Help me find a distributor! A common theme for emails to this site. Unfortunately, wineries seeking distribution today face more hurdles than in any previous time in recent memory. Distribution companies are bombarded almost daily by wineries hoping to secure a distribution channel, meaning few succeed in their quest. It is a numbers game, distributors sell wine to make money, they don’t represent wineries to build brands.
It is important for wineries seeking distribution to put themselves in the place of a distributor in order to see their wine’s offer through their targets eyes. Any new winery added to a portfolio must bring something to the table for that no other winery currently does, such as regionality, price point, awards, quirky marketing etc. Alternatively the winery needs to have an inherent demand in the marketplace, providing current and ongoing case sales (and least one pallet a month) to justify it’s inclusion in the portfolio.
Does your winery bringing any of the above to the table? If not then securing a decent distributor will provide a challenge. A good starting place would be to complete the ‘Pre-Distribution Checklist,’ available on this site, which lists the key aspects a distributor will be interested in, allowing you to refine your approach. Obviously the ‘Seeking distribution guide’ provides far more detail and will certainly take your offer to the next level.
A great deal of emails received to this site come from wineries unable to secure distribution, and I am unable to provide detailed answers to every unique case. My simple advice to get out on the road and start making regular sales calls in order to build up business, targeting independent retailers, fine dining restaurants and larger cafes. Bringing a list of current and loyal customers to a distributor demonstrates that there would be immediate profits to be made from selling your wines.
There is no easy way to secure distribution, however ensuring that you and your product tick as many boxes as possible will give you the best chance for success.
The wine industry loves awarding medals and trophies to itself, much like the entertainment industry loves giving itself shiny awards (in 1991 the Academy Awards won an Emmy Award for best Variety show!). In the 2009 Melbourne Wine Show, 566 producers entered 3,493 wines in the chase for the 22 trophies on offer, and with over 50 different classes available, every conceivable wine could be included. The fact that most classes only required a minimum holding of 250 dozen, even the smallest winery had the opportunity to put forward their wines; the result? Hundreds of medals awarded of course, pats on backs all round.
For a small or medium producer, receiving a medal or two from piers in the industry must be very satisfying, a confirmation that their hard work is worth it all. Medals are rightly displayed with pride at cellar door, and its not long before the stickers are produced to go on every bottle. This is where we are going to jump in, shout ‘stop,’ and take a wine trade view of medals on bottles.
If your wine scores 15.5 or more out of 20 it will get awarded a medal at a wine show, score more than 18.5 and you’ve got yourself a gold. However as much as the wine industry and some of the wine trade understand this, the average consumer views medals in the same way as they see sporting medals – gold for first place, silver for second, bronze for third. That is a wine trade fact. Thus the winemaker’s pride in being awarded a silver medal in a class full of much bigger producers is not reflected in the consumers view of that same silver medal on the bottle – ‘so it came second.’
Add to this the large amount of classes within a wine show, (and there are often even different classes for the same variety), meaning a cheaply priced, young and well made shiraz can get gold in it’s class, while a better made, barrel aged shiraz can get silver in it’s class, and the only difference is the class number on the medal. Consumers don’t understand class numbers and they don’t have the time or inclination to research them during purchase decision making. So when a $12 gold medal shiraz sits next to a $20 silver medal shiraz, what is the consumer to think? Moving up the price scale, how can a consumer justify spending $50 or more on a wine if it has ‘only’ won silvers and bronzes, or $100 on a bottle that has won a gold but no trophy?
From a sales perspective, producers should think long and hard about why they should put medals on their bottles. Certainly trophies and multiple golds medals will add good reasons for consumers to choose that wine, particularly if they haven’t heard of the producer, as it adds a third party acknowledgment to the quality of the wine. However the jury is out on whether silvers and bronzes add to the appeal of the wine, unless they are a platform for the multiple golds above them to shine. Human nature is to seek out the best value, and how can a silver or bronze medal winner offer value when there will be a gold medal winner or two at a similar price? Think about it – what excites people? The Oscar winner or the 3 other films shortlisted? The world cup winner or the beaten finalist?
