There is no doubt that the US is a highly sought-after market for wine producers from around the world.
The main appeals are twofold: US wine consumers are open to trying wines from regions around the world; and these same consumers are willing to pay a premium for better-quality wine.
Much has been said about how difficult it is for wineries and wine regions to find importers that will embrace their products. Importers have many choices and are more risk adverse than ever. It is not uncommon for an importer to make a small commitment to a new brand and then rely on the producer to build the sales. If the brand doesn’t sell itself, the importer becomes less interested and moves on to the next brand opportunity.
In fact, this is such a common occurrence that there is a west coast retailer that sells in excess of $100 million annually of close-out wines that did not move in the marketplace.
One of the first and most difficult steps to maximizing your efforts when targeting the US is to connect with an importer that is best suited to your brand. This means the importer shares your vision for your brand and is open to helping you build your brand.
In the US, finding the right importer takes market expertise, industry knowledge, strong connections with market partners and time. Unfortunately, this task is daunting. Searching the Internet, sending out emails, cold calling companies or attending a trade tasting to connect with an importer usually only result in a loss of time and money.
Having spent over 30+ years each in sales and marketing for the wine industry, Chris Lynch and I have a comprehensive knowledge of key US importers. Based on our experience, we are able to profile potential importers to understand their portfolio strategies and gauge their interest in your brand. We also have strong relationships with decision-makers and a large network that gets us a response. As the president of Palmateer Consulting, I have led several searches for wineries and wine regions in which suitable importers were identified and secured, thus enabling my clients to successfully launch their brand(s) in the US.
Palmateer Consulting has the experience, know-how and network to help wineries and wine regions successfully connect with importers. If you are looking for a US importer that will grow your brand, then please contact us to discuss.
As you know, hiring the right sales manager for your winery is essential to building your brand in today’s market. Here are three paths to lead you to the best suited candidate.
- Retain a recruiting firm. This approach is perfect if you are busy, believe in leaving recruiting to the experts, and cost is not an issue.
Pros: For wineries who can afford to retain a recruiting firm, I wholeheartedly recommend this route. These firms keep current on best practices, maintain a large database, and can help you secure the right candidate in 2-3 months. I have had successful relationships with executives Chet Hutchison, Dawn Bardessono, and Amy Gardner.
Cons: Can be expensive, costing up to 30% of the new hire’s first year compensation.
- Do-It-Yourself (DIY) recruiting. The DIY approach (asking colleagues for referrals, promoting internally, posting on a job search website) is good if you have limited money and a strong network.
Pros: You are in control and the monetary cost is low.
Cons: Sample size, perspective, and time. Likely, your network will help identify a dozen or so candidates. It is hard to find the best candidate in this small of a pool. Plus, you must be wary of a conflict of interest, e.g., a distributor’s recommendation may be good for them and not as good for you. If you promote internally, expect 1 to 2 years before anyone without established buyer relationships to earn their trust. And, while the monetary cost of DIY recruiting is low, you will spend more time finding that perfect candidate. We all know, time is money.
- Choose a happy medium. Palmateer Consulting offers a hybrid service between hiring a recruiting firm and DIY. This path is great if you want an experienced professional to help you secure the best suited candidate at a fraction of the cost of recruiting firms.
- Palmateer Consulting is structured differently than a single-focused recruiting firm. This allows us to help wineries find the right new hire at a much lower cost.
- Gordon Palmateer has extensive recruiting experience and walks with clients hand-in-hand through each step of the 2-3 month process. Throughout his 35 year career he has successfully recruited and hired hundreds of wine industry professionals. He has a strong network to tap into and maintains a list of possible candidates within the wine industry.
- Having worked for Importers, wineries, and distributors, Palmateer uses his unique perspective and strong network to help his clients evaluate their sales needs and find the right fit candidates.
- As a third party, it is easier for Palmateer to maintain objectivity to find the right candidate to fit your company, your needs, and to help build brands in the market.
Please reach out to us at Gordon@palmateerwinegroup.com if you have recruiting needs. We look forward to hearing from you and helping you find your next new hire.
The Problem: Success = A+ B
It’s that time of year when wineries are scrambling to solidify new agreements with existing and new distributors and trade accounts (buyers). In today’s hyper-competitive market, this can be challenging.
