Pros/Cons of becoming a distributor

A forum for and about wine retailing. Consumer questions, retailer rants, etc. All are welcome to post
Post Reply
Message
Author
User avatar
Scott Butler
Posts: 7466
Joined: January 28th, 2009, 9:32 am
Location: Greenville, SC

Pros/Cons of becoming a distributor

#1 Post by Scott Butler » April 26th, 2018, 11:42 am

Hello all,

Does anyone have experience with becoming a small boutique distributor? I've been looking into it - South Carolina license is not too expensive. The thought was to take on some small boutique wineries that are having trouble getting local distribution. Has anyone ever tried this? Would be curious about how the experience went. Did you get any trouble from the big distributors, how receptive were stores to a new distributor walking into their store, how much inventory do you have to buy, I would expect it not to be too huge with a smaller winery. Can a smaller distributor make money?

I am in the early stages of thought, so nothing too well defined yet.

Thanks in advance.
WOTY:61 Chateau Verdignan

User avatar
M A T T H A R T L E Y
Posts: 2003
Joined: June 3rd, 2009, 8:54 am

Pros/Cons of becoming a distributor

#2 Post by M A T T H A R T L E Y » April 26th, 2018, 12:39 pm

South Carolina is not a franchise state - so just keep that in mind.

Based on your questions above, I would hesitate making the leap.
___________________________
ITB

User avatar
Randy Bowman
GCC Member
GCC Member
Posts: 9009
Joined: January 27th, 2009, 2:23 pm
Location: Napa, CA

Pros/Cons of becoming a distributor

#3 Post by Randy Bowman » April 26th, 2018, 4:33 pm

We have two friends who started distributorships, one in Phoenix and the other here in Nor Cal. The Phoenix guy lasted 3 years and sold it to his employees to break even. The other one took on two other books, (distributed for other companies), after the first year, to make ends meet and gave up after five years. Both felt they had to cover too much area to meet sales. There are only so many stores and restaurants interested in an "unknown" or "boutique" wine and pricing sometimes kills the sale before you give your spiel. To cover more area meant hiring people. Then there is storage, handling and delivery.

If you do start one, try convincing the stores and restaurants in Myrtle Beach that it's okay to have good wine and even better if stored in a cool place that doesn't have 90 percent humidity.
IN THE BUSINESS SHILL: An associate of a person selling goods, who pretends no association to the seller and assumes the air of an enthusiastic customer.

Doug Schulman
GCC Member
GCC Member
Posts: 4645
Joined: October 21st, 2009, 9:42 am
Location: MA

Pros/Cons of becoming a distributor

#4 Post by Doug Schulman » April 27th, 2018, 12:14 pm

Do you know many wine buyers/directors in your area? Cold calling is exponentially more difficult than starting with some existing relationships, especially if you already know some decision makers in key accounts. How familiar are you with your state's wine business and how it functions? Do you have route sales experience?

You might see some potential to distribute certain really good producers that aren't represented there. Keep in mind that they will not all have wine to sell you. Also, much of that really good wine might not actually be sellable for more than a very small number of accounts. You might be surprised at how many buyers haven't heard of or don't care about producers you think are important. Then when you consider how much wine you'll have to sell to be profitable, you might find yourself rethinking this business model.

From a buyer's standpoint, I have reps for small companies coming in here all the time trying to sell me wine I don't want. Most of them don't understand the wine business or sales. That makes their job nearly impossible. Even if they do understand those things, they have to have some very compelling wines for me to make time to deal with yet another distributor. We already have access to everything we need through our existing relationships. If I can get comparable items or more marketable items in similar categories from people we already do business with, it makes a lot more sense for me to do so.