Another view of the medal debate is the fact that it brings up vintage differences, which can be a bad thing if you are trying to build up overall brand. Brands offer consumers trustworthy products that they can always purchase with the reassurance that they will deliver a positive or known outcome. Brand is built up over years and becomes much more than the product in the bottle, much more than the sum of it’s parts. A silver or bronze medal on the bottle will erode brand equity because it brings focus back to vintage variation, breaking the trust in the consistent image of the brand. On the other hand a trophy will build brand equity, reassuring the consumer that their trust in the brand is validated by the wine show judges. This is why you won’t see market leading brands display anything less than trophies or golds, if any medals at all.
To medal or not to medal, that is the question. The Wine Rep recommends smaller producers only include a silver or bronze on a bottle if there is at least one trophy or several golds to back them up. As for wines over $30 retail – never anything less than gold.
Thought this video might amuse, found it on YouTube:
In the old world of wine, regionality is everything – it is the style of the wine, the varieties used, the outlook of the producers, the crucible holding centuries of tradition together. Customers roughly know what they are paying for when they put their hand in their wallet for a Chianti, Burgundy or Rioja – a large degree of trust has been built through decades and even centuries of wineries in each region pumping out relatively consistent styles of wine using roughly the same varieties vintage after vintage.
In contrast, The New World upstarts have been breaking unwritten wine rules from the very beginning and regionality is no exception. Whilst each Aussie wine region has a reputation of making a certain varietal or blend better than others, wineries do not limit themselves (and are not limited by appellation laws) to only a handful of styles. The opportunities are endless and in the pursuit of commercial success (‘they more different wines you make the more chance of sales’ mentality), the urge to let a winemaker’s creative juices run free and often just to ward off boredom and to try something new, wineries big and small end up with a large stable of wines with styles and blends unsuited to the style of winery and reputation of the region. The wines might be good and offer value for money – but is producing this endless stream of non regional wines a self destructing habit wineries need to get out of?
Lets skip to the other end of the sales chain: a distributor’s sales force is armed with a portfolio of wines from all around the country, a mid size distributor might represent 2o wineries and 200 wines. Given each state has plenty of these distributors on the road, your average retailer and restaurateur might have an ongoing choice of over 3,500 wines in price catalogues sitting in their desk drawer. Putting together a new wine list involves balancing customer needs, food matching and price levels, never an easy task. The staples that will go on the list are regional wines at the right prices – Margaret River SSB, Marlbourough SB, Barossa Shiraz, Yarra Pinot etc etc, with relatively little or no space for that Coonawarra Sauvignon Blanc, Barossa Valley SSB, Margaret River Merlot or Yarra Valley Verdelho. Yes, those wines might be excellent, yes they might offer excellent value for money but unfortunately, yes, the average customer will overlook them because the region and variety/blend does not endear trust.
Every distributor in the country will have wines in their portfolio which can only be classified as dogs, practically unsellable and a lingering issue of discontent between the distributor and the winery. Take it as fact: 9 out of 10 of these wines will suffer from lack of regionality, be a variety or blend with next to no consumer demand or be stupidly overpriced. Price can be changed, styles with little inherent demand are niche products that will always struggle but offer a point of interest/difference to both wineries and distributors; lack of regionality is simply a winemaking blunder, a wine produced for the wrong reasons.
Wine Australia has been advocating ‘Regional Heroes’ for some time now but it seems the message has not sunk in. Perhaps the need to reduce Australia’s wine production is the perfect time to weed out those non regional wines. Somehow I doubt it, especially with the unceasing Sav Blanc demand lighting up winemakers eyes. Shame though, it would be nice to reduce the number of dogs sitting in distributor’s warehouses.
It’s probably about time that we face up to the fact that the discounting and buy deals of the last half of the decade have now become the expected norm – the trade does not expect to pay list price, that’s just a starting point for negotiations.
Given the reduced return distributors and wineries are seeing from deals - for a deal stand out in today’s market it needs to involve a great deal of margin sacrifice or a disproportionate about of bonus stock – other approaches need to be trialled. The theory behind a deal is increased volume at the cost of some extra discount or bonus stock; the retailer can then offer the product at a lower price while still making required margins and has stock weight on the floor to help sales (and remind him he needs to move the stock quicker to recoup his spend). It should be a win win.
