Stephan Davis was an ex-BRL executive who was appointed by Steve Millar as the newly merged company’s group marketing and export manager. Davies had been a successful executive at BRL having successfully expanded the company’s business abroad. Christopher Carson was the managing director of Hardy’s UK company and had over 20 years of experience in the wine industry. When the industry was facing a downturn in the late 80s, UK operations were also affected. However, Carson who had been hired in October 1990 had managed to turn around the situation by the time the two companies had merged in 1992. He had managed this reversal by implementing some tough cost-cutting measures and by installing strong systems, controls, and policies.
In the newly merged company, Carson found himself reporting to Davies who was the export manager of BRL Hardy. This led to a clash of personalities as Davies felt that as the export manager he should retain the overall control of the overseas operations while Carson believed that he had a better understanding of the European and especially UK operations and so wanted a free hand in managing the UK Company. The relations between the two were further strained in the post-merger uncertainties when the managerial responsibilities were still not clearly established.
The main issue between the two was related to marketing strategies. The two highest-selling Hardy brands in the UK were Stamps and Nottage Hill, with the two brands together accounting for over 80% of the Hardy sales. These brands were priced in the lowest price range and Carson felt that their brand image in the UK was eroded. So he wanted to re-launch them at a higher price range. However, Davies wanted to keep tight control on the branding, labeling and price issues since he felt this was necessary to build a global brand.
Davies felt that branding could not be decentralized and as the brand owners, the Australian headquarters should be responsible for labeling, pricing and branding while local operations should take care of sales, distributions and promotions. Carson, on the other hand, felt that he was in the UK market and hence better aware of the ground realities in the country. His argument was that the UK market was vastly different from the Australian market and wine branding had not yet arrived in the UK. Besides, in the UK, Australian wines were also competing with the continental wineries.
Steve Miller had kept a mostly hands-off approach to this conflict between his top managers. He did try to lessen the conflict by asking Carson to report directly to him on matters related to the company’s profit performance in the UK. But his general philosophy was that confrontation could be healthy as long as it is constructive. He tried to make them get along but he was not very successful since the differences continued for several years well into the mid-90s.