Getting wine to Point of Sale

Question 1

Ways to get Wine to Point of Sale:

Answer 1

1. Selling Directly to Retailers
2. Appoint a Distributor
3. Establish a Joint Venture
4. Use a Broker
5. Sell Directly to Consumers

Question 2

Joint Venture

Answer 2

Great for price-sensitive markets like the UK
Established between companies at diferent stages in tehs upply chain - gives them greater control of the overall process and potentially greater profitability as costs are shared and intermediary costs avoided

Ie. Mentzendorff is a UK distributor who’s major shareholders are Bollinger Champ and Taylor Fladgate

Question 3

Brokers

Answer 3

Independent intermediaries who represent neither distributor or producer
They make deals happen - they know how much the seller will sell for and how much the buyer will buy for. Also know the styles the seller has and the styles the buyer is looking for
Charge smaller fees (1-5%)
Usually focus on a smaller book that distributors
Have intimate knowledge on both sides - knows the producers’ wine really well and are experts on their market

In Bordeaux - brokers act between chateau and negociant

Question 4

Selling Direct to Consumers

Answer 4

Cellar door sales
Events
Wine clubs
Online

Question 5

Retail Sector Operators:

Answer 5

Supermarkets
Deep discounters
Online
Specialist Wine Retailers
Convenience Stores
Hybrid
Global Travel Retail
Wine Investment Companies

Question 6

Hospitality Sector Operators

Answer 6

Bars - specialist and general

Restaurants - non-destination, casual, fine

Question 7

Monopoly markets

Answer 7

State-run
All alcohol must be approved/brought in by the govt
No promotion, recommendations allowed - done to limit drinking
Prevents alcohol prices being driven down by competition
Once you’re approved, your wines are available nationwide - good for volume - equal opportunity to all producers
Bars/restaurants have to buy from rhem

Question 8

USA 3 Tier System

Answer 8

Introduction of the distributor
Distributor/Producer cannot own Retailer
Easier to levy taxes and collect more taxes

Control state - state holds monopoly in at least 1 tier
Open state
Franchise state - strict rules that dont allow producers from leaving a distributor easily

Question 9

Cellar Door

Answer 9

Pro:
High profits
Can share their story with the customer, engage directly. Build personal relationships
Can show customers the vyds, barrels, increase the experience to turn them into loyal customers
Increases brand awareness, promote brand values
Customers can taste the wines - even special reserve wines not avail on the reg market or not avail in retail at all
Huge ‘word of mouth’ marketing. FREE marketing
Can try new products on consumers and get immeidate feedback so they dont need to run expensive market research

Cons:
Expensive - you wnat your cellar door to reflect the prestige of the wine so tasting room, interior design, the lawns need to be also prestigious and constantly maintained
Must be in an accessible location with high traffic ie along the Silverado Trail. Expensive real estate - can have cellar door away from the winery in a neary city
Additional personnel, tasting room upkeep overhead
Some like to have in-house chefs to further the experience and allow the guests to try their wines with foods to further heighten the experience
Huge competition - need to have a draw for customers to come. High tea at a sparkling producer, live music, lunch/dinner

Question 10

Events

Answer 10

Pro:
Can reach a wider audience - both high and low involvement consumers
Elevates the recognition as a whole of the entire region

Con:
Need to stand out in a large group of other producers
People may just be there for the “free wine”
May need to pair with additional marketing strategies like free merchandise to help people remember your winery
Expensive to have a stand and need personnel to run it
May require travelling to the event

Question 11

Wine Clubs

Answer 11

Pro:
Great for marketing - Be in constant contact with your most loyal consumers via newsletters, blogs
Steady, forecastable revenue
Different levels - target different clientele
Consumers like exclusivity - offer wines that are available nowhere else, exclusive events/dinners
Great way to make members feel special and as if they’re getting one on one attn (Consumer engagement)
Higher profit margins

Con:
Shipping costs can become pricey esp in the summer (needs to be special refrigerated delivery) and need to take upon risk of transport damage or hire a reliable freight forwarder
Additional personnel needed
In 3 tier system, can’t ship directly to some states (ie NJ)

Question 12

Online

Answer 12

Pros:
Store is “open” 24/7
Consumers can easily peruse your selection in the comfort of their homes
Consumers can easily search for what they want
No need to build expensive display. Wines can just be stored
Outreach is much larger - can reach people who are out of state/country even sometimes
Higher profit margins bc DTC

Cons:
Constant maintenance to reflect accurate stock count, add new wines/remove old wines
Shipping can be expensive
Web development is expensive - need to make it easy to use, easy to navigate
Not able to directly communicate and recommend wines so need to rely on good descriptors, critic reviews, pairing suggestions