Unfortunately while retailers might be purchasing stock in deals, they then don’t feel obliged to move it quickly; if for example, a retailer sells an average of one carton of Wine A per week, they’d happily buy a 6+1 deal every 7 weeks, which simply costs the seller a carton every couple of months with no real increase in volume. It’s this cycle that many distributors need to get their customers out of, a very difficult process.
One option that the Wine Rep recently came up with (and admittedly is as yet untried), is time or frequency based discounts. Simply put, buy at discount X today and if you reorder within a certain time period you will get improved discount Y. The onus is then on the retailer to move sufficient stock to be able to regularly reorder within the required period, effectively shifting a retailer’s focus to your products.
There are a lot of caveats that need to be well thought out before such a deal structure is put into place, but it does offer an option for shifting the responsibility of pulling through stock back onto the retailer – if they want the extra discount/bonus, they don’t necessarily have to buy more (which is how most deals work), they just have to buy more often.
This type of deal structure also offers a significant point of difference in the trade which alone might be worth the effort, retailers love trying something new if it means they can get (or think they can get) something extra. Worth a go if current trading tactics are not yielding sufficient growth.
An esteemed member of the trade recently put forward a good reason that many wineries struggle to make a mark in the retail sector, namely unsuitable, unseemly or just downright poor packaging. A wine’s front label along with bottle shape and colour is it’s calling card, its brand communication, as well as quality and value statement, all in one. There are no signs in bottleshops that read ‘Don’t judge a book by it’s cover,’ because that is exactly what the bulk of consumers will do when choosing a bottle of wine.
Next time you’re strolling down a supermarket isle, have a gander at the different labels on offer, whether it be on homebrand tomato sauce, loaves of bread or packets of Jasmin rice. The bulk of those labels will stand out as professionally designed, well suited to their product and appealing to the eye – after all their job is to entice the consumer to purchase. Now have a wander around your local bottleshop – how many of the wine labels on display there look as professional as those in the supermarket?
Smaller wineries need to bite the bullet and spend some money on packaging design if they want their wines noticed by retailers and picked up by consumers. In house design is no longer an option in such a tight marketplace, professional marketing companies will draw up designs that take brand identity, region, price and competitive advantage into consideration to communicate the most sale-able aspects in the simplest fashion possible. A good label can do amazing things to sales, especially if the quality of the wine then over delivers on price – because the customer would have never been exposed to the quality if the label didn’t do enough to entice purchase.
For motivation, have a look at the packaging of some wines from small producers which are punching above their weight sales wise at the moment, you’ll notice it is well suited to the brand and price as well as easy to understand. Finally, remember one thing - a winery is full of people who have an emotional connection to the brand and therefore these are not the people to judge the quality or suitability of packaging. Distributors and retailers will provide far more balanced reviews as they will be looking through the eyes of salesmen looking to provide solutions to customers needs.
There isn’t a day go by in the liquor world without an independent retailer asking a supplier to support a promotion, fork out for advertising in the local rag or give a better discount ‘to hit a price point.’ Such is the working of this wine trade.
The chains have brought in a very different way of doing business, the ultra efficient head office, computer generated orders, planograms and distribution centres and guess what, it’s working great.
Lets have a quick look at the inner workings of Dan Murphy’s: all ranging and promotions are negotiated at the head office in Melbourne, the individual store managers do not negotiate with any suppliers, order stock, set prices or even decide on ranging; their sole job ensure the store operates to its full potential – staff efficiency, good service, restocking and promotional compliance. Head office expects around 30% margin on most wines but will to drop that margin to around 20% or less for specials. The software behind their ordering tracks not only their own instore price and sales volumes but also the advertised specials of all major competitors in each state, giving them unparalleled information about the average sale price of any promoted wine. This software automatically generates orders for each store which are emailed or faxed to wineries and distributors each Monday morning and must be filled that week, as they do not accept back orders. Large volume wines are ranged in their distribution centres so orders are sent there, while smaller lines are sent directly to each store.
