7/25/24 12:43 PM

STOP Thinking Small: The Critical Role of VOLUME in the Wine Business

It has always been amusing to see how much time and effort salespeople put into selling so few cases.

It’s time to realize that the victory is not just about the sale itself but about the financial impact the placement will (or won’t) produce for the enterprise.

The use of popular KPIs like “accounts sold” and “POD” are primarily to blame. After all, whatever your measure, you get more of.

If you seek VOLUME and revenue, it's better to measure velocity (sales per POD), which few companies do (or even know how).

think_big_wine_sales_stimulator Think BIG! Think volume!

For wine, at least, volume is paramount 👑

Success in a wine business (more so than other adult beverage categories) relies heavily on meeting the company’s volume objectives.

Here are the primary reasons why:

Unlike spirits, wine is highly perishable.
Volume is utterly dependent on the grapes growing in the vineyard. Adjustments in production are nearly impossible without selling or purchasing more juice.
Inventory ties up cash.

Failure to place the highest priority on volume will result in financial catastrophe as the new vintage stacks upon the old vintage, and your cash flow is strangled to death.

Volume = revenue

While the wine industry is particularly vulnerable to the failure to prioritize volume, all adult beverage categories need vast amounts of revenue due to their capital-intensive nature. An intense focus on volume is the surest way to achieve the much-needed revenue.

Is it wise to pursue the “right products in the right places?” Absolutely! But if you do it at the expense of achieving your volume goals, you’ll be out of business lickety split.

Are your salespeople “robbing you” blind?

The average salesperson’s time is worth between $80 and $120 per hour. And that’s just the average.

Factoring in prep time, driving time, waiting time, and appointment time, the average sales call costs between $200 and $400.

So, if your salespeople sell six bottles or a case at a time, you are losing money. They may not realize it, but they are robbing the company.

Never confuse activity with achievement.

Achieving the volume goals (profitably) must be the top priority. Your company's financial feasibility depends on it.

You can’t eat like a bird 🐦 and poop like an elephant 🐘

Putting a sales team on the field is very expensive. The only way to justify the cost is to gain incremental revenue.

The way you gain that revenue is to make volume the #1 sales goal.

Now, this does not mean volume at any cost. It needs to be a profitable volume.

It’s shocking how few truly understand this. Many salespeople don’t know how to sell, so they rely on lowering the price or throwing things of value into the mix.

But I will tell you a little secret: the key to selling volume is to focus on the placements where volume is automatic. Lowering the price to make a sale is for cowards and people with little to no business acumen. In today’s information age, identifying the correct accounts to target is easy.

You can’t eat like a bird and sh*t like an elephant.

Business Acumen Eats Wine Knowledge for Breakfast

Another area for improvement in the current system is the subordination of solid business acumen to the accumulation of wine knowledge.

There’s nothing wrong with pursuing all these advanced certifications, but they must be balanced with solid financial competency.

Ask the business owner. Ask the investors. Business acumen eats wine knowledge for breakfast.

The good news is that it is not an either-or but a both-and. But how many wine companies are pursuing only one? It is not a small number. It’s rampant in our industry!

Wine sales pros need to know and understand the following business principles FIRST:

Assets
Return on assets
Cash flow
Inventory turns
Working capital
Revenue
Cost of Sales

This advice is timely as more adult beverage companies teeter on the brink of financial collapse.

Who’s minding the store?

Suppose salespeople are running around demonstrating product knowledge, burning up travel expenses, and wasting time without the corresponding revenue to support their activities. In that case, this is NOT the fault of the sales team.

The ownership and leadership of the sales team are responsible.

This happens because too many owners don’t understand how to hire, train, lead, and manage a sales team. They willingly (or unwittingly) participate in the false assumption that personality + experience + product knowledge + activity = sales.

Here is the bold truth: The 80/20 Rule is not only absolute but leverage-able. Sales goals can be crushed every time by being more strategic about the accounts being pursued and by measuring the right KPIs (volume and velocity, for starters).

It’s about working smarter, not harder. The problem with this expression is that it’s so familiar that we tend to discount its power. It’s financial power.