The situation can be especially daunting for small to medium-sized brands (< 50,000 cases) that don’t have 95+ scoring wines or the muscle to force their way into the distribution market. Today’s overloaded buyers are seeking brands that have a track record of success and sell with minimal effort or risk. Too often, smaller wineries struggle to penetrate the distribution market or rely on selling the majority of their product direct to consumer.
Breaking Down the Formula for Success
What to do? If you are a small to medium-sized producer, here is the formula for successfully securing distribution and trade partnerships in this saturated market:
Success = high-quality, authentic product + realistic pricing + modest expectation and production in the short run + current vintages + commitment + patience + A STRONG AND BROAD NETWORK
High-quality, authentic product: If you are taking a new wine to a buyer that already sells similar brands, chances are slim that they will add you to their portfolio solely based on the quality of your product. In addition to having a high-quality product, you must also have a unique story and demonstrate authenticity.
Realistic pricing: Even if your wine is worth the retail price of $35 and is priced with parity to similar mature brands, in our post-recession world, buyers will be shy of taking on your wines unless you have very strong accolades and selling propositions. Often, this takes time. I highly recommend getting reliable, expert feedback on your pricing strategy to position your brand to grow successfully. (Look for a future blog on pricing.)
Modest expectation and production in the short run: Take the long view to building your brand and ramping up production. Start with a modest production forecast or chances are you are going to be calling “Larry the Liquidator” to sell a surplus of wine at distressed prices.
Current vintages: The argument that wine sells better with more bottle aging does not work in the U.S. distribution and trade market. What buyers hear is “I have an older vintage and I am ready to sell it at a low price.” Sell your mature wine directly to consumers; get your current vintage to distributors.
Commitment: If you are reading this, then you know selling wine requires a bigger commitment than a romantic weekend hobby. Buyers are looking for partners who will sell wines in the trenches with them.
Patience: Plan on 1.5 to 2 years of strategic sales and marketing before you know if buyers will support and be loyal to your brand. At that point, you can start the process of planning your production forecast with a level of confidence.
A STRONG AND BROAD NETWORK: Even with all of the above in place, there is still a high level of competition at every price point with every varietal. Often, it comes down to who you know and being at the right place at the right time. Leveraging your network or finding a company that has time for your brand as well as a strong network will help you succeed over time.
Gordon Palmateer is an expert sales and distribution strategy for domestic and imported wines brands in the US and president of Palmateer Wine Group. Email him at firstname.lastname@example.org for more information on this topic.
Why FOB ≠ Retail x 50%
Based on numerous conversations I have had with wine producers who are struggling to penetrate the distribution market, I have come to believe that there is someone out there spreading the fallacy that in the distribution market, a product’s FOB = winery retail x 50%.
The short explanation as to why this is untrue is that cost and margin have gone up throughout the selling channel. Plus (and this is a big one) post-recession level of competition has created opportunities for distributor and retailer margin enhancement.
Let’s take a real life scenario.
Your winery retail is $40, so you were told by a trusted long-time industry veteran that the product’s FOB should be $20.
In the table, that bottle of wine that used to retail for less than $40 is now retailing for $43. This model is only an example and there are many variables that differ from market to market and from buyer to buyer.
So, if a winery employs the philosophy of FOB = retail x 50%, it will be essentially undercutting those distributors and retailers that he is asking to sell and support the wine. If a winery wants to be successful in the distribution market, I would not recommend undercutting your trade customer. Remember, in today’s market, the internet tells all and your price is public knowledge.
Gordon Palmateer is an expert sales and distribution strategy for domestic and imported wines brands in the US and president of Palmateer Wine Group. Email him at email@example.com for more information on this topic.
In the past year, I have worked with wineries that achieved above average sales in the distribution market, but are now experiencing flat sales because they can neither keep up with the additional production expense nor increased needs of their channel partners. Sound familiar?
Typical winery profile
- Brands that are selling between 15,000 and 55,000 cases.
- One sales manager covers the entire US.
- Sales success due to tapping into a distribution and trade market that embraced its brands.
- Product’s consistent quality, creative packaging and appropriate pricing appeals to multiple buyers.
- Once vibrant sales are now flat as more product and marketplace support is needed.
- Limited financial resources.
- Dilemma is whether to change its production curve or invest more money on sales managers.
Are you in this situation?
You feel good about the sales growth you’ve achieved; however, you’re concerned about the increased investment required (production and labor) to maintain a similar growth curve and achieve far greater results.
However, just because you produce more wine, doesn’t mean it will sell. Due to a crowded and competitive distribution market, if you do not have the appropriate sales representation, then you won’t get the attention needed to reach your new sales goals. You will fall victim to competing brands that have the resources to devote to developing the market.
