Getting wine to Point of Sale Flashcards
(26 cards)
What are advantages of using distributor
Advantages of using distributor:
Marketing
Distributors will also have greater resources to promote a wine than the priducer and usually take over the marketing
Information
Knoledge of the market (key players, consumer preferences, current trends, retailers’ requirements and preferences)
Retailers contacts
Distributors organise portfolio tatstinf attended by a wide range of potential customers.
Retailers prefer to do business with one point of contact than many separate producers.
Import/Export
Local distributor are helpful where there is a language barrier
Help with legal compiance issues dor imported wine (duty payments and labelling requrements)
Administrative
Deal with all the administrative burden (logistic, marketing, contracts)
Logistic
The distributor will take care of collection, transportation and delivery of the wine, absorb the risk of lost or damaged wine and deal with the admiinistrative burded that goes with it.
Generally, wine sales are split into which 2 categories
Retail
Off premises - US
Off trade- UK
Hospitality:
On Premises - US
On trade - UK
HoReCa= Hotels, Restaurants and Cafes/Catering
2 e.g’s of prominent Joint Ventures:
e.g. Mentzendorff; UK distributor, joint venture of Champagne Bollinger/ Fladgate Partnership. Not direct Competitors, other companies in portfolio don’t overlap
e.g. Vinaalba: new wine brand created through JV of Buckingham Schenk (Uk distributor) and Herve and Diane Joyaux
Decribe cellar door Sales:
What types of customers?
Cellar doors:
Facilities on the estate or at the winery to sell wine to visitors.
Customers could be locals coming specifically to pick up wine or wine tourists visiting the region
At what types of events can producers sell directly to consumers?
PROS and CONS?
Tasting fairs or wine and food festivals
Pros:
Attracts a large number of visitors due to being held in larger tows, cities with other attractions, e.g. live music, so more attractive for visitors.
Cons:
Costs producer to exhibit wines; travel, additional staff.
Competing with other producers for visitors attention
What are the advantages of Cellar door sales
Adcantages of Cellar Door Sales:
Larger profits (no intermediaries)
Direct engagement with consumers = allowing guest to taste wines first has shown to increase sales
Build brand awareness and loyalty = especially important for new wineries.
Increase ‘word of mouth’ marketing; customers who have visited wineries make personal connections, are more likely to buy wine/recommend to friends in the future.
Excelent opportunity to test new products, get feedback withour expensive market research
What are the disadvantages of using a distributor
Diadvantages of using a distributor:
Costs:
The distributor will charge a fee to achieve its desired margin, which will reduce the producer’s profit
Marketing:
Producers can lose control over how their wine is marketed and where it eventually ends up on sale. The strategy chosen by the distributor may not therefore flect the producers’ brand image and it is therefore vital that both parties agree a clear marketing and sales plan from the outset and keep it under relura rewiew.
Competition:
- Distributorss cannot give undivided attention to any one producer
- Overall marketing strategy may not be the ideal one for an individual wine
- May drop thos which are not selling in sufficient quantities.
- May add new producers to their book that are direct competitors.
What are the disadvantages of Cellar Door Sales?
What are some strategies used by producers to eff set these disadvantages?
Disadvantages of Cellar Door Sales:
- Requires having suitable location
- Requires additional staff
-Takes focus away from other routes to market
Strategies:
Set up ‘cellar door’ in nearby town or nearest largest city to increase access
Define Wine Clubs:
What are other benefits for members?
Clubs in which members pay a small annual fee for the opportunity to puchase wine at reduced prices for delivery
Other benefits: access ti exlusive wines, free tours, invitations to exclusive tastings + easier access.
What are the advantages of online retail:
Advantages of ‘producer online retail’:
Higher Profit: No intermediary costs, so cheaper for consume and more profit for producer.
Marketing: ability to write lots of information about the wine, the producer, etc.
Gives consumers ability to order wine from comfort of own home
Take advantage of the growin market for online sales
Explain the role of a ‘distributor’
Distributor:
Buys wine from a range of producers and sells it to a range of retailes, including HoReCa
May/may not hold exclusive rights to import/distribute certain products in their market.
aka Importers/Wholesalers/Agents
What are the 4 main options for producers ‘ selling directly to consumers?
Options for producers selling directly to consumers:
Cellar door
Events
Wine Clubs
Online
What is the difference between a ‘merger’ and an ‘acquisition’?
Merger: 2 businesses form a (theoretically) ecqual partnership to create a new business with greater resources/capabilities than individual businesses had.
