Super Early Bird Ends
December 10, 2020
April 23, 2021
2021 Judging Date
May 16, 2021
The alco-bev market in the US is one of the largest across the globes. It’s no secret that everyone wants to find a place in the US marketplace. However, due to the three tier system (importer/producer - distributor - retailer), it can be hard to find the perfect distributor for your wine, and it can also be tricky to pitch your wine to a distributor for their portfolio.
Today, Schiffer gives us a look inside the importing and distributing business. He shares his experience and thoughts on different aspects of the market, including how distributors pick wine for their portfolio.
I got into the wine business almost completely by accident. I graduated from law school at the end of 1993, and needed a job while I waited for the bar examination results. In those days the answers were written by hand in a notebook and read by practicing attorneys who graded them. The process took about four months. A friend who had been in the wine business before law school suggested I contact the Winery of Ernest & Julio Gallo. I wrote a letter to the winery and two weeks later I was a freshly minted salesperson selling Gallo wines in Spokane, WA.
Early on in my career I thought I might go back and practice law but I’ve had so many great experiences selling wine and beer that I ended up staying with it. I’ve been fortunate enough to work for several great supplier and distributor organizations in the last 26 years, and to work with and for more amazing people than I could possibly list. It’s been a great way to spend my career. It has its stresses like any job but most days I head to work excited about what’s next.
Epic Wine & Spirits was formed in 1995 in Santa Cruz, CA. In its early years it was primarily a fine wine house focused on selling to on-premise establishments. Our owner Bill Foley purchased Epic in 2008.
In the last 20 years, consolidation acquisitions by the dominant national wine distributors in the United States began to limit supplier choice of route to market in states like California. We began to see small and mid-sized suppliers turning toward mid-sized distributors like Epic, where they benefited from the flatter management hierarchy and increased personal attention.
Many suppliers align their entire US distributor network with one of the three major national distributors; that route to market is absolutely the right solution for those folks. But others have brands at different stages of life-cycle development in different parts of the country, and for many of them Epic, and distributors like us, are a better fit. We’ve tried to carve out a niche in our market focused on service. We carry about 500 brands and employ about 200 people. We’ve got a great young management team and we’re very optimistic about the future of our company.
There’s always demand for imported wines in the US. The popularity of any given country of origin may shift some with the trends, but import demand remains consistent. Italian and French wines have a much deeper penetration of the mass market on the eastern coast of the United States, but you can find great quality wines from those countries almost anywhere. Wines from New Zealand have certainly made an impact in the US market as well as wines from Argentina and other Southern Hemisphere countries. The rise of retailers like Total Wine & More and BevMo, with their massive assortments, have allowed US consumers to explore and experience more imported wines than ever before. Leading grocery retailers like Kroger and Whole Foods, in particular, also do a great job giving their shoppers access to imported wines.
We evaluate import suppliers the same way we do domestic suppliers. We first look at the commercial potential of a brand or style of wine. Can the brand sell enough volume to justify the expense of carrying it in our warehouse? Does it have enough appeal to consumers to be purchased at an acceptable rate from our retail or restaurant customers? We then evaluate its potential fit in our portfolio. Will it add incremental sales and complement the rest of our offerings? Is it unique enough not to compete against the other brands we carry? Most importantly, we evaluate whether or not we can sell the brand effectively and be a good partner to the supplier. Setting the right expectations is particularly important with import suppliers. They rely upon us to guide them through the complexities of doing business here, so a candid discussion of these factors is crucial. We search for potential import suppliers at large industry events like Prowein to see where we might be able to fill gaps in our import collection. We also have other suppliers and distributors refer importers who are looking to penetrate the US market to us to evaluate their brands.
[management team, Epic Wines & Spirits]
That’s a great question. The demand from suppliers looking for representation from distributors continues to grow exponentially. Our management team gets about 100 inquiries a month from suppliers looking for representation in the markets where we operate.
The first thing we look at is whether or not we can be a good partner to the supplier. Do we have the capabilities within our sales team and on the operations side to sell and deliver the product effectively? Can we sell it in accordance with the message the supplier has for the brand? Is there anything they need in terms of storage or delivery that’s beyond our capabilities? Also, are the suppliers’ expectations for the brands realistic? Is the brand priced at a level that will allow it to be successful against its competitive set? Is it a late-to-market “follower” of a type of wine, trend, or innovation that has already saturated the market? Has the brand shown it can get traction in other parts of the country, and needs expansion into our markets? These are all things we consider.