Demands of success
The only sales manager you have got you off to a great start as you entered new markets and sales grew fast. However, you are left with the challenge of supporting current markets plus the ones that come on line. As the brand starts to sell more, it becomes a bit more important to the customers, so they demand more of the sales manager’s time and attention. The sales manager’s time in markets becomes more valuable as it is essential to take advantage of sales opportunities.
Sales manager overload
No matter how good your sales manager is, there is only so much he or she can do in a day and eventually unrealistic demands lead to burn out and reduced productivity. A sign that a sales manager is getting burned out is when he or she starts asking for additional money to spend with a distributor so they can obtain a lower price instead of working the market. Distributors don’t have extra time to focus on selling your brand, so their quick and easy solution to moving cases is to recommend that you lower your price.
At this point, it is clear that having one sales manager to cover the US no longer cuts it. In my consulting work, I have hired many sales managers at all price ranges. While everyone loves a bargain, and there are sales professionals who will work at any price, the old adage, “you get what you pay for,” certainly holds true. At the lower end of the salary range are sales professionals who lack the network and ability that is necessary to get sales past the first milestone, and at the higher end of the rage are super competent sales managers who have great contacts and know-how. Yet, don’t despair if you have limited resources. The best way to maximize your dollars may be to retain a sales and marking company that has the caliber of sales managers you desire, but at a fraction of the cost.
Gordon Palmateer is an expert sales and distribution strategy for domestic and imported wines brands in the US and president of Palmateer Wine Group. Email him at firstname.lastname@example.org for more information on this topic.
Pricing your wine brand correctly is critical to realizing your market potential. One wrong move and you may be pushed aside by your wine distributor for another brand that is more effectively priced in that market. You only get a couple of chances to get the price right!
After all, you are competing for share of mind from both within your distributor’s portfolio, as well as by brands that other distributors are selling.
Distributor sales people and trade buyers are key gatekeepers to successfully bringing your brand to market. Strategic pricing and promotions will influence how they view and treat your brand. If your pricing is in line with how they perceive your brand in relation to acceptable market practices it will be easier for them to get behind it. And, you want them behind your brand.
Pricing is a key component in determining if you can:
- Position your brand successfully
- Maintain profitability for your brand and for the distributor
- Create interest from key buyers
- Grow your brand over time
Even wineries that get the importance of pricing and gatekeepers, and have a strong pricing platform can still run into problems. Where I see most wineries struggle is in how to effectively execute their strategy in each market given the nuances of individual market practices and policies.
That being said, here are some of my insider tips to having a successful pricing and promotion strategy…
Be familiar with the acceptable market practices (what works in each market, as this varies by market). Keeping these nuances in mind, for each market wineries will want to:
- Have a well thought out front line strategy
- Establish levels of discounts, e.g., quantity discounts
- Determine the size of discounts (10%, 15%, etc.)
- Create pricing by channel: on premise, off premise, chain and broad market
- Set up duration of discounted pricing periods (one month, one quarter to all year)
- Be mindful of pricing relative to direct competitors
- Be aware of pricing as it relates to how advertisers (internet included) will treat your brand
- Set clear goals and sales expectations when product is on promotion
Take into consideration the policies of both the distributor and the market. For each market be savvy to:
- Market pricing regulation (state requirements)
- State tax and average freight charge from the pick-up point of their warehouse
- Distributor margin requirements
Armed with this information, your friendly distributor’s enthusiasm will skyrocket for your wine brand.
Some people think that narrowing a target market will make them less profitable because they are marketing to fewer consumers. For most, it actually helps them cut through the clutter, focus limited resources, and pinpoint their message to a market segment with whom it will resonate.
A good example of niche marketing is radio. There are a wide variety of stations out there such as Howard Stern
radio, NPR, and alternative college radio. These stations design their programming to reach a targeted market segment, or niche, with targeted content. By doing this they differentiate themselves from the mass of stations out there, build brand identity, develop a loyal fan base, and ultimately attract advertisers or sponsors who are also trying to reach the same niche. You can bet that advertisers on Howard Stern radio will differ from those on classical music stations.
When large consumer companies define their market niche, they often use multi-million dollar databases that segment the population by demographics and psychographics. Yet, without a big marketing budget or sophisticated database, smaller companies can still target market. When I work with clients on identifying a target market, I often suggest they start at the grassroots level and answer the following:
- Who are the current consumers and what do they have in common?
