Sherwin Herring, CEO of Southco Distributing Company, Goldsboro, NC, is well known in the convenience distribution industry as kind, fair and dedicated to his customers. With gavel in hand, he stands prepared to serve as AWMA’s new chairman for 2009.

By Traci Carneal

How did you end up in the distribution industry?
In 1971 I started working in the warehouse of this company for $1.65 an hour.  I worked my way up to truck driver, to night shift supervisor and then office manager. I’ve owned a piece of the company since 1980, and bought it in 1996.

What do you love most about this business?
I’ve been here 37 years, so I clearly like the industry. I enjoy the people, the customers, the employees and my peers.  I have friends all across the country thanks to this business.

Word has it you treat your customers very well.
About 20 years ago I began visiting our customers – I spend about 13 or 14 days out of the office in December so I can do this.  Only reason I’m in the office today and talking to you is because we are planning our Christmas party!  I think I’m unique, but I’m not sure that other CEOs don’t do the same thing.  I try to visit each individual group of stores or the headquarters.  We talk about a range of issues, from business to personal topics…after 21 years of working with someone, you know their family, schools, interests, hobbies and all that.  We stay away from politics!

Is there anything that you dislike?
I don’t like lazy people…lazy employees.  I don’t settle for anything less than doing [it] right.  It just isn’t satisfactory to me.

How have you seen the industry change since you’ve been involved with it?
M&A (mergers and acquisitions), of course, distributor and manufacturer based. Also, the way we deal with tobacco has changed.  It is still a huge part of our business, but in the past we just sold it and didn’t worry about the brand we were selling.  Now we have to think about all the different manufacturer programs and regulations. It’s much more complicated.

What about AWMA? I bet you have seen a lot of changes in the past 10 years.
Well, yes, the association has seen many changes, like fewer candy people and fewer companies in the industry.  But we just have to work harder and smarter.  I think AWMA does a great job keeping members abreast of what’s going on in the industry, whether it’s government relations or trends. Our speakers and educational programs have actually gotten stronger over the years.  We have to show the members that there is a benefit to being a part of AWMA.  We’ve done a good job getting the larger companies involved, and we need to ensure the smaller companies see the benefits as well.

We also need to bring all of our benefits together and make membership worthwhile to manufacturers. They provide a lot of support to this organization.  It’s also important that we continue to encourage distributors to attend the AWMA Summit & ABX so they can meet with their manufacturing partners.

How has your role at AWMA progressed in the last 10 years?
I have been involved since we were the National Association of Tobacco Distributors (NATD).  My first committee was Finance and Budget, and I’ve been involved with Industry Affairs forever.  And here I am, chairman of the board. It’s a great organization.

What are you looking most forward to as AWMA’s chairman?
I would have preferred a different year considering the election results!  There are going to be many challenges.  I will enjoy meeting the people of AWMA and working with those I already know.  I know most of the people on the board. Also, the staff is great to work with. They always do a terrific job and provide a great deal of support.

I’m really excited about the distributor data project, which will serve the purpose of collecting data from wholesalers and selling the results to manufacturers.  We’re hoping this project will help make manufacturers aware of all we do and show our value. If we can show that our distributors handle 80 percent of the distribution of a brand, then that will be beneficial to our industry.  We will have more details on this project at the AWMA REAL DEAL EXPO in March.

If you could make one major change that could have a significant impact on the industry, what would it be?
It would be that manufacturers recognize the service we bring to the table. Big box retailers get special deals that we don’t get.  We offer delivery, picking, returns, accounts receivable, and much more, but there is no price differential for these services. We are expected to provide more services, but for the same amount of money.  The AWMA motto (Championing Distributor Value and Building Profits) has been our initiative since it was implemented two years ago, and we’ve been hammering away at this directive and will continue to do so. 

You were interviewed this month for Distribution Channels’ new column, The Last Word, on the Presidential elections.  Who would you most like to see in the role of President?
Ron Reagan, but he’s gone!  Reagonomics were a good thing, and he did a great job.  I would not want to be President right now – Obama has his challenges.  Sen. McCain is not tobacco friendly, but he is more business-friendly than Obama. I think our industry is in for some challenges during this Presidential term. As you can see, I’m very conservative.

Who has the toughest job in the convenience supply chain – the retailer, manufacturer or distributor?
If you ask each one of those groups, they will all say that they have the toughest job.  We have it a bit harder because manufacturers can raise their prices when the cost of goods goes up…they can pass it on.  It’s harder for us to raise our prices that way.  Our customers don’t want to pay any more than they have been. As for retailers, they have to deal with insurance, employee pay increases, and other issues. We all have to work harder and smarter.

How do you see the distribution industry in 10 years?
There will be more consolidations, especially on the tobacco side.  There will be only three or four tobacco companies that will rule the world.  I think there will be more consolidation among distributors, but not to the extent of the tobacco manufacturers. The tobacco companies have some good opportunities, however, with alternative smoking products.  With the new administration it’s going to be harder to find places to smoke.  Taxes could increase due to budget shortfalls in the states, and then people will have less money to spend on tobacco. We are watching the potential FDA regulation of tobacco closely and expect that legislation to pass this year.  They really can’t ban tobacco – what would they do without all that revenue?

If you could have dinner with anyone, who would it be?
I would say John Wayne, who was an icon in the 60s and legendary actor in all types of films, and of course, Ronald Reagan, who did a heck of a job with the economy and was pro-business.

Traci Carneal is editor-in-chief of Distribution Channels.