Us drinks market import options for suppliers looking to enter the american wine and spirit market.

©2012 Brand Action Team LLC

U.S. Drinks Market: Options for Suppliers to

Enter the American Wine and Spirits Market


Hope is Not a Strategy


Model Has Changed

Suppliers

Distributors

Consumers

From To

Courtesy of Nora Favelukes, QW Wine Experts


4

Three Tier System

Producer(Wineries, Brewers,

Distilleries, Importers)

Wholesaler (Distributor) Retailer Consumer

ThousandsHundreds, but

Dominated by Few 630,000 Outlets 221,000,000 over 21 Years Old


What Importers Want

• The right “CHEMISTRY”• Fills an identified void in portfolio

– Brands with existing US volume they can grow– New brands they feel their expertise can develop and grow– Brands that have a unique positioning

• Enhances image, value and profitability (Synergy with importer’s mission)

• Strengthens importer’s position within the trade• Supplier understands the U.S. Three-Tier system• Financially sound, budget to invest and support the brand.


Presenting Your Brand to Importers• Company description/history• Product description – varietals, style, ranges, proposed US retail price by

line/sku, and price structures• Brand point of difference/value proposition for consumer; why THIS

importer should be interested in you.• Marketing materials as background• A defined target audience • Production Info• Past history of importers, distribution agreements, list of

distributors/brokers of products and volumes by state• Price structure for U.S.• Marketing support budget• Samples


Read the Book


Your Options

1. Large National Importer

4. Specialist Company that both Imports

and Distributes

3. Regional or Multi-State

Importer

5. Set Up Your Own Import

Company

8. Chain Retailer

Exclusive Brand

9. Direct Import thru Control

State

7. Large Distributor that

also Imports

2. Specialist National Importer

6. Nat’l Licensing,

Import and Services

10. Wine Club/ E-Comm/

Flash Site


1. Large/National Importer


1. Large/National Importer

Pros Cons

Existing national distribution network Small brands get lost in portfolio.

Clout with distributors, your brand benefits from their portfolio strength

Agency brand gets lower priority than owned brands.

Large sales force Importer controls pricing, margins

On staff marketing department, existing ad and PR agencies

Internal competition for company resources

Participate in their sponsored events: portfolio tastings that attract more and more important trade, press than you could reach on your own.

Importer determines marketing strategy, creative, promo, POS…fits your product into their portfolio

Existing business with chain accounts Set up to work with bigger suppliers, focus on big volume brands

“National” price



Pros ConsExisting national distribution network Smaller brands less important to

distributors.Participate in their sponsored events: portfolio tastings that attract more and more important trade, press than you could reach on your own.

Importer controls pricing, margins, brand priority, creative look and feel, fits your product into their portfolio

Category expertise Specialization may mean limited appealOn staff marketing personnel Limited in house marketing and sales

resourcesExisting business with chain accounts Sales management presence in multiple

states limited.


3. Specialist, Regional or Multi-

State Importer


3. Specialist, Regional or Multi-State Importer

Pros ConsSmaller, more focused and nimble Limited geographic reach

Get more attention/not lost in the portfolio Limited capital, credit, payment history may be a problem.

Specialize in specific area (country of origin, indigenous varietals, price)

Smaller/limited resources, limited capital availability, often no marketing staff, small sales staff, hire out PR on project basis.

The smaller you are, the smaller the importer should be

Tend to be with smaller, specialty distributors so don’t get wide off and on premise distribution.

If you only make 50,000 btls, you don’t need national distribution, you need strength in a limited set of markets.

Limited interest in investing in the brand, likely that the majority of marketing has to come from brand owner.If you have multiple importers, will need multiple labels …implications on inventory, compliance


4. Specialist Company that

both Imports and Distributes


4. Specialist Company that both Imports and Distributes

Pros ConsMore motivated to work with you because they control two levels of margin

Relatively limited sales force

Focus on major markets/cities, not outlying areas.

Limited geographic reach

Specialize/known for something: country of origin, wine style

Different importers in different states require separate labels…inventory management issuesSmaller/limited resources, often no marketing staff, small sales staff, hire out PR as projects.

May take lower margins at each tier because keep both.

Not sustainable price structure if move to traditional importer/distributor relationshipMarketing has to come from brand owner.



Company


Pros Cons100% of attention to your brand. Bear the complete cost of everything, can’t

amortize anything, need volume to make it work.

Have complete control of everything: marketing, sales, pricing, distribution, margin, focus, message.

Need people with lots of skills: marketing sales, import logistics, warehousing, which can take your eye of what you should be doing…promoting and selling.