- What other company in the market is reaching this same set of consumers?
- How does their brand differ from the competition?
- How can their brand provide added value?
As evidenced in today’s video, the way Chris and Brenda Lynch at Mutt Lynch winery apply target marketing is brilliant. When The Lynchs first launched their business in 1995, there were primarily two camps; wineries that produced great wine and wineries that were “critter focused” and offered average wine. The Lynches have been able to move beyond these two categories by overlaying solid marketing tactics with a targeted approach. By offering great award-winning wine at a fair price and with a whimsical, dog theme, they have been able to carve out their own niche. Chris and Brenda are their target audience – wine lovers who love dogs, so they not only understand this market’s behaviors, but also their values. This authenticity resonates within their niche.
One of my personal experiences with target marketing occurred when I worked for Louis Roederer. Louis Roederer wanted to reach American drinkers of French Champagne. What we knew about this niche market was that they were primarily baby boomers; very brand- loyal; knew the difference between Champagne and sparkling wine; had discretionary income; and liked to associate themselves with the “finer things in life.” Understanding our audience and who else was reaching them drove our marketing strategy and tactics. Consequently, in order to reinforce the high-end image of our wines, it was priced in the premium category, placed in the top restaurants in major cities, and aligned with premium brands, such as with the Four Seasons, Chanel, and Hermes.
So, narrow your focus and expand your reach. Unless you are trying to promote tap water, it will serve you better to segment your audience beyond all drinkers.
When the economy turned upside 2 years ago, many wineries were forced to lay off employees in an effort to streamline budgets. More often than not, many of these employees were experienced, solid team members who tended to earn a higher salary commensurate with their experience. As wineries are starting to rebound in sales, they are beginning to look at replenishing their staff.
I have been hiring for wineries for 20 years, and without a doubt, there are more qualified candidates for each position than any other time I can remember. The main benefit of this situation is that it is an employer’s market.
Due to the increased number of highly qualified candidates in the job market, it is possible to have a higher set of qualifications for a position and employers can be more selective.
The crash in the economy has unintentionally provided recruiting wineries with things an opportunity to restructure for the new market. Helping my clients do this is one of my favorite . I find it incredibly rewarding to help a winery evaluate their needs and hire accordingly. When not conducting the hiring process myself, I connect clients to agencies such as Human Resource Business Partners, run by Chet Hutchinson, former SVP of Human Resources at Constellation. In this video edition of WGHF, Chet shares his advice on hiring during these changing times.
As the economy and market continue to evolve, here are some tips on to consider when hiring with an eye on retention.
- Offer the best salary you can. Wineries that are still feeling financially stretched may feel compelled to low-ball prospective employees in salary. This is a short term strategy. As Chet Hutchinson points out, it is more costly to rehire when your new employee quits after 6 months than to hire someone at the right salary.If you can’t afford to offer your perfect candidate a higher salary now, look at the entire compensation package and see where you can compromise. For example, a candidate might be willing to negotiate on salary in return for a more flexible work schedule.
- Treat people with respect. It goes without saying that treating people with trust and integrity is very important. You reap what you sow. Avoid attitudes like, “you’re lucky to have this job with so many people unemployed.” Once again, this is a quick way for an employee to feel unhappy and to keep their ears open for the next opportunity.
- Referrals are still key. Even with a large candidate pool, referrals are often the best way to fill a position. When I recently sorted through 300 applicants to a job I posted on winejobs.com, I still placed a high value on referrals from my deep industry connections.
- Reference checks are more important than ever. I have a dear friend who is the VP of HR at a large company. He has given me sage advice about diligently checking references and conducting background checks (if applicable) in this market. According to him, desperation has resulted in an increase in fraudulent applicant information.
- Keep an eye on retaining your current employees. Even with budget limitations, there are still things that small wineries can do to retain and motivate employees. Show an interest in your employees’ well-being and career aspirations. Learn about their career goals and identify ways they can reach them while simultaneously supporting the company’s growth. Employees feel more invested in a company when they feel they are valued and part of a team.
I often hear wineries say how unhappy they are with the results from their distributor and that distributors no longer build brands as they once did. I also hear wineries say that:
- small distributors are more successful with key trade accounts because they have smaller portfolios and therefore have more time to create relationships, or
- all distributors, small and large, focus on only the largest brands that provide them with the greatest return.
