4. Different Options For Getting Wine To The Point Of Sale

Question 1

What are the 5 options for getting wine to the point of sale

Answer 1

Selling directly to retailers
Appoint a distributor 
Establish a joint venture 
Use a broker
Selling directly to consumers

Question 2

What are the 4 main options for selling directly to consumers?

Answer 2

Cellar door sales
Events
Wine clubs
Online

Question 3

What are the 2 broad categories of wine sales?

Answer 3

Retail
Hospitality (HoReCa)

Or off & on premises

Question 4

What are the advantages & disadvantages of selling directly to retailers?

Answer 4

Advantage:
Not having to pay the intermediary’s costs & margins
Increasing the profits
Free to decide which retailers stock their wine
Retain control over brand and marketing

Disadvantage:
Increased administrative burden for producers
Hire more staff
Ensure all import duties/ laws are paid and adhered to
The producer may take on full financial risk if the wine is lost/damaged in transit

Question 5

What does it mean to sell directly to retailers?

Answer 5

Producers sell directly to the retailer/HoReCa outlet.

Question 6

What happens when a producer appoints a distributor?

Answer 6

A distributor buys wine from a range of producers and sells it to a range of retailers (including HoReCa). Generally located in the same country as the retailer to which they sell, which may or may not be in the same country as the producers. The distributor may or may not hold stock of the products in its portfolio, and may or may not have the exclusive rights to import and/or distribute certain products in their market.

Question 7

What are the advantages & disadvantages of appointing a distributor?

Answer 7

Advantage:
Help producers with the administrative burden
The distributor will usually absorb risk of lost or damaged wine
Take care of the logistics
Have greater resources to promote a wine than the producer and may take over the marketing
Wine buyers usually prefer to buy through a distributor rather than several producers

Disadvantage:
Wine is more expensive to the end consumer as the distributor will add on their margin
They cannot give undivided attention to any one producer
Marketing strategy may not be ideal for an individual wine
May have larger purchasing power so producer may have to sell the wine for less then they wanted

Question 8

What is a joint venture?

Answer 8

In a price sensitive market (such as the UK) companies in the wine industry are increasingly looking to save costs. Just established am joint venture between companies at different stages of the supply chain can achieve this.

Question 9

What are the advantages & disadvantages of establishing a joint venture?

Answer 9

Advantage:
Sharing of resources and responsibilities
Cost savings therefore greater profitability
Give parties greater control over those different steps

Disadvantage:
Needs to have a contract so all parties know their responsibilities, this can take time and lawyers
Companies need to be of a similar size so it is not a take over

Question 10

What are some examples of a joint venture?

Answer 10

Buckingham Schenk (distributor) and Herve and Diane Joyaux Fabre (winemaker) created the Argentinian wine brand Vinalba

Mentzendorf (distributor) and Bollinger (winemaker, Champagne) / Fladgate Partnership (winemaker, Port)

Question 11

What is a broker?

Answer 11

The term broker is used in a number of different contexts in the wine industry. In the true sense it is different to a distributor. Brokers are independent intermediaries who represent neither party. They do not enter deals, they merely make them happen.

Question 12

What are the advantages & disadvantages of using a broker?

Answer 12

Advantage:
They charge smaller fees than distributors
They have intimate knowledge of a particular (usually specialist) market
Bringing a seller and buyer together saving both parties time and effort

Disadvantage:
Usually only for specialist markets, such as fine wine
You are trusting them to sell your wine at the best possible price

Question 13

What are the advantages & disadvantages of selling directly to consumers?

Answer 13

Advantage:
Producers keep full profit from the sale of the wine
Retain control of how the wine is marketed

Disadvantage:
More costs
Additional administrative tasks
Additional labour
Additional logistics

Question 14

What is a cellar door?

Answer 14

Facility set up on the estate or at the winery to sell wines to visitors.

This can be anything from just being able to pick up wine from the cellar door, attractive shops, tasting rooms to fine dining restaurants on site

Question 15

What events can a producer engage with consumers directly?

Answer 15

Events where consumers can try and buy wines.

Tasting fairs
Wine and food festivals

Question 16

What do wine clubs do when set up by a producer?

Answer 16

Wine clubs offer members the opportunity (usually for a small annual fee) to purchase wine at reduced prices for delivery to their homes. Other benefits include access to wines not normally available to the general public, free tours and invitations to exclusive tastings.

Question 17

Why would a producer decide to sell online?

Answer 17

As an addition to their other routes to market. Gives consumers the opportunity to buy their favourite wines from the comfort of their own home.