Issue Summer 12
A purveyor of some of the leading alcohol, non-alcohol and tobacco brands in the world, Bellows International offers an array of products to the Virgin Islands. The company’s extensive portfolio of products is a key part of its ability to remain strong even in a difficult economic environment.
The largest beverage distributor in the Virgin Islands, Bellows International specializes in beer, spirits, wine and non-alcoholic beverages. It also has a tobacco distribution business. Beer accounts for the biggest percentage of Bellows International’s business in terms of volume. About 46 percent of its volume is beer, with 20 percent for wine, 16 percent for spirits, 10 percent in tobacco and 8 percent in non-alcoholic beverages.
Within its core sectors, Bellows International’s leading beers are Coors Light, Heineken and Corona. Its leading wines are Sutter Home, Yellow Tail, Kendall-Jackson and Veuve Clicquot. The leading spirits are Diageo and Grand Marnier, while the leading tobacco and non-alcoholic brands are RJ Reynolds Tobacco, and Pellegrino and Evian, respectively.
“We represent many more suppliers and brands, but those are some of the leaders,” President Ron George says. “We cover the Virgin Islands only, which includes St. Thomas, St. Croix and St. John.”
Weathering the Storm
Bellows International employs 30 people, and all of them are focused on sales and marketing. Several years ago, the company spun off its various backoffice functions into an affiliated external company. That company handles all duties outside of sales and marketing, such as purchasing, human re¬sources, warehousing and supply chain management.
“Having that setup means Bellows is strictly focused on sales and marketing,” George says. “All we have to do is go out and sell, and that approach has proven to be very effective for us.”
In fact, the strategy has been so effective that the company is forecasting some minimal growth in the coming years. That is no small feat considering the impact of various economic factors affecting the Virgin Islands.
The unemployment rate is on the rise, utility costs are some of the highest in the region and the government has raised business taxes. The Virgin Islands region has a population of around 109,000, and it relies heavily on the tourist trade, which also has taken a hit. Not only are fewer people travelling, but those who do visit the islands are spending less.
“Tourism represents about 80 percent of the Virgin Islands’ GDP,” George says. “Hovensa, a large oil refinery located on St Croix, closed in June, which has impacted jobs and tax revenue. As a company we take stock of these situations and reduce costs wherever possible while tightly managing our inventory levels.”
Fortunately, Bellows International represents a solid portfolio of suppliers and brands. George says the company works closely with suppliers, making great efforts to ensure close alignment on branding and marketing programs. Together, Bellows and its suppliers determine what products should be distributed and where.
George says the major suppliers are always interested in launching new brands, packaging and flavors. Bellows approaches those plans alongside its supplier base to determine how best to fit new products into the mix. Each supplier has a regional representative that works with Bellows to discuss sales and marketing elements.
Although Bellows generally focuses its sales and marketing efforts with existing suppliers, it does get approached by new suppliers regularly. In the last few years, Bellows hasn’t added many new suppliers to its portfolio as part of its strategic plan because it has access to practically any product it needs from the key existing suppliers it already works with.
“We entertain the idea of bringing in new suppliers and brands, but we generally stick with our current roster be¬cause we know they will always introduce new products and line extensions to the market,” according to George.
Some of the trends occ¬urring in the Virgin Islands mirror those taking place in the United States. As Moscato has become a more popular wine in the United States, Bellows has added some Moscato brands through its key wine suppliers. On the spirit side, there have been flavor extensions in spirits such as vodka in the Virgin Is¬lands, just as there have been in the United States.
Not all trends common in the United States are taking hold in the Virgin Islands, however. Craft beer sales may be on the rise domestically, but this hasn’t been the case in Bellows’ backyard.
“We really don’t have that vast growth in the craft and specialty beer market here,” George says.
“We have some specialty beers located in the Virgin Islands, but they don’t perform at the level they do in the U.S. because of the heat and humidity here,” he continues. “Most craft beers are heavy and robust, and our standard beer here is a refreshing lager.”
Even though the economic picture in the Virgin Islands isn’t in great shape, Bellows Inter¬national is on pace for an average 2 percent growth per year on an annualized basis thanks to its status as the leading distributor. George expects that growth to be driven by expanding marketshare in various categories combined with a solid portfolio of brands, particularly in beer, vodka and wine.
Bellows Inter¬nation¬al says it will continue to take important steps to re¬duce costs and manage inventory, relying on its 30 employees to drive distribution, merchandising and sales programs. It may be a simple formula, but it requires a lot of attention to detail to prevent anything from going awry.
“We realize the global implications of the economy, but we have to do what we do best locally, controlling our destiny here knowing that there are outside influences that we can’t control,” George says.
“We have to control the internal aspects of our business, and we have a great team, great suppliers and solid brands that help us to achieve our goals,” he continues. “Over the long term, we will continue on current strategy because it is critical that we manage costs and inventories.”