My response is that most distributors, small and large, have too many brands, and not enough resources or time to accomplish all your wishes.
Due to their lack of time and resources, distributors typically respond to a winery’s lofty ambitions by suggesting that you either lower your price or spend money on their salespeople (incentives) to get them to focus on your brand. For those of you who have been down this path, sooner or later, you realize that this doesn’t work like you thought it would.
In my experiences, I believe that both small and large distributors are ready and willing to build your brand if you have developed an appropriate brand plan and are prepared to do your share of the heavy lifting.
Here are 4 essentials to improve your chances of being successful with your distributor in their market:
1. Understand the market and how it works best
Do your research and bring your knowledge to the relationship. You will build a balanced and successful relationship by understanding the market and how your brand fits in it. A keen understanding of what are the best market practices will go a long way in convincing your distributor to sign off on your plan.
2. Have a complete sales and marketing plan
This may sound elementary but providing your sales and marketing plan demonstrates your understanding of the market and your willingness to help them build your brand. A successful brand plan includes:
- Sales and depletion goals that are reasonable,
- Smart pricing and non-price promotions,
- Products focused on the selling channels and accounts that are most likely to succeed with your product.
3. Know the strengths of your products and what does and does not work
While it would be Nirvana to sell all the wines that your company produces, distributors are best at selling your key products. Wasting their time selling wines that don’t fit the market detracts from the distributors’ efforts and will deliver poor results. The better approach is for your distributor to sell your key items and for you to sell your non-essential wines.
4. Get involved and bring value to your distributor relationship
You can add tremendous value to your distributor relationship by creating direct relationships with their trade buyers and market influencers so that you don’t rely solely on your distributor to satisfy all of your needs.
- Schedule trips so that you spend half of your time working with the distributor’s sales team and the other half calling on accounts on your own.
- Your distributor is more likely to pitch in if he knows that you are helping him succeed.
Utilizing these tactics and having a full understanding of your distributor’s expectations and strengths will help set the foundation for a successful and balanced partnership.
You may also show your distributor that the heavy lifting wasn’t so hard after all!
In the third installment of our series on Best Practices for Distributor Relations, we talk about the hidden costs of selling through distributors.
Selling through the distribution channel can be more complicated and costly than you might expect. Lately, I have been working with a few clients where this is true. Up until recently, they’d been selling all of their production direct to consumer or trade. Now, their production level is such that selling it all direct has become unrealistic. So, they’ve decided to seek distribution for their wines.
When I compared their suggested retail price and their cost of goods, and factored in their selling costs, I found that the owners may not have fully considered all the costs of doing business with a distributor.
Frist, there is a significant up-front cost to getting a target distributor to say “yes,” including trips to meet with them, cost of sending samples, etc.
Once a distributor decides to list a wine in its already crowded portfolio, the best distributors will ask for additional support to help the brand get noticed by their sales team and by their trade accounts.
It’s a different world than 10 years ago. Post-recession, distributors are requiring greater margins from the wines they sell. Today, they run 25% to 33+%, which is an increase of 3% to 5% a decade ago. An easy rule of thumb is that the smaller the distributor, the more the margin they require.
In addition to these initial costs, there are additional expenses that need to be factored in to the selling price:
Launching the relationship: Getting the distributor to list a wine is only the beginning. Then the real work begins: introducing it to the sales team. Building a good relationship with the sales team is essential, and this is the first and best opportunity to make an impression. If they don’t know a wine, or it doesn’t have a high score in the major scoring publications, it makes their jobs harder. So, the expense of getting everybody on board needs to be factored into the wine’s price.
Don’t forget samples: Once upon a time, most distributors picked up the expense of paying for samples. Not anymore. Good distributors have really clamped down on this expense, as this cost can get out of control if not managed correctly. Distributors are now requiring that wineries pay for most of the samples. The launch period mentioned above will be the time when the samples expense will be greatest. In addition, when a winery schedules in-market time, the distributor will generally charge 100% for samples used during the visit.
Today, some distributors prefer to negotiate a small percentage of each invoice be deducted to account for samples. It is generally true that a winery can negotiate a lower percentage over the duration of the partnership. Some distributors will ask a winery to ship “no-charge” cases along with the paid cases to be used for samples and promotions.
Product discounts: Most distributors are willing to lower their overall margins to discount a wine to achieve a “hot” price point. They will, however, want the producer to pay for most of that discount. Many distributors have minimum thresholds that they will not go beneath, so this needs to be factored into the overall costs.
