving.

Organizational changes were made concurrently as the company divided its sales group into 13 teams, each led by a team leader who governed from ten to 20 team members. In the fall of 1994, the company also began using computer software and hardware to enhance its service to retailers, using a system named Margin Minder that provided data related to retailers' needs at an exponentially faster rate. From the mid-1990s forward, Hensley & Company began to offer its customers increased attention and service, which enabled it to increase its market share by ten percentage points by the end of the 1990s.

Hensley & Company in the 21st Century

As Hensley & Company entered the 21st century, it ranked as the fifth-largest beer distributor in the United States. The company that sold 73,000 cases of beer in its first year of business sold more than 20 million cases during its 45th anniversary year, when it controlled the largest contiguous Anheuser-Busch territory in the country.

The new decade began on a sad note for Hensley & Company. In June 2000, Jim Hensley died. His daughter, Cindy Hensley McCain, was appointed chairman, while Delgado increased his influence over the company by adding the title of vice-chairman to his posts as president and chief executive officer. At roughly the same time this transfer of power took place, Hensley & Company completed the first acquisition in its history, purchasing Mile-Hi Distributing. Owned by the Fornara family since the 1930s, Mile-Hi operated as an Anheuser-Busch distributor based in Prescott, Arizona. The acquisition increased Hensley & Company's sales by 5 percent, adding 900,000 cases of beer to the company's business.

As Hensley & Company approached its 50th anniversary, it held sway as one of the largest beer distributors in the country, enjoying more than a 60 percent share in its markets and dominating the distribution business in Arizona. In the years ahead, the company was expected to maintain its dominance, with its legacy of success fueling optimism for the future.

Principal Operating Units

Hensley—Phoenix; Hensley—Tempe; Hensley—Prescott.

Principal Competitors

Pearce Beverage Company; Phoenix Distributing Company; Alliance Beverage Distributing Company.

Key Dates:

1955:
Hensley & Company is formed.: 1970:
Hensley & Company establishes Anheuser-Busch's first controlled environment warehouse.: 1989:
Hensley & Company's annual sales reach $100 million.: 1994:
Hensley & Company's workforce is increased to provide better service to retailers.: 2000:
Hensley & Company acquires Mile-Hi Distributing.