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July 2007 Issue of Wines & Vines
 
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Michigan for Michiganders

Unusual new distributor spurs in-state sales

 
by Cari Noga
 
 
    HIGHLIGHTS
     

     
  • Mitten Wine Logistics is a 1-year-old distributorship that handles Michigan wines exclusively, within Michigan, to serve the state's vintners who believe their products are low priorities for most distributors.
     
  • Mitten believes a personal approach is the only way to win over retailers unfamiliar with Michigan wines. Partners Eddie Baur and Scott Fochtman host tastings in stores, train employees and introduce retailers to Michigan wines.
     
  • With 14 client wineries currently, Mitten forecasts that it will serve half of Michigan's 50 wineries by its second anniversary in April 2008 and own a second, bonded warehouse in the metro Detroit area.
As the only winery in Michigan's remote Upper Peninsula, and more than 400 miles from the wine consumers concentrated in Detroit, marketing and brand recognition were big issues for Mackinaw Trail Winery, which sold just 4,000 cases of wine last year.

Over the next two years, however, owner and winemaker Ralph Stabile plans to double his production. He credits the expansion to a single factor: The launch of Mitten Wine Logistics, a year-old distributor specializing exclusively in Michigan wines. (It's named for the distinctive, mitten-like shape of Michigan's lower peninsula, as seen on a map.)

"I deal with other distributors. The other distributors are in the old, establishment mentality--you're just another client," said Stabile, who was a distributor himself before starting Mackinaw Trail in 2004. "These (new) guys, they're out there really pushing the Michigan product. What I've found is with those guys, my business can grow."

"Those guys" are Eddie Baur and Scott Fochtman, founding partners in Mitten, a first-of-its-kind distributor in Michigan, and they believe in the state's wines. Combining their savings, a love of Michigan wine, sales backgrounds and workaholic attitudes, the pair hopes to position the wines of Michigan's 50 wineries front and center on specialty store shelves.

"Michigan's hit a world-class status," Baur said of the state's increasingly praised wines. According to the Michigan Grape and Wine Industry Council, the state's official promotion agency, Michigan wineries won 90 gold medals in national and international wine competitions in 2006.
Mitten Wine Logistics
Scott Fochtman (left) and Eddie Baur run a hands-on operation at Mitten Wine Logistics, spreading the word and delivering Michigan wines throughout the state.


But with the exception of what Baur calls the "Big Four"-Tabor Hill and St. Julian wineries in the southwest and Chateau Grand Traverse and Chateau Chantal in the northwest-the wines remain relatively unknown, even within Michigan. According to the state Liquor Control Commission, Michigan wines constituted just 5% of all wine sales in the state in calendar year 2006. That number looks even lower considering that wine sales accounted for only 7.5% of all alcohol sales in fiscal 2006.

"Salesmen don't even know they carry Michigan wine. Wineries that are in those books are stuck in between Yellowtail and Mondavi," Baur said.

After working in every facet of the wine industry for more than 35 years, he thinks he knows how to change that. Baur spent 18 years heading the wine division of Northern Michigan's Wicksall Distributors, managed state and national sales at Chateau Grand Traverse and owned a highly regarded local retail market for eight years.

His partner Scott Fochtman is new to the wine industry, but has 27 years of experience in auto parts sales. A wine lover, he started "helping" around Chateau Fontaine, a winery where Baur was a former partner, and also was a regular customer at Baur's market. When Baur proposed the Mitten venture, Fochtman signed on eagerly. "People like to buy wine. People don't like to buy auto parts," Fochtman said.

Mitten's operation is straightforward. Based out of a small warehouse space in Traverse City, hub of the state's Northwest wine region, the pair buys inventory from 14 client wineries outright. It's delivered in their lone Mitten truck or their personal vehicles to about 300 retail accounts around the state, most in the Detroit area.

"How we work this is one of us is on the road selling, and one of us is on the road delivering," Fochtman said. "We don't even have a bank involved yet."

While Mitten is a literal lifeline for small wineries like Mackinaw Trail -owner Stabile expects it to sell a full third of his production this year-larger wineries are starting to see the benefit, too.