Next we look at its potential fit in our portfolio vs. other suppliers and brands. Our objective is to be effective partners with our suppliers and to help distribute and grow their brands—not to be brand collectors. We’d be reticent to take on brands or suppliers that compete with what’s already in our portfolio if the market couldn’t absorb that concentration of brands of a particular type of wine, or wines from a particular place of origin.
Finally, we look at how the supplier demonstrates their commitment to support the development of their brands. The days of a supplier putting a brand into our portfolio and saying in essence, “Here you go...you take it from here,” are fast coming to an end. There are so many brands and suppliers looking for distributor representation that we can be selective in choosing our partners. In a chain driven market like California, we look at whether or not the supplier has national account sales capabilities to help us secure chain distribution. Do they have the financial resources necessary to support the marketing efforts needed to grow the brand? How do they reach consumers—via social media or through tasting rooms or other avenues?
California has a very vibrant restaurant scene in the major markets we service like Los Angeles and San Francisco but also throughout the entire state. Our sales reps try to tailor our portfolio offerings to the cuisine the restaurant serves and the demographics of their guests. Our portfolio is broad enough to service the wine needs of a broad range of restaurants, so we focus on the right fit rather than forcing a product into a wine program just because we’d like to make a sale.
Of late, one of the things I’m hearing is the high turnover of wine-by-the-glass listings in independent restaurants. The time period in which a new wine-by-the-glass listing gets to prove itself seems to be shrinking. I attribute this to two factors: lots of very high quality wines on the market compressing prices and better educated salespeople and buyers.
Early in my career we had to form our own wine education curriculum. If you were a salesperson in a large organization you got some fundamental wine training, but it was mostly centered on your own portfolio. You studied books and magazines and picked up what you could as you worked in the trade. These days, hospitality professionals and wine salespeople in decision making positions in the market have better training and wine education than at any other time in the history of our business. Consumers are also better educated, with reams of information available to help them evaluate what they’re drinking and cue them to ask for new and different wines. The result is a steady churn of wines through many restaurants to give consumers the variety they seek.
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Most off-premise chain retailers are not wine brand builders. They tend to look for data-driven evidence that a wine they list in their assortment range will do well before they give it a shot. Off-premise chain retailers have more data about their shoppers than ever before and they mine this data to tailor the wines in their range with great specificity. On the operational side, they also look to see if a supplier has a route to market that guarantees product will get to all of the stores where it is listed in a reliable manner. They also look to see if the supplier has the resources to market the brand to consumers to help pull it off their shelves once it has been listed.
Sales of all wines tend to trend upward during holiday periods so it’s fundamental to be in distribution during those times. National level suppliers and distributors tend to overspend to get big wine brands onto retail floors at holiday time, so smaller wineries might want to employ tactics that are more cost effective and connect with consumers on an individual level, like through targeted social media. In markets where it’s legal, in-store wine demos can be a really great way to drive awareness of your brand.
The states that have long established wine growing regions like California, Washington, and Oregon seem to support their local wines pretty strongly all of the time. California appellated wines are always among the top wines in the US in terms of overall volume so in terms of consistency of consumer appeal I would say they top the list in the US market. The good news for people in the wine trade is that because consumers have more wine information than ever at their fingertips, they are open to trying new wines. Wine professionals in the hospitality and retail channels have realized this and broadened their offerings. While particular types of wine may dominate specific markets, the diversity of offerings now is broader than ever, and that spells growth potential for the overall wine business in the US.
I live in Napa, and most of my friends here are in or connected to the wine business, so getting a wine into the rotation at a holiday event can be competitive. Everyone shows up with the best bottle their winery produces, or a special bottle that’s hard to find or that represents a project they’ve been working on. It’s fun to see what comes in the door with each guest.
The Chalk Hill Estate Chardonnay in the Foley Family Wines portfolio is a special bottle that goes well with many traditional American holiday dishes. Baron Ziegler, the founder of Banshee Wines, gave me a magnum of a special Sonoma County Pinot Noir he makes called Marine Layer. I’m looking forward to sharing it with friends this Holiday season!
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