To promote in Dan Murphy’s firstly you need to have a product with sufficient demand in the market, they’re not interested in wines no one has heard of outside of the wine region. For X amount of dollars and Y discount will get you a professionally run national or state based promotion, for a set period and at a set price. For a few more dollars you can even specify where in store your product is displayed, eg on gondolas, end of isle shelving etc. Their strong software will predict with reasonable accuracy how much stock each store will need to start with, and a good thing about Dan’s is that they do back up a promotion with sufficient stock.
The pricing of big box retail is the constant discussion of independent retailers, and for good reason. They beat any advertised price by loading into their back of house software the price of all wines in competitor adverts each week; the system automatically generates the required shelf tickets and till price changes so first thing the next morning all competitor advertised prices are beaten on the shelves at all stores. They have weekly or fortnightly ‘category killer’ prices on selected big brands which are as sharp as a price can be and don’t make them much, if any, margin but do bring customers through the door. They are now increasingly advertising their own home brand products with seemingly dirt cheap pricing, though they would still be making a handsome margin; a few weeks back one of their adverts included no less than 6 home brand products – 3 New Zealand sauvignon blancs, a vodka, scotch and an imported beer! Just like they have with grocery, they are gradually luring consumers to their cheaper alternatives.
For small wineries, the big box retail chains do offer an excellent path to increase sales and exposure; they generally won’t majorly discount a wine unless someone else is already doing so, their promotions can offer excellent return on investment and their stores don’t require any ongoing visits. There is a risk that some independents might shun small wineries who are ranged in big box, and there is the worry that wineries do lose control of price, but given that nationally two out of every three bottles of wine purchased is done so from a Dan Murphy’s or 1st Choice, ranging in them makes great business sense.
Have a look at your local liquor retailer and question if they are satisfying their customers’ needs. Ask yourself what makes you go to certain retailers and not others, what would make you browse longer and how they could entice you to purchase more.
Inside any liquor store, your average customer want room to move, suitable range, sharp specials, friendly service, clean floors, prices on all products and orderly displays. For larger retailers which are destination venues, add plenty of parking, an accessible entrance and even trolleys, while at smaller retailers and drive throughs, the convenience factor makes a smaller range acceptable.
Let me ignite the wrath of independent retailers now by pointing out that the chains are experts at filling their role in the sales chain. What their shops lack in personality they make up by ticking every other box their customers are demanding. Liquorlands and Woolies Liquor offer just enough range, a few big brand specials and a simple layout – perfect for quickly grabbing a six pack of beer for the boys and a cold white for the girls. Dan’s and 1st Choice are everything a destination retailer should be, the Bunnings or Harvey Norman of the liquor world – somewhere you can get happily lost for hours.
They manage to tick all the right boxes by identifying their customer’s needs and filling them in a consistent and pleasant fashion. This is a lesson many independent retailers need to learn in order to grow, rather than spend so much time focusing on what the chains are offering and complaining to suppliers about not getting bigger discounts. Pick a style of venue and get a reputation of doing that well, whether it be convenience, boutique focus, exceptional range or exceptional discounts.
More often than not, the local drive through won’t need a big wine range, super dooper boutique wines on special or a wine club – no matter what all the sales focused wine reps will be telling the manager. Rather, a concise range that caters for the customer demographic is sufficient – and that is often taken care of by the core range of whichever banner group with which they are affiliated. These bottleshops make a great gross profit on single bottles of beer and RTDs, yet often dedicate 75% of their floorspace to dust covered wine.
The fine wine retailer often dilutes his brand by trying to match the chains with big brand discounting and increase traffic by installing a wall of RTD fridges. Fine wine buyers can be tempted to buy expensive imported beers but are turned off by RTDs. Conversely, RTD drinkers are not going to splash out on a $30 hand picked 7th generation winemaker crafted red wine to go with their 10 pack of bourbon and coke.
For us suppliers we must identify which of our customers has the current ability or the potential ability to grow and give them more focus and support than those poor retailers that are operating their businesses into the ground. Reps have the unique experience of visiting dozens of retailers each week and so can observe what retail strategies work, where they work and why they work; smart retailers listen to smart reps, so find a smart retailer and help him grow his business, which in turn will grow yours.
