Times have changed and so must YOU Working with wine distributors in 2023 is going to be very...
Minimize Dependency on Your Wine Distributors (and What to do Instead)
Is there anything more disconnected from reality these days than the expectations from winery owners of what a wine distributor can do for your brand? Same goes for spirits brand owners.
Adapting to the Evolving Reality: Recognizing Wine Distributor Challenges
“The past” is a terrible place to live these days if you are serious about selling a lot of wine or spirits. Especially when it comes to working with wine distributors. Here is how you can tell if you are doing it:
- You think finding (and landing) a good wine or spirits distributor is a top priority.
- You think once you find a good distributor, you are well on your way to growing your sales.
- You have people on your payroll whose job description includes “managing” distributors.
- You believe more states equates to more wine sales.
Let me be crystal clear about one thing: the days of wine distributors being able to build new distribution for you are OVER. Period, end of sentence.
There are just WAY TOO MANY wine brands out there and way too few distributors!
It’s the same story for tiny, startup distributors, medium-sized distributors, large distributors and mega-distributors. The ratio of brands to sell and people to sell them is horribly out of whack and it is only getting worse by the day!
The new reality of working with wine distributors
Whether you are ready to accept it or not, this sets up a new reality: the burden of building sales & distribution has shifted from the distributors to the manufacturers.
When I rack my brain trying to understand why so few brand owners have fully embraced this reality, the only thing I can think of is that the distributors’ inability to do what they used to be able to do is a fairly “recent” phenomenon.
And by “recent” I mean just the last 5-6 years or so.
What the heck happened? What has changed In the 3-Tier System?
It’s a great question, isn’t it? Since the repeal of prohibition, the 3-tier playbook has been the same:
- Find a good distributor
- Educate them on your products
- Roll up your sleeves and work the market with them
- Provide training and incentives
- Treat them like an indispensable business partner
This playbook worked just fine for eighty years! So what the heck happened? THIS is what happened:
Too Many Wineries and Too Few Distributors
When you stop to consider this graphic was created by Silicon Valley Bank back in 2015, this was only the BEGINNING of the dramatic growth in the number of brands on the market.
For spirits, the situation is equally as grim:
Source: American Distilling Institute
It's up to YOU to figure out how to overcome these distributor challenges!
(Distributors won’t come out and say it.)
Of all the blog posts I’ve ever written, 5 Things Distributors Won’t Say to Your Face is by far the most widely read and shared one. It was viewed over 9,500 times, received 220 reactions, 53 comments, and was shared 18 times.
It is almost as if this never occurred to people until it was pointed out. It’s not that distributors won’t do what they used to do, it’s that they CAN’T and it's up to you to figure this out for yourself.
If it’s important to you, you’ll have to do it yourself.
Too many are still in denial! Dissecting Unrealistic Job Descriptions and Distributor Realties
I can say this with confidence because a quick perusal of a typical job ad is full of “crazy” descriptions of what the job requires. Consider these disconnected-from-reality bullet points taken from actual job postings:
- Develop effective wholesaler objectives and take appropriate corrective action
- Manage key distributor relationships
- Hold meetings with the key distributor management
- Convey company objectives and marketing strategies to distributors
- Create the framework for full distributor accountability
Can you tell that these companies have completely missed the memo?
Can you see how off base this way of thinking and operating is?
It is essential that you let go of any notion that you can somehow get your distributor(s) to perform at a higher level.
The truth is no amount of training, education or “accountability” is going to change the fact that distributors large, medium and small are all completely overwhelmed with the number of brands they have in their portfolios.
How to adjust to the new reality of working with wine distributors
Let me make this as easy as possible for you by breaking this down into simple steps:
- Accept that things have changed in the 3-tier system.
- Re-imagine your sales team structure
- Take more control of your own destiny
- Narrow your focus to accelerate wine sales
- Leverage technology!
Accept that things have changed in the wine and spirits industry
They say that in war, when a new soldier is dropped into the field of duty, they are so terrified of dying they become “frozen” and are not very effective as soldiers.
But, there comes a point that they realize they most likely will never return home alive. Once they’ve accepted their new reality (that they are going home in a box), the fear leaves them and they are now free to fight with great ferocity and courage.
