By Gene Linn, AJOTTwo Thousand and Seven shapes up to be another vintage year for fine wine importer, distributor and broker Henry Wine Group. Not so long ago, however, the Benicia, California, company’s wave of acquisitions left a bitter taste. Henry Wine Group started in 1985 as a distributor of wines to premium shops in grocery stores and to upscale restaurants, providing a specialist alternative to giant liquor marketing companies that focus on scotch, rum and other spirits. “It’s probably more of a boutique operation,” said Don Locke, CFO of Henry Wine Group. “One guy produces about 2,500 cases a year in France. We don’t market wine to 7-Elevens.” Then in 2001, the Group went on an acquisition surge, with some 17 transactions according to Locke. The buying spree helped the company gain the desired economies of scale. It is now the fourth largest liquor distributor in California behind three big companies that deal mainly in spirits. Annual sales in California are about $100 million. The enlarged company now sources wine from small and medium-sized suppliers from around the world. About 65% is imported, mainly from Spain, France and Italy with Australia, Chile and Argentina growing fast. California wineries provide much of the domestic product, along with suppliers in Oregon, Washington and other states. The wine is shipped to one of three warehouses, in Maryland, Oregon and California. Then it goes to myriad customers. About 55% goes to retailers like Safeway in California and the rest to high-end restaurants. Henry Wine Group serves some 6,000 customers with liquor licenses, out of a total of 22,000, in California alone. Making this devilishly complex supply chain even tougher, shipments are all temperature-controlled. “The second we take the product it is temperature controlled, from the truck to the container to the warehouse and on to our truck,” said Locke. “It’s very important that there’s no variance in temperature.” The Group at first tried to manage the larger workload by asking its customs broker to be the single point of contact. That was a mistake, acknowledged Locke. The small customs broker was asked to do more work for the same amount of money. “The theory of having a single point of contact was good,” said Locke, “but we reached the breaking point fairly quickly.” The Henry Wine Group had to manually handle communications between far-flung suppliers, 150 sales people and thousands of buyers. The system easily clogged up, leaving sales people with little confidence to set firm dates for sales and delivery. It was also difficult to calculate landing costs, which made it hard to price the wine in the market. Then the Group turned the problem over to logistics company, Agistix. All sales and transportation information flowed through a single point, and sales people could check the status of an order on-line and by daily email reports at any place from the winery through the warehouse to the buyer. “We’re a sales and marketing company,” said Locke. “Our sales people need to know when a shipment will arrive. From a chief financial officer’s perspective, I don’t want the product on a rack collecting dust before it is marketed.” The Henry Wine Group’s main goal was to get good information, but it also got a bonus - cost savings. “If we had broken even, we would have been fine as long as we got better information,” Locke said. The 5% savings in freight costs was “all gravy,” he said. That savings comes from $5 million to $6 million a year in freight expenses for imports. “Instant visibility”Agistix uses a web-based system to provide easily accessible information to Henry Wine Group, according to Frank Cirimele, Agistix general manager, logistics and strategy. “They copy us on their purchase order,” he said. “We get information into the system and provide instant visibility. Marketing people can get an update where that purchase order is, from the carrier, through customs, to delivery, to the warehouse.” The Group’s supply chain is comp