Lets leave the world of wine briefly and have a look at the beer trade. The 1990s seemed to be all about branding, getting the big brands front of mind by advertising and association with sports. Some time just after 2000 the marketing departments of the big brewers discovered China could provide them with ultra cheap gimmicks to give away with purchases – stubby holders, bottle openers etc all well branded, and lapped up by consumers.
Soon it became apparent that niche markets could actually be of value, with micro breweries gaining shelf space although not that much overall market share. Extra flavour at an extra cost seemed to be the area of growth, and this has continued today with premium segments of the market showing the best growth.
Pure Blonde heralded a new way to approach niche marketing and has opened up the flood gates for numerous imitators, which leads me to the reason for this post. Coopers has come out with their own low carb offering, Coopers Clear.
Coopers Brewery is a superbly run operation with classy marketing, excellent products and a commitment to steer clear of the gimmicky approach many of its larger competitors have followed over the last few years (has anyone won a VB Pop Up Bar yet – crafted from wood and forged from steel my arse). In many ways, Coopers approach to branding has been similar to that of a boutique winery – focusing on the uniqueness of the product, its production and the company’s history.
When Coopers ‘62′ lager came out last year, the product did smack a little of trying to be something that Coopers is not – refined, classy, chique and modern; an era of change had begun. A beer with no label does look good, but it doesn’t make for good sales – sitting in a fridge behind a bar it just looks like a bottle with a label missing, sitting next to lots of bottles with labels. Just ask Carlsberg – they made the same mistake a few years ago. But I digress.
Coopers Clear is branded in the same colours as Pure Blonde and comes in a clear bottle. It is a complete change of direction for a family owned company which has always focused on classic beers without pretension, though this is an understandable change given they’ve got to make a buck too. The point I’m creeping towards is that if a company like Coopers needs to change direction to move with the times and consumer tastes, do wineries need to think about doing the same?
Wine is full of carbs and a few glasses puts you over the limit. On the other hand, ladies want to have a few glasses of wine without feeling guilty about stacking on weight, have a good time with their friends and then drive their drunk husband home. That their people is a ‘niche market,’ satisfied by low carb and low alcohol wine that hopfully doesn’t taste like yellow acidic water.
Fosters has already built a fairly strong portfolio of low carb/low alcohol wines – Yellow Jewel, Rosemount O, Lindemanns Early Harvest, though their sales don’t seem to be breaking any records. Other wineries are following suite and it’ll be interesting to see where this new direction will take us. Whilst I can’t see Rockford coming out with ‘Alicante Bouchet Light,’ there’s no reason for other small wineries to make a statement and create wines for ever more weight and drink driving conscious consumers. If big burly blokes are moving to low carb beers, how hard can it be to get soccer mums to drink low carb wines?
After any downturn we are rewarded for our patience with the recovery, who’s arrival is heralded as the solution to most of our sales problems. The catch cry of many winery’s seems to be, ‘We’ve weathered the storm, once things are back to normal we should be ok.’ Logic states after all, that as consumer confidence and spending increases, so will purchases of luxury goods such as wine – but I fear it’s not going to be that simple.
The downturn has had some unexpected side effects by changing the basic landscape of our trade, meaning our supposed recovery ’saviour’ will lead us towards new and uncharted territory. Let me know your thoughts on what follows.
First and foremost we’ve seen wineries discount to maintain sales volumes, effectively spoiling lucky consumers with increased value – the same product for less. The recovery might herald an increase in discretionary spending but it certainly does not mean that prices can then automatically return to their pre-downturn levels – a new norm has been set.
Next we have the consumer’s natural response to belt tightening – trading down. Habit is a powerful thing, so persuading people that they should stop buying $12 wines and return to the $20 bottles they enjoyed 2 years ago is going to be no mean feat.
Finally, the downturn has been a boon for the supermarket chains, with their slick ads, uber discounting and most importantly, their ’save save save’ advertising campaigns. Smaller booze budgets have seen consumers forgo the convenience of their local bottleshop to head over to big box in order to ’save save save.’ Getting them to return to a fine wine specialist or local hotel is hurdle one, but there’ll now be a consumer expectation that those supermarket prices are replicated to a certain degree throughout the trade – and that’ll hurt everyone’s margins.
All we suppliers can really do is continue to add value to our customers and role with the punches as the ‘new’ wine trade unfolds.