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Morgan & Moore

 

The Tragi-Comedy Of Distribution

July 2008
 
by Jeff Morgan & Daniel Moore
 
 
Wine Distributors
 
    HIGHLIGHTS
     

     
  • Distribution is comedy. You'll laugh, you'll cry, you'll laugh some more.
     
  • There is no such thing as a "good market." Distributors make markets good.
     
  • It is not what you do when you're visiting the market but, rather, what you do after you have left.
     
  • Distributors are essentially unmanageable.
     
  • The distributor grass is always greener.…Not!
     
  • Make it personal.
Is your distributor a sales partner or just a glorified trucking company? Unless you've got a label so hot (or so small) that you sell out upon release through direct-to-consumer sales, you'll need help selling your wine. Distributors, who buy your wine at FOB; or brokers, who work on commission, definitely can help you build your brand--as long as they are responsive to your particular needs.

A good distribution partner understands you, your wines and your target market. "Doesn't a good wine sell itself?" you might ask. Yes, on occasion. But there is a lot of good wine out there, and more often than not, a restaurateur or retailer is apt to be most receptive to a wine recommended by someone he or she likes and trusts. That's when an effective distributor really can make a difference.

Still, finding a good distributor can be a tricky business. You may have culled a few distributors from existing relationships or the rare instance when a distributor simply wants your brand out of altruistic love for "what you're doing in the vineyard and the cellar." However, as your production grows, the time will come to expand your distribution network beyond the easy connections you have already exploited.

Make it personal

When soliciting new distributors, try to make a personal presentation. It really helps to put a personality and a face behind a bottle of wine. Your potential distributor still will need to go through the company protocol for taking on a new brand, but you will be ahead of the game, because you made it personal. Then the waiting game begins.

During the waiting process, don't stalk your prospective distributor. Make an initial contact by phone, and then send samples. You certainly will want to follow up within a few weeks, but if you receive no response after two e-mails and four phone calls (we're not even counting the three times you called and hung up without leaving a message), then it's time to walk away. If you can't get a return call at this early stage, just wait until you are doing business, with real issues to discuss.

Assuming the courtship moves forward, you might want to consider the meaning of certain code phrases that will arise during conversations that potentially carry great import.They include:

"Your wine is a hand sell." This is code for, "Do you really expect me to build a brand that does not have 95 points?"

"I have to taste my staff on the wines." The true meaning is, "I will forget to taste your wine for at least three successive staff meetings. When we finally do taste it, some staff geek will proclaim that the wine 'has a prolonged malolactic finish' (or something like that), and as a result, is not yet ready for release."

Our take on such commentary is this: If the boss doesn't have a sense of who his staff is and what they can do in the marketplace, he (or she) is not the distributor for you. (The staff tasting, by the way, should occur after the boss already has decided to bring in the brand.)

Check in the mail?

A critical question you must also ask yourself before entering a distribution partnership is this: "Am I 150 days desperate for distribution?" With today's economic flux, it is common for all but the larger distributors to take 45 to 60 days to pay their bills. Some small distributors will take even longer, but that's OK if they pay regularly. Nonetheless, we recommend avoiding distribution partners that take five or six months to pay. You should not have to bankroll a distributor's import containers for the privilege of having representation. Do your homework on the financial health of a prospective distribution partner.

Ultimately, as your distribution portfolio grows, you must learn to communicate effectively. Unless you've got a 100,000-case brand that gives you leverage--or a cult wine that offers a similar cachet--you will find that your distributors are essentially unmanageable. Simply accept the fact that you're not going to be able to call the shots. What you do have, however, is the ability to cultivate personal relationships at all levels of the distributorship. You can then use these relationships cumulatively to give you critical mass in the market place, especially when working with a larger distributor.

Managing the unmanageable

Here are some suggestions for maintaining distributor entropy, or managing the unmanageable:
  1. Stay on top of your inventory. Get a monthly depletion report to track sales.
  2. Find a point person in the office to help you. This is not a "top down" industry. The people with access to the information you need often work at the front desk--not in the owner's wing.
  3. Remain updated on your reps. People come and go, and you want to be able to contact all of your distributor reps in an ongoing manner with information, such as positive reviews or new POS material.
  4. Travel smart. Not every distributor needs to see you regularly. It's good to know a market firsthand, but learn to distinguish between those markets where a "work-with" really makes a difference, and those where it does not. Travel costs money, so learn when to stay home and work the market from your computer.
  5. Stay in touch with your reps (particularly following a market visit). More often than not, maintaining these relationships can pay great dividends.
  6. < /ol>
    When you must leave

    At the end of the day, there isn't a winemaker among us who hasn't contemplated leaving a distributor. Too many things go wrong--from slow sales to botched shipping, to orders taken during a work-with that never materialize. Eventually the grass starts to looks greener somewhere else.

    Sadly, we've jumped from the frying pan into the fire a few too many times. An untimely departure without the right effort can cause even more losses in a given market. In some markets, you might even have to admit that your wine has a limited audience--and that's all right, as long as you can find other markets that understand, appreciate and drink your wine.

    When you feel that you absolutely have to leave a distributor--one that has let you down one too many times--do not leave. Instead, give your distributor one more year. Why? Because the grass is rarely greener, and you likely will swap one set of issues for a set of new ones. Use that extra year to make sure you can actually find something that will make a real difference.

    Get started soon

    Despite the scenarios described above, new wineries should not wait too long to seek out representation. If you wait until you've got wine in bottles, you can lose a whole year in a market. To get a headstart, don't be afraid to show barrel samples or other unfinished wines to potential distribution candidates. Unfinished wines can be delicious, especially when you've got a fresh sample backed by your stellar personality and smile. In fact, it's that personal touch that will carry the day--perhaps more so than what's in the bottle.

    Finally, try to remember that there are two sides to every story. Successful distributor partnerships work for everyone involved. Your distributors surely will have legitimate issues with you as their supplier. Listen to their questions and suggestions. Those distributors who remain in business usually know something about their market.

    And yet…there will too often be some kind of rude awakening--when the bubble of happy collaboration bursts. For instance, imagine that things are finally starting to go well with your wines, which sport an average FOB of $300 per case. Then you get a call from the vice president of sales for your most important distributor. He announces (with pride, no less), "I want to introduce you to your new brand manager, who has spent the last 15 years working with Riunite." That's when it's time to remind yourself: Distribution is comedy.

    Jeff Morgan of Napa Valley and Daniel Moore of Sonoma County are partners in M Squared Wine Consultants, m2wine.com, and jointly own and operate SoloRosa and ZMOR wineries. Morgan also makes two kosher Napa Valley Cabernet Sauvignon wines: Covenant and RED C.
 
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