I think the wine world needs people to try these things, but you need to realize that they are rarely successful. I'm not saying you definitely shouldn't do this, but you do need to consider what challenges there are and realize that they are immense. When I say "need", I mean these considerations are necessary for success, not for the dream. All of that said, I have seen this work very well for some people, but those people are excellent at sales and already had quite a bit of experience in the wine business in their local markets.
ITB - retail sales and education

Sean Devaney
Posts: 3076
Joined: June 25th, 2009, 5:11 pm

Pros/Cons of becoming a distributor

#5 Post by Sean Devaney » April 27th, 2018, 10:08 pm

Get a job with a local distributor, learn the business to see if it is for you and make contacts.

User avatar
ToddHansen
BerserkerBusiness
BerserkerBusiness
Posts: 76
Joined: November 26th, 2013, 7:43 am
Location: Newberg, OR

Pros/Cons of becoming a distributor

#6 Post by ToddHansen » April 27th, 2018, 11:51 pm

I found South Carolina one of the more annoying states to work with as a producer, so there's that side of it. I left the state a couple years ago, partly due to mandatory monthly paper reports whether you make a shipment or not, required hard copies of bills of lading and invoice sent to the state for each shipment, and the annual license is a couple hundred dollars which adds a few dollars to each case for a small producer - and it took them a while to issue the initial license. If I forgot to send my monthly paperwork they would send me letters threatening large fines so I would need to call and eventually they would waive them. The people were nice, but for the volume it just wasn't worth it. If I were a bigger winery with compliance staff it would have worked better and I probably would have had a better attitude.
Grower, Longplay Wine/Lia's Vyd

User avatar
Scott Butler
Posts: 7466
Joined: January 28th, 2009, 9:32 am
Location: Greenville, SC

Pros/Cons of becoming a distributor

#7 Post by Scott Butler » April 28th, 2018, 5:58 am

M A T T H A R T L E Y wrote:South Carolina is not a franchise state - so just keep that in mind.
What does that mean? Can you elaborate?
WOTY:61 Chateau Verdignan

User avatar
Scott Butler
Posts: 7466
Joined: January 28th, 2009, 9:32 am
Location: Greenville, SC

Pros/Cons of becoming a distributor

#8 Post by Scott Butler » April 28th, 2018, 6:00 am

Randy Bowman wrote:
If you do start one, try convincing the stores and restaurants in Myrtle Beach that it's okay to have good wine and even better if stored in a cool place that doesn't have 90 percent humidity.
HAHA! Unlikely. The main Myrtle Beach clientele likes their Yellowtail warm.
WOTY:61 Chateau Verdignan

User avatar
M A T T H A R T L E Y
Posts: 2003
Joined: June 3rd, 2009, 8:54 am

Pros/Cons of becoming a distributor

#9 Post by M A T T H A R T L E Y » May 1st, 2018, 5:29 am

Scott Butler wrote:
M A T T H A R T L E Y wrote:South Carolina is not a franchise state - so just keep that in mind.
What does that mean? Can you elaborate?
My guess is you have never been in the alcohol business, which is most likely why you are asking for answers to these basic questions:

Did you get any trouble from the big distributors, how receptive were stores to a new distributor walking into their store, how much inventory do you have to buy, I would expect it not to be too huge with a smaller winery. Can a smaller distributor make money?

You need to take Sean's advice upthread and get a job at a local distributor to better understand the business you want to get into...

As for franchise laws - you can read more here:

https://www.winesandvines.com/features/ ... chise-Laws
___________________________
ITB

Doug Schulman
GCC Member
GCC Member
Posts: 4645
Joined: October 21st, 2009, 9:42 am
Location: MA

Pros/Cons of becoming a distributor

#10 Post by Doug Schulman » May 4th, 2018, 10:27 am

Sean Devaney wrote:Get a job with a local distributor, learn the business to see if it is for you and make contacts.
This is great advice. Diving into the distribution side of the business (or any part of the business, but ESPECIALLY distribution) without a good amount of experience is an almost certain recipe for a huge amount of frustration and ultimately failure.
ITB - retail sales and education

User avatar
Bruce Leiser_owitz
GCC Member
GCC Member
Posts: 12187
Joined: June 16th, 2009, 12:54 pm
Location: Los Angeles, CA

