The business of wine

We talk about the wine industry, and we complain about market pressures; we laud the beauty and the romance of our work, and we talk in terms of luxury and indulgence. But we rarely look at the levels of attention required to get that grape from the vine, into the bottle, and being purchased by a customer.

Our work is infinitely more than a rustic idea, some winemaking nous and sheer enthusiasm.  There are now thousands of brands vying for shelf space, an increasing proportion – and variety – of imports on offer, and the ever looming spectre of supermarket own brands replacing our slot on the shelf. And in order to be a successful part of the wine game, it is simply no longer enough to make good wine.

We must also have a comprehensive understanding of cash flow, and the financial requisites encompassing the path from vine to glass. The price of a bottle must take every level into consideration, from vineyard equipment, storage fees, and the cost of filling a salesperson’s car with fuel. Not to mention, the multitudes of costs too long to note here.  This price must cover every last detail, and also be reflective of the value of the wine – a somewhat more amorphous concept. Let alone the more idealistic notion of market positioning…

And we must accept that, at times, a client may request a bonus, or a discount, or a donation of stock, or co-op funding. There has been a long history – and it is still rampant – of producers putting their hands in their pockets for the benefit of the client, be they distributor, retailer, pub, or hospitality venue.  For the larger companies, this is part of their marketing budget, and can be rather more readily absorbed by volume, and the economies of scale.

But for the smaller producer? Where is the cost of this bonus stock, or co-op expense accounted? A bottle of wine given away still has a cost attached to it, and to ignore these costs – be they potential, or actual – has been of great damage to many brands over the years.  The cost of selling a bottle of wine? Exponential in the early days, and with ever more ways used by the market to extricate something as perceived bonus from the seller, that salesperson or producer must be continually en garde to ensure that the sale of that bottle generates an adequate rate of return. And the ongoing business of that producer.

A good business manager, accountant, or finance type is imperative. Should you, as a producer, not have 100% of the time and knowledge required to address the costs of making and selling that bottle of wine, hire someone who does. It need not be a full time position, it need not be someone you actually like. It does need to be someone in whom you can put your faith. The ongoing potential of your business rests in those hands.

It would also do to remember that there are real people at the client end. Real people, running their own businesses. Who have their own concerns, daily challenges, and plans.

So, if you cannot complete a transaction as planned – be it delivery time, short supply, inability to supply, vintage roll, label changes, pack size changes, whatever issue it might be today – understand that they have planned around your agreement. If you cannot supply their riesling , the restaurant will have a gap on the list. The store will have an empty slot, which will rapidly be snatched up by another smart salesperson, who will deliver on their agreement.

Pick up a phone. Tell them in person. Offer them a solution before someone else does.

Any issue in sales and distribution is not solely the province of one side. Your actions – as ever in life – have an impact on those around you. People appreciate notification of any change. They will rapidly condemn, and often boot out, those who do not accept that this is how the industry operates. Be honest. Apologise, if an apology is required. Thank them for their business. Appreciate that they do not wish to have to extend their trading terms any more than you do. But someone may not have paid them. Or there has been some other issue. You do not know their business inside out. Never presume. If they are owing money, a gentle nudge will accomplish so much more than a heavy handed demand. If they need to order to keep up their end of the bargain, belligerence will get you nowhere.

These are the pepole buying your wines, and showcasing them to the consumer. These are relationships which deserve respect. That respect may often tested, but taking the position of being the party who understands business – on both sides of the equation – and who makes an effort, rather than making presumptions, can only be of benefit to the growth of your brands, and of your business.

And should that respect be stretched, the business manager/accountant/finance type can be brought into play… A divide between salesperson or producer and accounts is imperative. Allow the sales relationship to be unsullied by the tawdry, yet ever necessary imperatives of financial sustainability.

The business of wine operates across so very many platforms. Each platform has their own unique requirements and must be addressed separately, with a holistic view of that bottle, the cost of its development and sale, and it’s position in the marketplace.

Just remember that there are also people involved… Just being good may not be good enough anymore, but add a dash of vibrant passion, and a measure of financial smarts, and we may be well on the road.

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