Sorting Out The Distribution Maze
Deciding if you need a distributor is essential if you are a small winery. Many successful wineries only sell direct-to-consumer (DtC)—from their tasting rooms and wine clubs—and the profit margins are better. Some wineries have individual relationships with restaurants or retailers. Others are only distributed in their home state and its capital and regional cities.
Selling the wine directly means you—the winery—are doing all the work, and reaping all the benefits. However if you want to be a national, or more than regional, brand it helps to have additional sales feet on the street.
Choosing a Distributor
Three distributors control almost half of the U.S. wine market, according to Forbes. The country’s largest, Southern Glazer’s Wine & Spirits alone accounts for about $16.5 billion in revenue, according to Wines & Vines.
A small brand can get lost in a big distribution house, however smaller distributors may not have access to and connections with as many accounts. Finding a distributor who shares your company culture and understands your brand is essential. Oftentimes that means seeking out smaller players who sell other small-production wines similar to your own.
Lists of distributors can be found on sites like the Beverage Trade Network, LibDib and Wines & Vines. However, before setting up meetings, you will have to dig deeper and find out more about the companies, the brands that drive their sales and if their way of doing business works for you. You don’t want to be distributed by a wholesaler whose staff is focused on selling the greatest amount of generic brands in order to win a trip to Hawaii.
Keep in mind that distributor mark-ups can vary between 18 to 45 percent, depending upon the brand and the region. However most distributors average around 30 percent of the sales price but may work on slimmer margins—such as 25 percent—during promotions.
Once you choose the right distributor keep in mind that you will have to invest in the company. They will need samples, a promotional budget and you will need to support their sales drive by coming to their major markets for “work withs,” where you go on sales calls with them to meet merchants and sommeliers.