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The Days of Managing Wine Distributors 🍷 are Over

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Working with wine and spirits distributors has admittedly gotten more complex in recent years.

This SHOULD NOT come as a shock to most of you but unfortunately it will. 

Judging from the job descriptions listed on winejobs.com, it appears most wine companies believe there is still such a thing as “managing” wine distributors. Just look at some of these snippets I pulled from actual job postings this morning:

  • Develop effective wholesaler objectives and take appropriate corrective action if goals are not being met (love this one!)
  • Manage key distributor relationships… (there’s that word, “manage”)
  • Hold meetings with key distributor management (oh, that will really help)
  • Convey company objectives and marketing strategy to distributors (you can “convey ‘till you’re blue in the face but…)
  • Create the framework for full distributor accountability (yeah, good luck with that…)

This way of thinking and operating is everywhere!

When the horse stops breathing, dismount.

Something has happened in only the past five-to-six years that has forever changed the way brands interact with wine distributors and that is simply this:

  • Too many brands
  • Too few distributors

Anyone with an IQ above room temperature can see that distributors' portfolios are swollen beyond all reasonable practicality . I mean it’s become ridiculous!

Business as usual has left the building.

Prohibition ended in 1933. And from that time until about 2015- 2017 the idea of “managing distributors” was absolutely fundamental to building a successful brand. 

Many prefer the softer more cooperative terms like “partnering” or “collaboration” but no matter what you call it, the days of getting a distributor to take action on your behalf are GONE.

It’s not they that won’t go out and sell for you, it’s that they can’t. There are just too many brands. Too many masters to serve.

No amount of training and education can change this fact.

The situation has changed dramatically! Please wake up!

Please tattoo this to your brain: The burden of building sales and distribution in any given marketplace has SHIFTED from the distributor back to the supplier.

US_Distilleries_2006_to_2022

This graph above (from the American Distilling Institute) illustrates the dramatic increase in the number of spirits brands. I wish such a graph existed for the wine trade but it does not. The closest I can come to is this one:

Number_of_wineries_vs_year

The situation has changed dramatically. The new situation calls for new strategies and new ways of thinking. 

Anyone who insists on interacting with wine and spirits distributors as if nothing has changed are going to become more and more disappointed with their distributors' results.

If you know, you know.

Now I DO see suppliers making the necessary adjustments and that is encouraging. Here’s what they are doing, specifically:

  1. Taking more control of their own outcomes (if it’s important to them they know they must do it themselves)
  2. New expectations of distributors are more about logistics and fulfilling orders (versus going out and selling for them)
  3. Taking responsibility for generating their own demand (most of this is done digitally)
  4.  Redesigning their sales team structure so there are fewer people “managing distributors” and more people selling to key accounts and chains.
  5. Leveraging 80/20 by narrowing down their focus to the most important and impactful account targets

As a recruiter, I see way too much of the “old” mindset and far too little of the “modern” mindset but I am happy to report the winds are indeed changing.

It's up to you to figure this out on your own.

A few months ago I wrote a blog post called, “5 Things Distributors Won’t Say to Your Face

The reaction was astounding!

  • 9,756 impressions
  • 4,599 article views
  • 220 reactions
  • 53 comments
  • 18 reposts

Apparently this article really struck a nerve!  

It especially struck a nerve with DISTRIBUTORS because I was saying things they are unable to say. Linkedin provides me with data on exactly who viewed this article the most (by job role, by exact company, and by industry). 

So here I am again waving the flag and sounding the alarm for the large number of brands/suppliers still operating as if nothing has changed.

New reality. New strategy.

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!

New brands have an advantage.

I see this time and time again. New brand owners have no awareness of what the competitive landscape was prior to 2017. All they know is what it looks like today!

They are unencumbered by preconceived notions about the role distributors play in the world. 

They know unequivocally that “if it’s going to be, it’s up to me.” True words indeed!

But here and now I am inviting ALL brands (large and small, new and old) to ACCEPT the new reality and make the necessary adjustments.

Too big to fail?

In case you are thinking it is only the small brands that are suffering from distributors inability to serve so many brands, let me set the record straight.

While the mega suppliers certainly do wield a bigger stick inside the wholesalers, they have the exact same problem as the little brands: the ratio of brands to salespeople.

This inopportune ratio exists among all sizes of distributors.

In fact, I think the mega brands have it much worse - especially if they believe they can get the distributor to act on their behalf. The only way this will happen is if they spend a lot of money on distribution incentives

And then there is the enormous payroll they’re going to need to “manage” all these layers of distributor management. My recommendation here is to severely shrink the number of people being paid to “manage” distributors and then re-deploy those payroll dollars to put more feet on the street so they can control more of their own destiny. You’re welcome.

Building a "modern" sales team structure.

The sales team of the future will have far fewer people “managing distributors” and far more people selling to chains and key accounts.

This new and more modern sales structure should be accompanied and supported by data and sales-related technology such as CRM

No matter how you slice it, times truly have changed. It’s an inescapable fact. No amount of denial will change this and no one is immune from it. It’s simply the new reality!

Some assembly required.

One of the big outcomes is the need for new and better training. 

For the training you may need to implement more “modern” strategies, look no further than our new group coaching program called, Wine Sales Stimulator

Check it out and let me know if you’d like a personal tour! I can be reached at ben@winesalesstimulator.com

 

 

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