Works better for spirits than wine. Not your expertiseKeep Importer Margin


Company


6. National Licensing, Import

and Related Services


6. National Licensing, Import and Related Services

Pros ConsVery efficient at what they do Do not do marketing.

Cost savings in logistics, freight consolidation, etc.

You will need either a rep in country or you’ll have to hire someone who can do the things below

Only pay for services you need Need to do everything else yourself: marketing, sales planning, distributor management, marketing, inventory, pricing etc.

“Incubator” distribution services in NY, NJ, CAHandle cash flow, invoicing, billbacks and other price modifications and distributor deals.

Need to find/set up distribution network.

Quicker market entry


7. Large Distributor that

also Imports


7. Large Distributor that also Imports

Pros ConsBuilt-in distribution network, integration Distributor is focused on satisfying needs

of big internationals like Diageo, Bacardi, Pernod. You will never be a priority.

Existing sales force Not in the brand building business

Efficiencies and margins of having combined functions of importer and distributor

Can’t/don’t work with multi-state chains on or off premise if have operations outside their markets.

May get more attention here than with a large national importer.

Difficult to get distributors in states where this distributor does not operate. Dist’s are not interested in helping competitive distributors make money

Primary business is distribution and sales Not their primary business


8. Chain, Retailer Exclusive Brand

73 stores, 11 statesAnakena

500 stores, 19 states


8. Chain, Retailer Exclusive Brand

Pros Cons“Shadow” distributor works on very low margin, so retailer has more room to price aggressively

Extra margin does not usually accrue to supplier

Establish distribution in multiple states quickly

Limited to selling through only that retailer or retailer group

Minimal marketing costs (Don’t need to fund distributor incentives, consumer awareness programs)

Limited opportunity to grow brand outside dedicated distribution, no on premise business.

Immediate volume with first order Business limited to the states in which the retailer operates. In Total Wine example, no opportunity for sales in NY or IL.


9. Direct Import thru Control State


9. Direct Import thru Control State

Pros ConsGetting “traction” in one state can get the interest, credibility with other import options.

Only works in one state

An experienced broker with relationships in that specific state can facilitate.

Broker generally only knows that one state.Not a scalable strategy.


10. Wine Club/E-comm/ Flash Site

Wine Clubs E-Commerce Sites Flash Sites


10. Wine Club/ Ecomm/

Flash Sites

Pros ConsAn option…to at least get a beachhead. Limited reach to only their customer base

Low support costs for supplier. Retailer assumes burden of marketing, securing customers.

No real brand building for the long term.

Can represent good volume via a simple sales, shipping, inventory, labeling process to a single customer.

Every sale involves a DTC shipping cost to retailer, meaning a lower margin to supplier.

E-commerce allows you sell in states even where you don’t have a distributor.

E-commerce represents limited volume potential…now.Off premise solution only


11. Other ideas

• Enter competitions to get U.S.-based ratings and reviews. Some will work with brands that do not have a current importer. (Great way to legally import samples)

• Use Wine Enthusiast Importer Connection program (Jay Spaleta, [email protected])

• US trade shows for wines and spirits: – WSWA/US Drinks Conference/US Beverage Alcohol Forum, Nightclub and

Bar Show, Manhattan Cocktail Classic, NY Bar and Wine Show, Tales of the Cocktail

• Data on U.S. market, brands, volumes, share, trends: Beverage Information Group Handbooks for Wine, Liquor, Beer, On-premise (www.bevinfogroup.com)

• ImporterConnect ™ service to help find U.S. importers


US Competitions

Do not need a US importer to enter Need a US importer to enter

Ultimate Beverage Challenge Beverage Testing Institute

MicroLiquor Awards

NY International Spirit Awards

Indie Spirits Competition

San Francisco International Wine Comp.

Spirits International Prestige Award (SIP)

http://www.ultimate-beverage.com/

http://www.tastings.com/trade.html

http://www.microliquorawards.com/

http://www.nyispiritscompetition.com./

http://indiespiritsexpo.com/

http://www.sfwinecomp.com/index.html

http://www.sfwinecomp.com/index.html

http://sipawards.com/


Contact

Steve RayeManaging PartnerBrand Action Team 1 Darling Dr.Avon, CT 06001 860-676-7900sraye@comcast.netwww.TheBrandActionTeam.comwww.BATChat.net (blog)

mailto:[email protected]

http://www.thebrandactionteam.com/

http://www.batchat.net/

Us drinks market import options for suppliers looking to enter the american wine and spirit market.

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