4. Options for Getting Wine to POS Flashcards
What are a producer’s 5 options for getting wine to POS?
a) Direct to retailers
b) Distributor
c) Joint venture
d) Broker
e) D2C
What are 3 advantages of selling direct to retailer?
- Not paying an intermediary; more profit
- Retain control over marketing/brand image (but large retailers may dictate)
- In-house sales may be feasible if dealing with a small number of large retailers
(4. Bulk transportation has enabled sales “en primeur” to retailers - ? )
What are 4 disadvantages of selling direct to retailer?
- Cost of delivery logistics and export logistics (labels, duties/taxes). (Freight forwarders also add cost.)
- May take on financial risk of loss or damage in transit if that’s the agreement
- Time & cost of forming relationships, especially in foreign markets. (Trade shows and tastings can help.)
- Not as feasible to deal with many small retailers.
What are 6 advantages of appointing a distributor (aka importer/agent/wholesaler)?
- Knowledge assists with relationship development, securing listings, sell through, consumer trends/preferences
- Don’t waste time with the wrong retailers
- Help with admin, especially delivery logistics, legal compliance (duty pmt, labelling)
- Might absorb breakage/loss risk
- Help with language barrier
- Retailers may prefer to deal with distributors
What are 4 disadvantages of appointing a distributor (aka importer/agent/wholesaler)?
- Fees aka margin. Higher for on-trade than off-
- Loss of control over marketing, brand image, product placement (relationship helps)
- Attention is divided across a portfolio.
- Wines can be dropped if they don’t sell
What is a joint venture? 2 examples?
Between a producer and distributor, or other supply chain company of a similar size (otherwise it’s a takeover)
1) Mentzendorff (UK distributor) with Bollinger & Fladgate
2) Buckingham Schenk (UK dist) with winemakers Herve & Diane Joyaux Fabre
What is are 2 advantages and disadvantage of a joint venture?
+ Saves on cost, Greater control
– Contracts can lock in parties
What is a merger? One example?
Two businesses join together to create a single business with more resources.
ie. Conviviality with Matthew Clark/Bibendum PLB
What is an acquisition? An example?
A company (likely larger) buyers another (likely smaller), which becomes a subsidiary. With the purpose of acquiring capabilities or saving the business.
ie. E&J Gallo or Jackson family wines acquiring producers
What is a broker? What is a common function in the industry?
An intermediary that facilitates deals between parties (ie. producer and retailer) but does not enter any deals (like a distributor).
Often connect supermarkets or merchants with a grower or co-op.
Advantages of using a broker?
- Smaller fees than a distributor (ie. 1-5%) due to lower overhead
- May specialize (ie. sales of bulk wine, or small production wines)
- Responsible for correct product/vats being delivered
What is a courtier?
A broker in Bordeaux with legal status, acting between Chateaux and Negociant
What are 4 main channels for selling D2C?
- Cellar door sales
- Events
- Wine clubs
- Online sales
What are the main advantages and disadvantages of selling D2C?
+ Retain full profit and control
- Admin, logistics, staffing costs
What are the benefits of selling via the cellar door?
- Tastings encourage sales over buying blind
- Builds brand awareness, loyalty, and word of mouth
- Gather feedback on new products and respond to market trends
- Can be located away from production
