Once a winery or brand hits a certain size, distribution becomes a necessity. Whether that is by travelling and hand-selling, or by appointing an agent, or by appointing a distribution business to handle the sales, warehousing, invoicing and so on.
Whatever happens, these producers, agents and distributors all need to pay for the expenses incurred by their businesses, and make a little moolah. Simple, no?
And for many, distribution is the holy grail. A channel to market. With people out spreading the word and pouring the booze. Five days a week (mostly; well, sometimes.; well, generally.).
From a winery point of view, there is a decent amount of negotiation involved in settling on a suitable distribution option and securing the agreement. Just finding the right people who you trust with your brand is a massive deal. Let alone the teensy bit of legal acrobatics that goes with securing a mutually beneficial agreement and ongoing business. Reading distribution agreements is:
c. Dedicated to the notion that these documents are prone to favouring one party or the other at certain points, and this must be acknowledged, and often negotiated; and
d. BORING. And absolutely necessary.
Back in the day (pre-interwebs-on-phones), this distribution management involved a mountain of faith on the part of the winery. Winemakers would only get out on the road once or twice a year, and would rely on phone calls with brief details, and sales figures. There was not a lot of wriggle room.
Now? Now I can ask my mate in Melbs via the twitters whether Rep X had been in yet for the contact I had set up. I can double check the wholesale prices they have been given. I can ask my restaurateur buddies in Sydney how the rep went with the spiel and sales bit. If they were on the ball. And the venues and the stores can check the RRP in SECONDS by jumping online. They can check in a heartbeat whether a rep is fibbing with the old “independent/on-prem only” line. Pop the deets in a search engine and Robert is your father’s brother.
Distribution is fundamentally a business of trust. A business of relationships. An agent or distributor trusts the brand to make a consistent wine and to support sales. And to not go outside the lines by selling to a venue with sales territory managed by that agent or team. The winery trusts the agents or distribs to be smart. To sell into good venues or outlets which respect the wines and pay their bills. To make the margin they need, and to build business. To work hard and to bring in new business all the time. The restaurants and retailers trust reps to bring them the wines which will fit, at the right price and to not waste their time. They trust them to not bring a wine in with an RRP of $22 and a Woollie/Coles/Clearance Channel advertised price of $12. The punters trust the venues to not put truly shit wines on their lists, and to know what they have on hand and how it suits their venue, locale and palates. They trust retailers to recommend with a degree of sense and a broader database of knowledge than the punter might own.
And sure. Sometimes it does not work. Some staff (distrib/agent/retail/on-trade/winery) take a while to best identify their approach, their method, their spiel. Some take time and don’t necessarily hit the ground running. Some do. This timing bit? PART OF THE TRUST FACTOR.
I ran into a sales rep a couple of months ago. He had had a big day, and was fairly smashed. Lovely. Not rude. Not incoherent. Just talkative and drunk. With no filter. He told me his business LOVED me because I build up sales in hard accounts and on wine lists and get them to a point where they are a good takeover option. They hit up the winery, offer a distribution option with a team of reps and BAM. Done.
Cheers dude. Yeah. I know. That’s ok. Getting a brand to that point? For me? Is a job well done. Move on. But my agreements now have a sunset clause covering existing sales for three months after the termination of an agreement. I find that fosters a little more trust on both sides…
Someone else on the west coast? Agreed to take on a brand. Promote it. Talked the talk. Was so engaged in it all. A true believer. A new venture, but with some runs on the board. Eight months later they have changed the wholesale price by 45%, which effectively made the cellar door/website rrp an AWESOME deal. They said it was because they couldn’t make money on the agreed price. But they did not call. They did not advise what they were doing. They were just cranky that they were not selling anything. Except: they NEVER told the brand. They adversely impacted the brand reputation without a care by monumentally manipulating the brand price-point. And then issued a borderline threat to the brand – decrease your prices or we stop selling it. DUDE. You were not selling it ANYWAY. And apparently have NO plan in place to do so even if the prices were lowered. I have seen the portfolio. EVERY brand has a manipulated price-point. Scarcely a brand in there has a wine at a price that would reflect their rrp. Trust – DESTROYED. (Besides – seriously: if your business plan is to increase sales by increasing the price that much on a product with a clearly identifiable rrp? You’ve got bigger problems…)
A restaurant. Orders a wine. It fails to show up. That happens. And yes, the warehouse should have been on the ball, and the venue should have put their hand up before 8pm on a Friday night, but still. No sauv for the weekend. Their rep? Begged, borrowed and stole enough stock to get them through til Monday. Trust – on the way to being destroyed, but saved, and because that rep moved hell and high water to fix it.
A winery. Sends a wine of a different vintage/style/quality with no heads up? They just expect a follow on and are possibly trying to conceal something. Do I even need to say it? Trust – DESTROYED.
Different winery – threatens to penalise the agent financially for a customer business failing to pay bills. Which is in contravention of pretty much everything, but is also a fairly solid way to decimate any remaining trust and goodwill within someone working in the industry. It takes very little to undermine a business and doing it to yourself seems a teensy bit silly.
Seriously people. Faith must be earned on BOTH sides. A teensy fracturing of that can have an incremental effect. Be good. Earn the trust. Put your hand up when things go wrong. Be forgiving when you have the chance. And learn to walk away when you should. Is a distributor who breaks your trust better than none at all? Is a restaurant with a great reputation who does not pay bills worth the debt? Is any winery irreplaceable to a distributor or agent? To any restaurant or retailer?
Why would you trust your business there when you do not trust the people? It is a small world. Know thy neighbour. And don’t screw them over.