The Games that Distributors and Producers Play

It looks like its not only some of the wine retailers that play games when trying to sell their products. Retailers have to put up with games from distributors and producers, as the details in these two emails show, and they make fascinating reading.

I have customers who come in and taste, then run home to see if the wines they've tasted are high scoring and if they, then, ought to buy them. My advice and their tasting these is still not sufficient.

Meanwhile, a local wine store and importer/distributor routinely sends out reprints of articles touting their wines.  They had one last year for Egly-Ouriet Champagne, noted by The New York Times as a "best buy" in non-vintage dated Brut.  But the NY Times article had the wine selling for about $32 or $30.  These jokers "wholesale" the wine for $30, so the normal retail here would be $40-$45.  They neglected to mention the price quoted by The NY Times, of course. 

And many people do buy wines only because they're limited. I had a fabulous Pinot Noir a few years ago.  Some customer demanded to know how many cases were produced.  I told him it was a small winery, but we were more interested in the fact that the wine was really stellar and only $15 or $18.  He said he didn't want to support big production wineries. I then asked if he was saying he'd prefer an inferior wine as long as they didn't make very much???? He didn't buy this wine, of course. 

I spoke with a fellow who used to be a restaurant wine buyer and now sells Australian wines.  He told me how some sales reps think limited availability is a major selling point.  He said he told someone he thought their wine was poor. "But there are only 200 cases." he was told. And so he responded, "Listen, I wouldn't care if there were only 50 cases of gonorrheae remaining, I still wouldn't want one of them!"

We have a chain of stores here which sells you a bottle for $X and the second bottle for five-cents more.  Yes, people think they're getting a bargain paying double for a wine if they get the second bottle for 5-cents!  This is an amazing joke.

But I had a customer who asked if we offered a case discount on some sale-priced wine. It listed for $17 and we had it for $14.49.  I explained it was already discounted.  The woman told me she was then going to buy it elsewhere since the other store offered a 10% discount.  Yes!  A 10% discount off the $17 taking it to $15.30 per bottle.  This points out the poor system of education here in The States. But that's another story.

What a wacky world.

(Editors note, it gets stranger.)

I have the laugh/cry thing virtually every day. Right now I'm crying about dealing with a major, small distributor and importer of wines.  They have a nice portfolio.  A small percentage of their products are available in good supply and they'd like to "sell" these.  However, a number of items they offer are "restricted" and allocated.

I don't know your market, but here marketing geniuses have the idea that our shop is their competitor, not their ambassador.  They have the idea of selling 75-100% of their wines in restaurants only, forcing consumers to contact the winery directly if they wish to own some bottles.  The funny thing about some of these geniuses is that their wineries make tannic Cabernets which could benefit from cellaring, but they prefer to sell their wines in restaurants where they'll be opened tonight.  And, keep in mind, most restaurants around here stay in business for but a year or two.  The national average life span is 6 months! 

So, this distributor dictates to customers as to how much wine they will be allowed to buy. 

I am not alone in finding these people "difficult" to say the least. Some of my competitors won't go to their annual trade tasting, saying "Why go taste wines we cannot buy?" 

Okay, the latest incident is this:  Our shop has sold about quite a few dozen of a lovely Rosso di Montalcino from the 2002 vintage.  I am interested to taste the same property's 1999 Brunello which is newly-listed in their catalogue, figuring if this guy can make such a good wine in a disaster vintage, his Brunello in a good vintage might really be terrific. This firm always makes its customers jump through hoops and when you think you've jumped through the required number, they produce one more, dipping it in gasoline setting it on fire. 

"Well, the 1999 isn't available just yet.  We still have more of the 1998 to sell and the 1999 will be sold ONLY to those customers who have purchased the 1998.  You have purchased none of the 1998, so I'm afraid we won't have 1999 Brunello for you despite your selling all that Rosso."

Given that this is not an isolated instance, consumers must know how the "system" works.  I don't have any customers demanding this estate's 1999 Brunello, so it's more a loss for the winemaker/vintner.  But when wines are strictly allocated, I can tell you few of the people wanting Wine X are interested in actually supporting the winery and buying their basic Wine XY.

Seeing your write up on Dead Arm Shiraz (tasted the 2002 the other day...delightful wine and from a freshly opened bottle, by the way), I can tell you the people asking for that wine in our shop never want to buy a bottle of Footbolt Shiraz.  But I am obliged to buy several other wines in some quantity to be allowed the privilege of buying Dead Arm. 

Consumers may know some of these trials and tribulations, but they don't care for the most part.  But it's why some retailers are not happy to deal with cherry pickers (especially those who "flip" wine -- flipping is a major hobby of some people...buying hard-to-get wines and then placing them immediately on auction sites to make money.)  Tough business.  I've been in it for nearly 30 years...

I'm not sure where to begin so perhaps I'll just relay some examples of the typical behaviour we see from a wide array of sales. I should explain beforehand that when we got into this game I assumed that all suppliers the world over exhibited a strong focus on customer service. My professional background is that of corporate / investment banking, an industry that is cut throat and intensely competitive, and one that has deeply shaped my approach to business. If you don't make an all out attempt to service customers in a professional and ethical manner, you will eventually fail, and I have seen this time and time again in banking.

Mind you, selling wine is much more competitive in comparison, so one would expect that those doing the selling might just employ at least a small amount of professionalism and compassion.