I think parallels can be drawn in the wine & spirits business today. Due to the intense and unprecedented level of competition, “death” is the most likely outcome for many brands.
But for those who accept the new reality and make the necessary adjustments, nothing but victory awaits!
Reimagine your sales team and wine rep structure
Since the burden of building new distribution and sales has shifted from the distributor to the supplier, most brand owners need to take a hard look at the way they deploy their sales team.
What you need now are fewer people managing distributors and far more calling on chains and key accounts. This article I wrote a few years ago about how to build a modern winery sales team will get you off to a great start.
Taking charge of your winery's path to success
You need to embrace a new mantra: “If it’s important to us, we’ll have to do it ourselves.”
Go ahead and get all you can out of your distributors but at the end of the day, you need to take responsibility for your own outcomes on the objectives that are a high priority for you.
Here are a few examples of objectives you will want to handle on your own:
- Identify the most attractive key accounts (or chains) in the market based on their ability to generate volume.
- Identify the key decision makers in each of the key accounts and chains on your target list.
- Leverage modern technology like CRM and Email for Trade Sales so you can get more done with less.
- Learn to grow a large list of trade buyer email subscribers so you can speak directly to trade buyers at will.
- Learn to generate your own demand and lots of it!
If you want to truly shrink the learning curve on these topics, you should strongly consider joining our group coaching program, Wine Sales Stimulator, where you can get EVERYTHING you need all in one place!
Narrow your focus to grow wine sales FAST
The key to dramatically accelerating your sales is to NARROW the focus on time, investment and energy to ONLY the most attractive and responsive accounts.
I have several great resources that will help you create your own list of target accounts.
The 80/20 Rule is REAL and you ignore it at your peril. Thanks to the internet and amazing assessment tools that are part of Yelp, it is easier than ever to identify the accounts capable of generating the move volume.
When you create these lists, keep in mind that they are intended to be used by your own sales team. You don’t just hand them over to the distributors and expect them to do anything with them. This is kind of the whole point of this article. They CAN’T do what they used to be able to do. There are only 3 things you can expect from your distributors and this is not one of them.
Once you’ve assembled the list of “80/20 Accounts,” you would be wise to learn HOW to sell to those key accounts.
Leverage Technology in Your Sales Process
There are really only two types of sales activities when it comes to selling more wine or spirits:
- Things that cannot be scaled.
- Things that CAN be scaled to increase your wine sales.
And the key to “scaling” your sales is by leveraging technology.
Any sales activity that requires the physical presence of a human being cannot be scaled. These would include things like:
- Getting people to show up in person at your tasting room
- Working in the market with distributor sales reps
- Wine dinners
- In-store tasting demos
- In-person sales calls to accounts
There is nothing wrong with the activities listed above. The problem is they cannot be scaled.
Here is a list of things that CAN be scaled:
- Email marketing strategies to boost wine sales
- Leveraging SEO to get tons more website traffic
- Social media posting to promote your winery
- Paid social media advertising and wine facebook ads
- Building a large audience on YouTube
- Lead generation to find wine and spirits trade buyers (both paid and organic)
Even a small investment in one or more of these strategies can make a BIG difference in your sales success. And the best part is there is no need to add headcount to your payroll to do them!
Technology: the great equalizer!
One of the best things about leveraging technology in your sales process is even the tiniest winery or distillery can use it to box well above their weight class.
Take email for example. With the right email marketing strategy in place, a small wine or spirits brand can reach a passionate consumer’s email inbox just as easily (and at the same price) as a giant, global brand. This is amazing when you think about it!
When you combine the fact that anyone can leverage technology with the ability to scale it up, investing in technology (and the know-how to use it) becomes a high return, low cost way to level the playing field!
Make a commitment to master one or more of the six strategies listed above BEFORE you add any more headcount to your payroll.
What if there was ONE PLACE you could go to learn more about ALL of the things discussed in this article? What if most of the tutorials were absolutely free?
Well, there really is such a place and we invite you to check it out at your convenience. It’s called the Wine Sales Stimulator group. Don’t let the term “wine” throw you as fully half our members are non-wine producers (mead, spirits, etc).