Giving Incentives: Distributors are more likely to want you to pay 100% for all incentives. In some cases, a winery may be able to negotiate that the distributor take responsibility for minor expenses associated with the incentive. I have very strong feelings about the impact of incentives, but will save that for another post.
Event participation: Distributors will typically ask a winery to pay 100% of all costs associated with trade shows, special events, wine dinners, retail tastings, etc. Many wineries will feel compelled to pay for a table at a trade tasting because they want will want to demonstrate their commitment. This is a good practice, but must be considered in the overall costs.
Wine returns: This is a hidden cost than many wineries don’t consider. In their mind, once the wine leaves their facility, it’s as good as sold. Not so. Sometimes the wines come back damaged or out of condition. If anyone drops a wine while presenting or packing it in a warehouse, there is a good chance that the distributor will ask the producer to pay for it. If a trade account returns it to the distributor because he believes that the wine is flawed, they will ask the winery to pay for it. Thankfully, this has become less and less common, and we see less of this happening lately.
I’ve touched on some of the hidden expenses involved in selling a wine through distribution, but there may be others. It is important that anyone endeavoring to build relationships with distributors consider all the additional costs, and to do their best in negotiating a good partnership. It’s the only way to build a sustainable sales channel.
If there is one thing to remember in the wine business, it’s that distributors and wineries are not of the same species! However, in the U.S. wine market the survival of both depends on them working together. It’s critical that wineries have a clear understanding of how to maximize face time with distributors in order to successfully execute a great wine sales strategy. So, what’s the secret handshake you’re wondering?
Well, there is no secret handshake. But, while helping wineries assess their under-performing distribution network, I’ve observed severe miscommunication resulting in ineffective meetings, dare I say wasted time. Witnessing this repeat pattern first hand, I thought I’d share some helpful information for wineries to get the most out of their distributor meetings:
- Give yourself lead time. It’s best to plan your review meeting well in advance because you will be more likely to get a meeting on a day and time that you request. You will also have as many distributor managers as possible who are involved in your brand attend. (Kindly request attendance of responsible parties, but be willing to accept if not all requested members are able to attend.)
- Do your homework. Distributors are more likely to agree with what you are asking for if you are prepared for a meeting with accurate and complete information.
- Be clear and concise. Leave no room for misinterpretation.
- Start and end at the time that has been provided to you.
- Keep the group on topic otherwise you will not be able to accomplish your meeting objectives.
- Present ideas that are reasonable and relevant to the market and actionable.
- Take control of the meeting – this is your meeting to discuss what you need accomplished to build your brand.
- Assign responsibility and accountability to both the distributor and yourself.
- Send a follow-up email within 24 hours of the meeting to keep everyone focused on their responsibilities. Remember, after your meeting it is highly likely that other wineries will be meeting with your distributor asking for more time and attention, too.
- Check in and follow up regularly until all the agreed upon actions have been completed. That way you won’t be out of sight and out of mind.
- Don’t show up with a half-baked presentation or without hard copies of your presentation (that has also been sent electronically).
- Don’t spend unnecessary time talking about an issue in front of all attendees when the issue pertains to just one sales manager. This is a way for you to quickly loose interest from other attendees.
- Don’t present ideas that are not actionable or reasonable for the distributor. Distributors will not entertain ideas that they know won’t work or will take up too much time.
- Don’t try to run the meeting without an agenda with clear meeting points (that have been sent ahead).
- Don’t leave sales managers who are involved with your brand out of the meeting. Secondhand doesn’t have equal impact.
Happy Meetings ~ GP
For the second blog in our series “Best Practices for Distributor Relations” we are going to tackle the “relationship” part of distributor relationships.
As you know all too well, distributors are very busy selling many products simultaneously. Getting a distributor to represent your brand in their marketing area is just the beginning. So, how does a small to medium size winery with little clout capture and retain a distributor’s attention? Relationship.
Distributors need to know that a winery is committed to them and to the market – that you are shoulder-to-shoulder in the race to the finish line. What I have seen with my winery clients is that it is not uncommon for even the smallest, most seemingly insignificant winery to generate a large amount of enthusiasm from distributors and trade accounts by following a few simple, common sense practices to being good partners (that are surprisingly overlooked too often).