Acquisition: aka ‘Takeover’, when one company (usually much larger) buys another company, which then becomes a subsidiary of that company.
What are the Advantages of ‘selling directly to retailers’?
Advantages of selling directly to retailers:
Bigger profits: No intermediary costs to pay. Beneficial for both producer and consumer.
Control over marketing: Producers are free to decide who stocks their wine.
Admin burden is light if only selling, to a small number of companies, e. g. only supermarkets
Trade fairs/tastings gives producers excellent opportunity to meet many potential clients at once
Explain how a producer will choose the right distributor
The right distributor:
Size matters: larger distributors prefer large producers, smaller producers may specialize in particular wines, can be beneficial for smaller producers.
May be necessary to find multiple distributors if producer has a range of wines, depending on what the distributor specializes in.
Though this process is costly appointing the wrong producer can be more problematic in the long run.
Get information by attendind trade tastings, getting recommendations from other wineries.
What are the benefits of ‘acquisitions’
Benefits of acquistions:
Reduced costs = lower prices due to economies of scale, simplification of supply chain.
Method of growing business in order to compete in more sectors of chosen markets
For smaller producers being bought = increased investment, large distribution network, new routes to market.
In which market are ‘joint ventures’ particularly important?
What’s the point?
What is necessary for success?
What common form do these take?
Joint Ventures:
Important in price-sensitive markets, e.g. UK for companies trying to save costs.
Are established at different stages of the supply chain which give greater control & profitability - intermediary costs avoided
For success - companies need to be comparable size
Increasingly common JV’s = producer & distributor or large retailers to create a new wine brand.
What are the disafvantages of ‘selling directly to retailers?
Disadvantages of Selling directly to retailres:
Marketing: Can be costly (time and skilled labour)
Information: Own market reseachr has to be done
Retailers contacts: Difficulty to engage mane retailers, especially big ones
Import/export:
Language barrier can be an issue
Lagal compliance issues for imported wine (duty paymatens and labelling requirements)
Administrative: Administrative burden (logistic, marketing, contracts …)
Logistic: Collection, transportation and delivery of the wine. May have to take on the full financial risk of wine being lost or damaged in transit. This risk may be reduced by using a freight forwarder.
e.g. of how acquisitions do now always work out well
What happened?
Convintiality in the UK.
2016: Conviviality (major UK distributor + several retail chains) acquiored Bibendum PLB = UK’s largers wine distributor.
2018: Company was in serious financial difficulty, put into administration.
Various subsidiaries were sold off to new owners C&C Group and best way to allow them to continue trading.
e.g. of company OUTSIDE the wine trade acquiring wine brands:
What was a key benefit of this acquisition?
2018 Carlryle Group ( US Private Equity Firm) Purchased Accolade Wines.
Aquisition occured during trade war between the US and China = tariffs places od US wines entering China.
Howeever, Australian wines = large part of Accolade brand, benefits of free trade agreement
What are the adventages of using a Broker
Advantages of using a broker:
Smaller Fees: brokers have low overhead costs (small office, laptop), they charge smaller fees than distributors (~ 2% of contract vs 5-25% of distributor).
Intimate knoledge of particular specialized market e. g. bulk or small-production wines.
Contacts: brokers can brind together buyer (e.g. supermarket) and producer (e. g. grower) = saved time and effort. Brokers know what each party is seeking, therefore streamlining the process.
2 examples of wine conglomerates getting bigger via Acquisitions:
example of distribution company consolidation:
e.g E&J Gallo purchasing number of smaller producers.
e.g. Jackson Family Wines
e.g. Conviviality with Matthew Clark/Bibendum/PLB in the Uk
What are the PROS/CONS of ‘Wine clubs’
Pros:
Useful for marketing: contact with customers via newsletters, websites, blogs, developing ‘word of mounth’ marketing.
Can give members a feeling of exclusivity (important for cult wines, e.g. Screaming Eagle).
Cons:
Additional work: composition of newsletters, sending out interesting content.
Logistics of shipping wine, assuming risk of damage/loss means paying for a reliable freight forwarder is essential.
Bureaucracy of legislation e.g. 3-tier system in USA, can be onerours to navigate, not all states permit.
Explain the special status of brokers in Bordeaux:
aka ‘Courtiers’
have legal status, act as intermediaries between chateaux and negociants.
responsibility of ensuring that correct vat(s) of wine are delivered
Also play a key role in fine wine trade, facilitating deals between buyers and sellers of rare wines.
