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.
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.