- Be attuned to your distributors’ information needs. Nothing says “I am committed to our relationship” like understanding your partner’s needs. Like the rest of us, your distributors are overwhelmed with information coming at them. Streamline your communication by providing only the information your distributors want and that is appropriate for their market. This goes for marketing materials, too. Send your distributors what they believe is good for their sales efforts.
- Provide information how distributors want it. Before you dazzle your distributors with your very impressive Excel document, ask the distributor managers if they have a form that works best for them. By doing this, you will save the manager’s time and you will most likely get a faster reaction.
- Be responsive. Distributors are busier than ever trying to appease trade accounts, wineries, and sales people’s issues and growth plans. When you have their attention, be responsive. Demonstrate your commitment by being timely – reply to inquiries on a same day basis.
- Nurture key sales relationships. Good relationships with your distributor managers are important…and so are good relationships with key sales people. Determine which distributor sales managers and representatives are responsible for 80% of your sales and communicate directly with them. By getting to know the key sales people they will better understand your message, see that you are committed, and will more likely be loyal to your brand.
- Share best practices. Get in the habit of providing your distributor with new ideas and successful strategies that are working in other markets that have application. Distributors are always looking for innovative ways to sell more of your wine and, frankly, don’t want to get bogged down trying to solve your problem. (This is information your distributors want.)
- Keep your distributor partners in the loop. Your distributors are representing you in the market. They need to be up-to-date, knowledgeable, and motivated. Send your distributors important winery information and recent press. Remember to send it in the best format for them (versus what is easiest for you to send). Distributors don’t have time to reformat your documents.
- Befriend key trade accounts. Get to know the important trade accounts that are capable of or are selling a good amount of your wine. Then, come up with reasons to touch base with them every 3 months. Make sure you visit them at least 1 time per year – nothing shows I am shoulder-to-shoulder like a good face-to-face.
- Be a welcoming host. Jump at the opportunity to entertain your distributor sales representatives and key trade accounts when they are visiting your wine region. This will leapfrog your relationship forward and will build lasting memories that will translate to loyalty and sales over time. (Some of my closest industry relationships solidified at these onsite visits.)
- Lastly, show gratitude. Your sincere thanks and appreciation for your distributors’ hard work and efforts are greatly valued. Avoid the “what have you done for me lately approach.” You want the distributor working for you and thinking about your brand.
Palmateer Consulting specializes in helping wineries to develop strong, strategic distributor relationships. We would be happy to work with you.
For some, July means fireworks, barbeque, and the baseball All-Star Game. For those of us who live and breathe wine sales and marketing, we see July as the start of the third quarter in the sales cycle. Now is the time to evaluate sales made in the first half of the year and fine-tune your strategies so buyers say “yes” more often in the second half. The beauty of the third quarter is that while it is “already” mid-year, it also is “only” mid-year.
Since the last issue of A Wine Glass Half Full, I have been spending a great deal of time traveling with clients helping them refine their sales and marketing plans and present wines to buyers. I have found that in spite of a challenging market, buyers are still considering new opportunities and genuinely want to sell more of your brand. Also, relative to the last few years, there has been a shift towards sales growth and an increase in the average sell price. My main takeaways from dealing with buyers recently are:
- Buyers expect you to have a complete plan based on facts versus dreams and wishes.
- Buyers do not have time to help you create or figure out your plan; however, they are very capable of executing your complete plan if they understand it and it fits their program.
- Buyers depend on you more than ever to create excitement and momentum for your brand, which requires you to provide a clear, compelling brand story and value proposition.
- Buyers want to sell more of your wine. You don’t have to give it away through deep discounting, but you do need to supply effective tools and resources that will help them promote your wines.
- Buyers want to buy from people with whom they have a good working relationship and who have a business model they understand.
The third quarter is your window of opportunity to strategically position your brand for success in the critical fourth quarter. Here are some tips to help you reach your mark.
- Study your shipments, depletions and key account placements for trends in each market. Use this data to evaluate and adjust your sales and marketing plan to make it more effective.
- Develop a concrete sales and marketing plan that is based on smart programs that consider your direct competitors and target market. This will help buyers visualize your ideal consumer and enable them to focus their efforts.
- Focus on your competitive advantages. Incorporate them into all aspects of your plan, from developing programs to targeting buyers and building brand power.
- Target buyers. As a case in point, when I was faced with the task of securing orders for a client with a new super-premium wine, I strategically targeted buyers from my network whose portfolio and preferences were in line with my client’s brand. Because I consistently use this approach when selecting buyers upon whom I call, they trust me to have a product that fits their portfolio and is not a waste of their time. Consequently, I was able to obtain appointments with key buyers and the wine was placed with a powerful distributor that is committed to grow the brand.
