CLS: Today is July 26th. My name is Charles Sykes and I'm with Mr. James Doney, President of Chicago Beverage Systems and it's 2:25 in the afternoon. Mr. Doney, can you give me a description, first of all the nature of your business and including a description of your customer base and the order process, etc.

JD: Okay. We're a wholesale beer distributor, Chicago Beverage Systems L.L.C. We service approximately 2700 liquor license holders in the city of Chicago. We service approximately 60% of the city limits from Evanston on the north, to 131st Street on the south. The Lake's our eastern boundary. Our western boundary, on the west side we go out to Austin, but on the northwest and southwest sides we only go out to say Western. On the south side we go as far east as Ashland. We don't have a northwest side; we don't have a southwest side. But the brands we sell, we're primarily a Miller Brewing Company distributor. That's about 72% of our business. We also sell, in addition to Miller, we sell Heiniken products, Heiniken USA. We sell Guinness products. We sell Barton products, which is Corona. The Guinness products, or Guinness Bass are our main three brands in addition to Red Stripe (inaudible). The product is Corona, Magro Madello, Madello Especial, St. Pauli's Girl and a few other brands. We sell Boston beer products which is Santa Anna. We've got, what am I missing? Coors, Coors for about a third of our market. We're trying to, as of next week, we'll probably be selling about two-thirds of our market.

So overall our share of the business, in our total market's about -- some parts of town we have more brands, up to 60% -- but overall we're probably about 50% of the beer market. We'll sell to anybody with a liquor license be it a bar, a restaurant, a supermarket, a liquor store, a convenient store, lounges. If they have a license we can sell it to them.

CLS: Now basically the orders primarily come in, do they call in or, marketing to them or --

JD: Well, we've got, we have in-house order department, we have a sales department. I'll explain each of those. Our in-house sales department consists of approximately four or five people. Three or four of those people actually made calls to customers. They're our smaller customers where it really doesn't make sense to have a sales person visiting them personally. But they service a larger group of our customers. You know those that say sell less than 20 cases per week, 25 cases a week.

We've got an individual in the order department that takes calls coming in. We try to be the initiator, to make the call, or to visit in person or to make the call. But we occasionally get people calling in for an order, and that's what that individual does. We've got a sales department that consists of approximately 35 people. And those sales people actually visit the accounts on a daily basis. They receive an order, and they'll try to sell a new brands, packages, get the order. Those orders are transmitted to our warehouse each evening by 6:00 p.m. We load our vehicles at night and we deliver the product ordered, say for today, Thursday. Those orders have to be in at 6:00 p.m. They'll load tonight and all that product is delivered on Friday.

So, we've got a sales department, an outside sales department, an inside sales department, a delivery department, two people on a truck for the most part. We've got an operations department which is our warehousing and forklift drivers and loaders. And we've got an office guy to do admin stuff. Overall we've got approximately 190 employees and we do about $130 million a year in sales.

CLS: Mr. Carmichael had mentioned, I guess, there's a heavy investment in information technology. Maybe you can describe the transition of that little bit. Because the sales people have Palm computers and the drivers have a Norand hand held.

JD: Right.

CLS: That seems, that seems like a major investment so maybe a little history around how you got to that point.

JD: Well probably if you take a look at our business, -- I'm trying to remember when we made the move to the Norands. But I would say probably ten years ago we were probably doing everything by hand. We were a driver sell operation, where our drivers and assistant drivers were the sales people. They loaded their truck at night trying to estimate what they think they would need the following day to deliver. And they went out and they went out and hit the accounts and delivered off the truck. At that point in our company history we had Miller products and Heiniken. We've since grown and acquired more brands. In 1995 we moved to a -- '94, '95 in that time period, we went from a driver sell to a pre-sell operation. By pre-sell I mean our sales people were out getting the orders, transmitting the orders in at night and, we loaded the truck at night and delivered the following day, it's much more efficient. We went to a pre-sell operation where, rather than driver sell. Our drivers are getting paid less per case now but they don't have to load their own truck. We have a night crew loading. But even though they're making less per case delivered they're all making more money because we deliver more products.

CLS: All the energy is going into the customer.

JD: Right, right, but to make that transition from a driver sell to a pre-sell operation we had to get more efficient in here. Instead of our drivers writing invoices for every account they went to -- which was very time consuming, there was a lot of errors, we had less control over what was actually happening at the retail level -- we went to the Norands. Where our drivers were carrying the Norands. And our sales people also had a separate thing they called an MSI. The MSI was a device -- all it was a hand-held mini type of computer that really didn't give our people a lot of information. They had to work off of a route book, which they had to manually write the orders and inventories in, into the data transfer of the MSI, find a phone line and transfer it into our computers. And our orders were processed that way. Now the drivers had to use the MSI to generate an invoice in the trucks, they're still -- not an MSI, Norand -- they're still using that, but basically all the information is put together for them by the sales person for the order they process. They need the Norand to generate an invoice.

CLS: And make onsite changes, ...

JD: That, right. But we went to, our sales people stopped using MSIs. We started transferring over to Palms late last year, probably fourth quarter of the year 2000 and, you know it's just an electronic route book: inventory, customer information, sales history. It's all in the Palm itself.

Our sales people are very happy with it. There's additional features, sales and profits, stories for customers for new products we're selling in, margins, sales history. And it's been very well received by the sales people. It's expensive; each unit probably I think we paid around 3,000, 3500 a piece. We've probably got about 25 or 30 of them. Let's see, the Norand they're pretty old but we're still working with them. You know they'll have to be updated sometime in the near future.

CLS: When I was talking to Mr. Carmichael he mentioned that you didn't have a website at this point in time, but you were looking at it; probably with the exclusive distributorship from Miller it didn't have as much of a business implication sense it wouldn't be much of a marketing vehicle. Maybe you could elaborate on your positions, directions --

JD: Yeah, we'd like to be the first one on the market with a website. But at this point in time we have not received a lot of inquiries or demands from our customers. We don't think at this point that we would probably use it as an ordering device. Which is really what we want to be able to do with it. I've talked to other distributors around the country. We do have them. Some of them are starting to get some -- receive orders from customers on it. Being the type of business that we are and we like to be the -- you know, more in the active end of the business, going out to get an order --

CLS: Sure.

JD: -- if you make it too easy for your customers to order, they'll do it on their own and you don't have the opportunity to sell any new packages, new brands, new --

CLS: Reduce the interface.

JD: Right, right. New draft accounts, or whatever it is. So I mean we do want to make sure we move ahead with it and stay with the times but we want to find a way to integrate it into, use it as a sales device that will provide information that our customers will be able to learn more about us, more about our company, not just make it an ordering device.

CLS: Basically just one last question. Given that DePaul is looking at starting a business support center in the area, which would draw from the School of Computer Science which is networks, web development, the whole nine yards in terms of technology, but also would draw from College of Commerce which would include the expertise there in terms of marketing and sales and commercial areas, as well as various other units within DePaul, what kind of services, facilities, in what ways, I guess what you think should be in the center in order to be an asset to you or of use to you?

JD: I guess what we would probably have to offer, is a small business I mean we're a large small business, but we're a pretty lean operation here. We've been thinking more on our sales and marketing end, we could probably implement something like this in our information systems entity, maybe some type of an internship where we can get somebody from the school, you know where we could offer them some experience in the business world, and they can offer us some expertise in the NT system. I mean I don't know if that's something you're going to be looking with working with the school, but I mean that's an opportunity here I think we could mutually look at or address in the future.

CLS: Okay, beautiful. That's basically it. Thank you very much.

JD: Great, sure.