Tuesday, April 20, 2010

Wholesalers: Protectionism, and the art of self-destruction

While the 3 Tier system has been under attack quite a bit as of late, I've been considering how I feel about both sides of the issue. Then there's the whole State vs. Fed argument that I'm not even going to touch. The whole sales tax thing is a sham, so don't get me started on that. Without getting too deep into politics and fair trade laws, I thought I'd bring up some points that keep getting missed.

Wholesalers are, by in large, acting like HUGE MORONS. Direct shipping won't affect you nearly as much as, say the public backlash against the three tier system, which could theoretically start a landslide of sentiment to dismantle the whole system. Tread very lightly wholesalers, the wine buying public views you as middle men that take a greedy slice no matter what. On the other hand, they sort of have a point, sometimes.

Wholesalers, are actually still vital, no matter what happens with direct shipping. Preplanned wine purchases are great for consumers, but 98% (no data to back this up, don't bother checking) of wine consumers buy in a store for near term consumption. They also need the expertise of a knowledgeable wine staff, something you can't get from the winery, mainly because it's not unbiased. Oh, and what about sampling? If we allow retailers and restaurants to buy direct, how will they get to know the wines? Will they buy the minimum shipment just to sample new items? Who will organize trade tastings? Don't forget, any wine professional worth their salt has tasted thousands of wines, in the last few years alone. How does anyone expect this to continue if the 3 tier system is attacked? If consumers think they are going to get better pricing from the wineries, think again. Most will hold the retail price,and keep the full markup, just like they (justifiably) do in the tasting room.
The answer is, no one knows. Change is always unpredictable, and often scary. Laws of protection often fail, and in this case, who are they protecting? They are probably just protecting a small group that are too narrow minded and antiquated to see themselves adapting. All I know for sure is, wine consumption is on the rise. Wholesalers should quit worrying about rigging the system for their own self interest, and do a better job of promoting and educating. Don't you think Congress has better things to do than to protect the security of the big 6 distributors?

Wednesday, April 14, 2010

Video: The positive effects of Global Warming (feat Dirk Richter of Max Ferd Richter) via Understanding Wine with Austin Beeman #5

Monday, April 12, 2010

Moving Boxes is very different from Building a Brand

There's more than one way to skin a cat. Unfortunately, the same can't be said of brand building for artisan wineries. There are plenty of "professionals" out there that can "move boxes". This is an important skill, and one that is not to be overlooked. Moving boxes is the "art" of the deal. It exists in a universe I have never visited, and don't know much about. It's easy for us wine geeks to scoff, as I often do, about these corporate minded "tools". It may be time we learned about them though. I have noticed them infiltrating my world quite a bit as of late. I can only presume this is because of the economy and these seemingly glowing resumes hunting for new jobs. Inevitably, small and mid-sized wineries look at these salespeople, and think that they are what they've been missing all of these years. Corporate placements, court-side seats, $1000 table fees, spiffs, DA's. These are their tools of the trade.
This may sound great, and maybe I'm just jealous. Or maybe, it only works in certain situations. Moving Boxes is great if your supply is large,and your margins are thin. If you are diversified enough to withstand not being profitable every couple of years. Most small wineries count this as blood money. They can't afford discounts, let alone marketing budgets, entertainment budgets, etc. The price is the price. In these situations, you need to build the brand. Building the brands perpetuates placements,and you may even turn your customers into evangelists (the best sales tools in the world). People that move boxes can't evangelize. They just aren't built that way. That's not to say they can't sell, but their skill set is better used in different arenas.
My prediction is that this market correction, will once again have another market correction. This will inevitably result in small wineries refocusing on their solid placements, and selling by brand building rather than the fast money.