- Keep in touch. In order to prevent your brand from being forgotten during a time when buyers are bombarded with new wine options daily, it’s essential you contact them regularly with something of value, such as product news, promotional support or educational tools. It is up to you to make your wine stand out in a crowd and engender enthusiasm for your brand. Once you do this, buyers will gladly build upon the momentum that you have created.
Just like a good book editor, an outside perspective often helps to refine a plan. Palmateer Consulting is ready to work with you to develop or refine your sales and marketing plan and increase your brands’ power. Contact Palmateer Consulting to learn how we can help take your brand to the next level.
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One thing that wineries can agree upon is the importance of their distributor relationships. Yet, negotiating the U.S. three-tier system has its share of obstacles, especially for small-to-midsize wineries. To help these wineries navigate the system, over the next several months, I’ll be publishing some of my insights as a wine industry consultant in a series of “Best Practices for Distributor Relations.” Our first topic: The Distributor Survey.
Winery owners often are not on the same page with their distributor partners
When well thought out and reasonable sales goals are not being met, I find that it is often because winery owners and distributor executives are not on the same page. There is typically a lack of communication, direction and understanding between the two parties. This can result in products being sold versus brands being built.
Distributor’s unique perspective and risk avoidance strategy
Distributors deal with many brands and therefore have a unique perspective of how a market reacts to a brand. While this feedback could be incredibly useful to a winery owner, even when asked, distributors often are hesitant to share their observations and impressions with winery owners because they don’t want to jeopardize the relationship. A distributor’s impression of a brand will definitely influence their commitment to it.
Winery owners need all the facts so they can have a successful distributor relationship
Winery owners need reliable information about how their products are being received in the market to realize their full potential. Too often busy owners rely just on case sales, sales of competing brands or the impressions of their sales people for this information.
Distributor Survey: The information you need for results
One effective way for a winery to get invaluable information is for an experienced third party to ask a small set of trusted distributor executives about their brand performance and perceptions.
The interview often provides winery owners with:
- Invaluable feedback on how the brand is being received by the marketplace,
- Insight into the distributor’s level of commitment,
- A channel for increased and improved communication,
- Feedback to ensure that the sales managers are presenting the information to the distributors as intended, and
- A tool to measure the success of the sales and marketing approach.
Often I am asked why distributors are likely to share their honest feelings with a third party. Two factors are key:
- A guarantee of anonymity – this comes from being interviewed by an experienced neutral party and by combining the responses. Anonymity offers the distributors the freedom to speak their minds.
- A trusted interviewer – a good interviewer will have an appreciation for their responses and an understanding of the challenges distributors face, market knowledge, and often a familiarity with the people interviewed themselves.
A good interviewer, with the required expertise, will be able to translate feedback into both actions to improve brand performance and programs to overcome the winery’s challenges.
Distributor survey in action
As a consultant, I often am asked by my clients to find out why their brand is under-performing. I once worked with a small up-and-coming winery, who despite being told that “everything will be fine overtime” was not meeting their expected sales forecasts.
After finding that their sales and marketing plan was sound, we decided to initiate a distributor survey to better understand “the whys” of the problem. After interviewing key executives from their distributor network, I aggregated and analyzed the feedback.
We were able to distill that the winery owner and the distributors’ expectations were not in line. This was resulting in brand messaging not being communicated to the market the way the winery intended and the distributor selling the product on price versus a way that built loyalty with customers.
The next step was turning this knowledge base into specific actionable tactics. Ultimately, we were able to work with the winery and the distributors on communication and training issues that got to the heart of the problems, issues that would not have been apparent and resolved without having implemented the survey.
Palmateer Wine Group has developed an in-depth distributor survey and an approach for this initiative that has proven to be very successful. We would be happy to work with you on implementing a distributor survey.
Smaller wineries and new brands often have big dreams about becoming regionally or nationally distributed so that every wine lover near and far can enjoy their vino. Unfortunately there can be a serious underestimation of the investment in time and money required to secure distribution partners AND support them properly once they’re on board. I’ve talked before about what it takes to be successful in a distributor’s market, and this visual will help you better understand what your upfront commitment can look like. Of course all brands are unique so time and cost will vary based on goals and other factors, but the intent is to provide some insight to aid in planning and decision making.
Good luck! – GP