Surviving Consolidation in the Wholesale Wine Market
January 27, 2013
This week, like much of the California wine community, I'll be making the trek up to Sacramento for the Unified Wine & Grape Symposium. "Unified", as this enormous trade show is known within the indistry, is a chance to see the newest in technology, to check in with friends and colleagues from other regions, and to take in a program that includes seminars on viticulture, winemaking, wine marketing, and business/operations. We always have a cohort there, partly to see what the exhibits have to offer but mostly to support NovaVine, the nursery with whom we partner to sell Tablas Creek vine cuttings. For NovaVine, Unified is one of the year's best marketing opportunities.
I have been invited to speak on a panel Thursday afternoon -- a part of the marketing curriculum -- titled "Surviving Consolidation: How to Position Your Brand for Success". I'll be representing smaller wineries, and will be joined by representatives from the worlds of wine wholesale and retail, as well as Ed Lemay, the Senior Vice President of Marketing at Constellation Wines, who brings the perspective of a larger supplier. I spend a lot of my time thinking of how to prosper in a crowded wholesale market, and thought that while I was putting together my notes for Thursday's session I might share a few of the key points here. For the longer version, please come see us!
It's worth pointing out that I'm not sure that all of this is much more important because of consolidation than it was before. Sure, there are many states with fewer options for distributors, but the wholesale market has always had more wines than it could possibly focus on, so these strategies for making sure that you, as a small-to-medium size winery, get your share of the attention are likely the same that they've always been. They're just more important now.
- Know what makes you distinctive. And focus on it. There are thousands of wineries that are competing in the wholesale market, from your neighbors to wineries elsewhere in your state to others from around the world. If you can't reduce what makes you distinctive down to a few sentences, the game of telephone -- in which you need to educate your wholesaler's management, they need to educate their sales team, those salespeople need to sell to their restaurant and retails customers, and those restaurant and retail buyers need to speak to the end consumer -- breaks down. One place I see many wineries get into trouble is in the assumption that because their model works in their tasting room, it will necessarily translate into the wholesale market. Tasting room customers are faced with many fewer options than any buyer in the wholesale chain. It's good marketing overall to keep yourself focused, but make particularly sure your story for the wholesale market is concise and logical -- as well as memorable.
- Demand the information you need to evaluate success. You need to be engaged with your wholesalers. Make sure you're regularly getting inventories, account lists and how many (and which) samples are being pulled. Know what the pricing and the deals are that are offered. Know (and care) whether your 100 cases are being sold to 30 restaurants or 3 retailers. And then review this information regularly so that if what you're seeing isn't what you want, you can communicate this to your wholesaler. Just showing that you're interested in this information helps tilt the playing field in your favor.
- Be a good partner. Most wholesalers are filled with talented, passionate salespeople who want to do a good job. You can help them succeed with your brand in many ways: by going regularly to their markets and working alongside them. By being generous with samples, to help make sure that your wines are in their bags often. By taking good care of them when they come out to visit, and when they send out their VIP's to see you. And by giving them the tools they need in point of sale, positive media attention, and marketing support. You are in this together.
- Work together to set your goals and strategies. Is there a particular wine or two that you need your distributor to focus on this year? Or a particular type or list of accounts you'd like them to target? Or a sub-region that needs work? You should be conducting regular (annual, at least) reviews with your wholesalers to communicate this to them. Make sure you listen to them when they tell you what is working and what isn't, and involve them in the solutions to the problems you identify. The more ownership they have over the initiatives you work out, the more likely they are to see them through.
- Build and use your own restaurant, retail and consumer relationships. Nothing gets a distributor's attention like accounts asking for your wine. When you are out in the market, collect cards and drop a thank you note after you're back home. Then, stay in touch. Share directly news of new releases, special offers and positive press. And don't forget your consumer mailing list. When you have a cool new placement or a feature at a retailer, share the news with your fans in the area. The fans will appreciate it, the account will be grateful (and maybe even surprised) by the support, and the distributor will know that if they work on your wines they'll be rewarded. Success breeds success, so each time a distributor rep puts your wine into an account and sees it sell through and be reordered, it makes him or her that much more likely to think of your wine the next time there is an opening to fill. Of course, failure breeds failure, too. Don't chance it if you have the power to help.
- Be careful in franchise states. Nearly half of states have some sort of franchise law that restricts or prohibits suppliers from leaving a distributor that is not performing. In those states, your recourse is less and of course distributors are less responsive. Consider insisting on an opt-out clause in a contract before you sign on. If the distributor refuses, it may be a sign that you're better off not doing business with them anyway. And remember that just because a distributor is a great fit now, they may not be if they are bought by someone else, although your franchise tie will likely remain in force. But even in franchise states, all of the above fundamentals still hold true, and distributors in these states have the same goal as anywhere else: to sell wine.
It's worth also mentioning that I'm assuming you're already making a good product and pricing it fairly. If not, you're going to find executing a successful wholesale strategy difficult, no matter what else you're doing. The wholesale market is less forgiving than your tasting room, where your customer service, and the time you can spend with your customers, makes a greater difference.
Anyway, this is just a teaser for Thursday's discussion, at which I'm very much looking forward to hearing the other panelists' (and the audience's) perspectives and ideas. I hope you can join us. If you won't be there, please add any ideas or feedback in the comments section.