June 28 2006
Generallyspeaking, I’ve stayed away from too much discussion of wine shipping,distribution and the shake-up that is changing the wine industry.
I’mnot very qualified to speak with authority and, most importantly, otherpeople do it with far greater insight and experience then I do. Tom at Fermentation and a Wine ShippingCompliance Blog come to mind.
But,that doesn’t mean I can’t call a spade a spade.
And,to that end, I read a blurb in the July issue of Wine Business Monthly, a trademagazine in the mode of Variety magazine, for, say, entertainment, and itmentioned a merger of two distributors—Republic Beverage Company and NationalDistributing Company.
Neitherof these companies operate in my state, so overall I have no visibility totheir business, but the jist of the brief article was the merger of the 4thand 5th largest distributors nationally and it went on to mentionthe remaining distributors on the “chessboard” (their word, not mine) SouthernWine & Spirits, Charmer, Peerless, Young’s Market and Wirtz.
Thisis all interesting enough … but the reason I bring this up is a quote from anunnamed distributor source that really rankled me. He says:
“Myrecommendation to wineries is keep your head down and focus on brandbuilding. If you do that, you’ll alwaysbe wanted.”
Theimplication here that wasn’t fleshed out in the article was that continuedconsolidation amongst distributors would continue to crimp the ability for smallto medium producer’s to get their product on retail shelves.
Oh-man-oh-man.
Whereto begin?
“Keepyour head down?”
“Focuson brand building?”
Isthis some gangster-like reference to being seen, but not heard?
First,it sounds extremely condescending and second the comment, in general, belies alevel of insular cluelessness that can only occur when people that are ina position of power abuse that authority, or worse, can’t pull their head outof the spreadsheet to realize that all business is transacted through and withother people. Or, they do not realizethat their power is slowly being usurped.
I work in the channel in the technology industry and watching this is really curious because manufacturers in the technology space are really the tail that wags the dog and distributors work exceedingly hard to add value--in order to not be wagged, so to speak. Here, the exact opposite seems to take place.
In short, Iwill say that any brand building exercise has to start with an excellentproduct and secondarily has to have a route(s) to market. Only when a product is available toconsumers who transfer their consuming identity to the product is a brandborn. It’s not made at a marketingagency, or a winery for that matter.
Buildit and they will come works in some industries, but out of the gate brandbuilding in wine works as often as a winning lottery ticket.
There is no magic bullet and brand building, in myestimation, has to occur with a partner that is interested in building apartnership. The distributor that onlywants to be a pass through mechanism while controlling retail slotting will beoutflanked in the next 10 years as alternate routes to market mature—notablywith changes in wine shipping laws.
“Keep your head down.” Sheesh.
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