Small Wine Distributors Association USA
Small Wine Distributors are facing real challenges in sustaining their business. Wine distribution laws must protect small distributors and take a hard look at the impact of wine distribution bottleneck. For example New York is trying to force a law that all wine distributors must have their own warehouse - offcourse small wine distributors cannot afford warehouses - they are barely trying to see their 10th year! what happens if it does go through - again the big might wholesalers will stay in the game - meaning big brands being distributed more and more... Lot of small wine distributors don't see their 10 years due to many reasons and few of them are as below:
Not able to get BIG brands that have pull - which means they always have to work hard for the sale - RETAILERS DON'T NEED THEM
High Sales Rep turnover: most of small wine distributors pay their reps commission instead of base salary. If a rep is not able to sell about $20,000 it becomes very hard for the rep to stay there. Reps quit themselves as it does not work out for them.
High Delivery Costs: Big distributors often deliver about 300 cases per day per delivery where as most small distributors average 10-15 cases a day. Per cs delivery charge for a small distributor is very high.
Terms: Small distributors often end up giving flexible terms to the customer (retailer) and also provide more service. Retailers start comparing them with big distributor service models but big distributor can afford a merchandiser or a taster doing tastings on Friday evening as they have more than 50 wines in that store.
Our point is small distributors should 'learn' from what beer industry did. What I like about beer industry is - divide and rule policy. They are friends at the same time they are competitors. I will explain how: Lets take an example of a state. A Beer brand (big brands) will have atleast 10 distributors in the state with same pricing (almost). What it does is: all distributors work hard to grow the brand and maintain the price. All distributors decide to take the brand and plan joint marketing efforts. Beer wholesalers even take new wine in such manner. They all meet, help each other introduce the brand and then take the brand. Few brands that have appled the strategy to divide the states are Twig Wines (www.twigwines.com), Grays Brewing Company, Southern Italy Imports, Mwitu Wines.... What we are advising is small wine distributors should be open in sharing the state and building the brand. And in some cases, share the resource also like delivery truck and driver. Or even sales reps (because sales reps need big portfolio to make orders). The reality is they are not competing with other small distributors, the only competition in distribution game is "shelf space" and that is why big distributors keep buying other distributors. Try to aim towards shelf space and use any partnership opportunities to maintain that space. Your products must perform for the retailer. BeverageTradeNetwork.com is trying to make state by state associations and will help with any advise and connect the distributors. If you are a small wine distributor, we encourage you to register for Free on Beveragetradenetwork.com. Email us of any brand that you think you should share with your distributors and then work towards building the brand for long term benefits.
We also have big suppliers who want to work with small distributors and aim for a long term relationship and will support small wine distributors in building the brand.