Interestingly, our peers that we have dealings with in Melbourne don't share our concerns to anywhere near the same degree .... perhaps they just accept that this 'is just the way it is'? Anyway, let the ranting begin!

(Note: for further reference checkout out US retailer Gerald Weisl's sales tips. Very funny, and unfortunately very real. These skills have   managed to find their way across the Pacific to Oz).

Ability to interact with the customer base in a professional manner: this is perhaps my biggest bugbear - the inability of sales people to behave in a professional manner. This 'illness' usually takes its form via a blatant disregard of our requests to make appointments, but we have also seen examples of sales staff using offensive language when customers are in the store, an inability to follow up refunds / corked wine in a timely manner, failure to keep appointments, and a more serious crime, the cloak and daggar approach to volume pricing. The latter usually relates to the inability of sales people to be fully transparent over volume pricing deals

- we didn't receive a deal because we didn't ask. As a matter of policy we now instantly terminate relationships where we have been f%$#% over. I would get sacked if I treated customers like this in my 'real' job.

- re follow-ups, one company "borrowed" 3 or 4 bottles to give to a restaurant that desperately needed it on a weekend. This was in June this year. The wine has not been returned to us and a chase-up email has been ignored.

- re appointments - Jacinta is repeatedly requesting reps make appointments, yet every day they wander in - "I was just in the area and thought I'd pop in and say hello" is a common line. They seem to think we're just sitting around all day with absolutely nothing to do!

Know your Product: as a rough rule of thumb 80% of the sales people we deal with (i.e. winery employed staff excepted) have a surprising poor understanding of what they are selling. Many fail to appreciate or recognise the 'hook' nearly every winery has to assist its sales (i.e. could be the maker, vineyard sites, awards, limited production) and lack of knowledge on price is common. Although this probably sounds horribly arrogant, I can only think of 4 - 5 sales people (out of say 100) that know more about the wines in their portfolio than I do.

A false sense of demand: this practise is often employed by individual wineries themselves and is downright deceptive. Usually takes one of two forms:

- a 'customer' wondering around the store confused as to why we don't stock a wine, thereby  encourages us to make a purchase ('I'd buy it regularly if you stocked it'). Do you think we every see them again post our decision to stock? Nope!

 - Jacinta had one or two people a day over a period of week come in and ask if we stocked an “X” NE Victoria Company wine - no one had ever asked for it before. Finally she said to "that's funny - you're the 7th person this week requesting “X’s” wine and no one has ever asked for it before."  Must have been the companies sales convention in Melbourne and out of town reps were visiting Melbourne stores where they didn't have a presense to generate demand.

- a call from a stranger enquiring as to whether we stock a wine, and if not, questions why. Funnily enough the caller displays a surprising lack of knowledge about the wine in question (when prompted) and looks to kill the call quickly when you ask for credit card details to secure the order! It may also come as no surprise that the mystery customer sounds like they are ringing from a call centre.

Nightclub queue theory: a bit of an out chestnut. A number of wholesalers believe that creating a false sense of tight supply spurs us on to purchase more wine. This takes the form of instant 'allocations' whereby we are told after purchasing two cases that we can have a '6 pack' every now and again. Rather than mess around with small volumes we usually move on. Of course, we nearly always receive a call three months later from the rep claiming to have 'found' another three cases - too late!

Back Door selling: these techniques really get my dander up! It nearly always relates to situations where a winery bypasses its agent/wholesaler to get wine to consumers at whole price levels. Recent examples have included a Clare winery doing deals on certain wines with corporate social clubs as well as small producers. One small producer quotes prices (on Torbwine and other sources) that make a mockery of the prices Cloudwine pays. I now feel stupid for having even taken the time to support this producer and we will no longer sell those wines (ever). I can only imagine wineries behaving in this manner think retailers have their heads stuck in the sand.

Now I do recognise that a consumer advocate like yourself would see no problems with this activity as the wine ultimately gets into hands of consumers at a lower price but try to understand the view from someone who has spent a lot of time and money building a business to distribute wine on behalf of producers.

Know your customer: this probably impacts Cloudwine more than other retailers as we have a heavily focused niche on small producers that is rarely found. From our position, we market this image quite well and I think most wine geeks would associate Cloudwine with this segment, and it would be fair to assume that most sales people should as well. But this hasn't stopped numerous 100,000+ case producers trying to flog us wine. The other day, a rep from one of the biggies (note book out and pen poised) who claimed he 'had done his homework' came in to try and get an order. To their credit both Southcorp and Hardy's have not been in either store since we opened (I could of course be confusing astuteness for laziness!).

Willingness to embrace technology: where possible we communicate via email to enable orders to be made out of hours. Funnily enough, some suppliers cannot for the life of them reply to emails or even act upon the orders contained within. Frankly we'd prefer to deal this way given most sales people add zero value in sales calls (Gerald Weisl's term 'sales prevention agents' is very apt) but this of course would put a whole bunch of sales people out of a job.

Appreciation of industry dynamics: this relates mostly to reps trying to stuff wine down our throat that Dan's regularly sell at cost. Reps often have no idea where their products are being sold and for how much, and even if they do, still can't work out why a small retailer doesn't want to buy the wine (and look horribly uncompetitive in the process).

All we are really asking for is professional, ethical, fair treatment.