How to find the right importer or wholesale partner.
On the heels of announcing our exciting news last week, the Brokerage Division partnership with SOMLYAY, I figured this would be a timely share.
Any Producer, whether wine, beer or spirits, has three main avenues to sell in the United States. It’s important to regularly analyze your strategy and weight your focus in each category to maximize revenue.
The largest profit margin, for US based producers, comes from selling on-site, whether it be in a tasting room or an adjacent retail space. This is also the ideal environment to convert a customer to a club member or brand-loyal advocate. You have the opportunity to educate and provide an experience that no other revenue stream can rival. However, not everyone, especially in early stages, has a tasting room. Moreover, you’re betting on local weekend warriors and tourism. A month of bad weather or, as we unfortunately now know, a freaking pandemic, can throw budgeted targets out the window.
Direct to Consumer (aka DtC or E-Commerce) offers more flexibility and solid profit too. Depending on your fulfillment set-up, the profit margins do vary. You may be paying a third-party, absorbing some of the shipping costs or even offering coupons and discounts to customers. In addition, there are licensing, compliance and intrastate shipping laws to navigate. Good SEO alone won’t catapult your sales forward. Continued investment in marketing, customer acquisition and web design cut further into net revenue. However, wide access and building your customer database are hugely valuable, so using great traffic drivers to your website, like Sippd, are also worthwhile.
Wholesale Distribution entrusts partners with your wine/beer/spirit and your story. The right distributor advocates for your products in their own markets; educating consumers, promoting sales growth and communicating effectively to reach common goals. The sales margin is lower of course, but distribution is a volume game. I like to look at the reduced margin as an investment between your marketing and staffing lines. With the right company, it’s an extension of your team and organic “on the ground” exposure. In fact, the end consumers that find your wines at restaurants or retailers in their city often become the same people who visit your website and tasting rooms too.
I find Wholesale to be incredibly important. Even on a small scale, I recommend it to be part of everyone’s overall sales strategy.
So, how do you find that perfect fit? What markets do you focus on? Where do you start?
To begin, answer the following questions for yourself-
How much product can you allocate to distribution? This will be a key determining factor to how many states you can reasonably aim to sell in.
-You’ll want to be sure your distributor can take the full allocation you designate or be committed to reaching that within a few years.
-You’ll want to compare several markets to see where there may be gaps in the type/style of products you offer. Or where data shows the sales of similar products are strong.
2. Where does your product work best? Do you want to focus on chain retail? Boutique retail and fine dining? On-premise only? This will help guide you in both the best markets and the size of distributor you’ll need.
-You can ask a distributor for a list of active customers that fit your needs; making sure they have the relationships necessary to achieve your goals.
-You can compare your products to current SKUs a distributor carries to ensure you won’t “get lost” in their portfolio and also that they know how to sell your price point/region/varietals/style etc.
3. What is your expectation for communication and performance?
-Don’t always sell to the first company that shows interest. Do you enjoy speaking to your contact? Have they asked relevant questions and told you why they want to work with you? How many sales representatives and what regions do they cover? What’s their employee retention like? The goal is to build a long-term partnership. You want to feel confident that both the person(s) in charge and the team they’ve built will fully support your success in their market. If your brand is a specialized category, you’ll want to know that there are sales staff that understand it; whether that be spirits category specialists, sommeliers or otherwise.
-Ask what a distributors standard reporting and communication with producers is. Many companies automatically send a monthly or quarterly depletion report. What else will help you? Would you like a monthly list of new account placements? Do you hope to plan market visits? If so, request their guidelines on how far out you need to schedule and any limits on frequency or days in market at a time.
———————————————————————————————————————————-
Ultimately, instinct plays a large part in finding your partners. Sometimes you just know, both when it’s right and when it’s not.
Often though, it’s a challenging endeavor to figure out who to reach out to and even what states you should focus on. That’s where we come in.
If you’re looking for an importer in the United States or you’re hoping to begin or expand wholesale distribution, please feel free to reach out. Common Fuel Consulting has recently established a partnership with SOMLYAY to take the guesswork out of this common challenge that producers face. Our teams and our dedicated Brokerage Director accelerate and streamline the process, using proprietary tools and hundreds of established relationships.
Our services are affordable, costing the equivalent of one market trip or trade show, and get you in front the best prospective partners.
