A Call to the Beverage Bullpen

Red Sox fans didn’t shed tears when manager Grady Little left the team following the team’s 2003 playoff catastrophe against the New York Yankees. Little, after all, infamously left tired ace Pedro Martinez on the mound for too long in the deciding game of the American League Championship Series. Against Martinez, the Yankees staged an 8th inning rally to tie the game, eventually winning a ticket to the World Series off an 11th inning home run hit by Aaron Boone.

Little was canned that fall and replaced by Terry Francona – who was also handed a brand new All-Star relief pitcher, Keith Foulke, to address the key problem the Red Sox had faced the year before – that they didn’t have anyone reliable around to man the back end of games. Francona led the Red Sox past the Yankees to the World Series the next year, with Foulke as the closer.

So would Grady Little have celebrated a World Series title in Boston if he’d had Keith Foulke? It’s a question that has some relevance to the beverage game right now.

The resignation of Kevin McClafferty as CEO of Marley Beverage Company is about a month old and it’s obvious that ownership contributed to his departure. One lingering question: how much that resignation was the result of a power play on ownership’s part and how much was spurred by disagreement over strategy and resources. What’s clear is that ownership is shedding the same leadership that built the brand: McClafferty’s gone, so is Chris Mamos, the national accounts director, as well as global marketing chief Lee Brody. Another 8 to 10 positions are being eliminated to bring personnel into alignment with the new “growth strategy.” Craig Thibodeau, the SVP of Sales and Distribution in North America, is an old friend of McClafferty’s and isn’t the heir apparent, but as of now he’s running the company alongside Chairman and lead investor Gary Shiffman.

But – and here’s the head-scratcher – Shiffman’s growth strategy, one in which the company is bringing on another 30 to 40 full-time sales and marketing employees in key regions, is a personnel bump that McClafferty’s team asked for before his resignation. Why didn’t the company come up with the budget earlier? It’s not like Marley was bloated with personnel; in fact, it ran extremely lean under McClafferty, with 16 sales representatives for the entire U.S. – more than 140 distributors – at the start of the year. And it did so under the mandate of ownership. Chances are McClafferty would have been drooling at the opportunity to put 30 additional pair of feet on the street to help market the brand.

In about three years, McClafferty had gotten the brand to the point where it could be in position to layer in extra marketing help in select locations while also running national ads and promotions, like its Howard Stern ad campaign and music competitions. But like the 2003 Red Sox, the brand needed to open the wallet for closers. Unlike the Red Sox, however, the new growth plan shuts off national marketing in favor of local. At Marley’s size, that isn’t going to fix things, either: it’s like axing your starting rotation to bring in a bullpen. But it’s not an either/or situation: to move to the next level, Marley needs both national and regional campaigns to go with the local sampling and positioning support that ownership says it wants to bring in.

Maybe ownership had concerns that some DSD relationships had been irreparably damaged over a summertime shift of 7-Eleven distribution to broadline convenience wholesaler McClane, and used that as their reason for cleaning house. But if that was the case, why not come out and say it? As of now, it looks like the executive team is being pushed out for failing to provide resources that ownership could have enabled them to provide. And McClafferty’s team won the accounts initially: why not give them a chance to support them better, rather than put your whole company in reboot mode?

Or maybe the about-face is about company control. Plenty of investors had shown interest in partial stakes in Marley, which would have taken pressure off the financial group backing the company, but ownership so far hasn’t brought in any partners. Not that ownership is hurting for cash: Shiffman is a multimillionaire. If they’re interested in keeping ownership’s stake undiluted, though, the hard truth is that money’s still going to have to be spent, and fast, before the window closes. The land-grab model – as my buddy Gerry Khermouch calls it – is one that does require expenditure at some point to juice revenues enough to get the attention of key strategics or VC groups. The key is balancing those expenditures against execution, and that’s something that McClafferty and his team had done to great effect.

Fast pushes to national networks have gone wrong in the past either because the entrepreneurs did a better job of selling to investors than they did to distributors, or because the products weren’t consumer-ready propositions. Marley, however, has walked that fine line, farther than most recent launches of this type, becoming a contender – a viable brand with a national network. Just like the Red Sox in 2003 and 2004, questions of spending and strategy are likely to affect the final outcomes, but this shift could easily cause this promising brand to implode.

Which brings me back to McClafferty. A New Englander by birth, he’s a big Red Sox fan, one who was thrilled that the team finally won in 2004. I wonder if he’ll be rooting for Marley in 2014 like he rooted for the Red Sox in 2004. I also wonder if he isn’t thinking about what he and Grady Little could talk about over a beer, or maybe a Marley’s Mellow Mood.