Doug Welsch is owner and winemaker at Fenn Valley in Southwest Michigan. Large for Michigan, Fenn Valley bottled 33,000 cases of 40-plus labels in 2006, half of that custom work. Its primary distributor wanted only five different wines and sold 3,500 cases total. Baur, on the other hand, will take the specialty products that Welsch produces in tiny, 30- to 50-case allotments.

Mitten will only sell 500 cases this year, Welsch estimated. But that's 500 cases that he would otherwise have to try to sell out the tasting room. "(Mitten) fits a whole different niche," Welsch said. "When I tried to give (my wines) to my other distributor, they ended up languishing in his warehouse."
Mitten Wine Logistics
Scott Fochtman (left) and Eddie Baur (left) and Scott Fochtman plan to expand their operation, now based in Traverse City, by opening a bonded warehouse in the metro-Detroit area.


The Michigan Beer and Wine Wholesalers Association represents 75 distributors in the state, including Mitten. President Mike Lashbrook said the belief that larger distributors ignore Michigan wines is a matter of perspective.

"If you look at the most successful Michigan wineries, i.e. St. Julian, Chateau Grand Traverse, Leelanau Cellars, etc., I believe they would tell you that their success was dependent on good partnerships with the established distributors who have the market presence and clout to get their products on the shelf and moving," Lashbrook said.

"Other newer, smaller win eries seem to have the fear of getting lost in an established distributor's operation. They perpetuate this myth, sometimes without even having tried to partner with some of these folks."

Mitten, however, is betting that its laser focus on Michigan wines will pay off. On the retail end the business model is finding fans, too.

"As soon as we tasted the wines, it blew me away, what (Baur) was presenting to me," said Susan Cosenza, a sommelier and wine buyer at Joe's Produce in Livonia, a Detroit suburb.

Cosenza's store remodeled this spring, expanding and upgrading its wine department to a 6,000-bottle capacity. While she's still filling it, Cosenza estimates half of her stock is Michigan wines. Before she met Baur, she carried the basic Big Four wines. She now carries 74 different Michigan facings from a dozen wineries.

"No one ever presented Michigan wine the way Eddie has. I think he's doing a fantastic thing," Cosenza said, adding that there is a "huge Michigan following" among her customers, many of whom vacation in Michigan's wine country.

"I want to be known as having one of the best Michigan selections," she said.

David L. Neault, sommelier at Vince and Joe's Gourmet Markets, a store with two suburban Detroit locations, said his customers also are seeking Michigan wines.

"They're traveling up to the vineyards, experiencing these wines, and want to come back home and have the same experience with their friends," he said. "People are just gravitating toward Michigan wines, and that's really why I had to step up my game a bit."

Neault, who made his first tasting trip to Northern Michigan in April, said Mitten is helping him serve those customers. While Michigan wine represents just 5% of his inventory at one store and only 1-2% at the other, he expects that to increase.

"My goal would be to promote Michigan wines more to the savvy consumer," Neault said.

That's what Mitten wants, too. Baur and Frochtman carefully select potential retail accounts, seeking upscale, independent stores with wine departments headed by sommeliers and staffs willing to learn. They provide tastings and training, backdoor tours of wineries, and promotional materials from the Grape and Wine Industry Council.

"We want to put a face on the product. If you go anywhere, they know Scott and Eddie," Baur said. In return, they want shelf space and lots of it. No set displays for Mitten wines-they want a dedicated Michigan wine section or endcap. "It's the Gallo concept. A billboard," Baur said. "We want the same thing with Michigan wines."

With Michigan's population and its retail customer base concentrated in the southeastern part of the state, Mitten's next move will be to establish anchor there. There are plans for a bonded warehouse in the metro Detroit area. Baur also will relocate to the Detroit area, while Fochtman will remain in Traverse City.

They also want more winery customers. Discovering eager retailers like Cosenza and Neault, Mitten needs more wine to deliver. "The biggest thing holding us back is what we can get," Baur said. "We've got wineries, we've run them out of wine."

(Cari Noga has covered Michigan's wine industry since 1999. Read her blog at michgrapevine.com, or contact her through edit@winesandvines.com.)
 
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