Pros/Cons of becoming a distributor

#11 Post by Bruce Leiser_owitz » May 7th, 2018, 9:58 am

Doug Schulman wrote:
Sean Devaney wrote:Get a job with a local distributor, learn the business to see if it is for you and make contacts.
This is great advice. Diving into the distribution side of the business (or any part of the business, but ESPECIALLY distribution) without a good amount of experience is an almost certain recipe for a huge amount of frustration and ultimately failure.
Talk to anyone on the retail/restaurant side, and they will probably tell you that there is a HUGE variation in quality when it comes to distributor portfolios and distributor reps. Some people with decent wine knowledge may not make effective reps. So it's definitely worth it to explore the business first working for someone else (although you may have to deal with non-compete agreements).

It's like people who go into wine retail who really don't have the skill set to sell wines retail; it's not a job that everyone can be successful doing even if they know something about wine.

Bruce
"Bruce you are correct."--Andrew Kaufman, 3/24/13.

User avatar
Michel Abood
GCC Member
GCC Member
Posts: 4667
Joined: February 3rd, 2009, 8:30 am
Location: New York/Paris

Pros/Cons of becoming a distributor

#12 Post by Michel Abood » May 7th, 2018, 2:24 pm

Sean Devaney wrote:Get a job with a local distributor, learn the business to see if it is for you and make contacts.
THIS and what Doug said. The most important thing to consider is, how good are you at cold-calling and sales? Ignore your wine knowledge, this is the most important aspect of the job. You can learn about wine, but being a great salesperson (if it's your company you're going to want to be great, not good) is almost impossible to teach, it's all about your individual skillset. Some people are good at the more active sales (like the ones you'd need to be in distribution), others are better at more passive sales (think retail/restaurants, where customers come to you). Both are important, but the unifying thread between them is SALES.

I started importing in late 2012 and distribution, especially in a saturated market like NY, is a real PITA. I carried the bag day in/day out, did in-stores, sweated in the subway in summer, froze on the street in winter, but always did my best to hit as many accounts as possible every day (around 9-10 every time I was on the street - including ending my day at accounts to have a drink and talk to the somm or have dinner). I started when there were 200+ wholesalers in NYC, now there are over 450 and it's brutal out there, and from the looks of it this is trending nationwide.

Not to be a downer, but at the end of a day this isn't a wine job, it's a sales job. You just happen to be selling wine. If you're lucky (and I consider myself lucky), you sell stuff you love and are passionate about. But 99% of the time you need to sell a ton of plonk before you can sell the fun stuff. And no offense, but in my experience wine geeks are the worst at this.

Do your homework, talk to as many people as possible in your market (both buyers and sellers), and do the math. But first, get a distribution job. You might end up realizing it's not for you or it's something you love. You never know until you do it.
Guess what? I'm ITB-> Vinotas Selections

Doug Schulman
GCC Member
GCC Member
Posts: 4645
Joined: October 21st, 2009, 9:42 am
Location: MA

Pros/Cons of becoming a distributor

#13 Post by Doug Schulman » May 10th, 2018, 10:01 am

Michel Abood wrote: Not to be a downer, but at the end of a day this isn't a wine job, it's a sales job. You just happen to be selling wine.
This is one of the most important points made in the whole thread.
ITB - retail sales and education

User avatar
Bruce Leiser_owitz
GCC Member
GCC Member
Posts: 12187
Joined: June 16th, 2009, 12:54 pm
Location: Los Angeles, CA

Pros/Cons of becoming a distributor

#14 Post by Bruce Leiser_owitz » May 11th, 2018, 9:10 am

Michel Abood wrote: Not to be a downer, but at the end of a day this isn't a wine job, it's a sales job. You just happen to be selling wine. If you're lucky (and I consider myself lucky), you sell stuff you love and are passionate about. But 99% of the time you need to sell a ton of plonk before you can sell the fun stuff. And no offense, but in my experience wine geeks are the worst at this.
This is true in wine retail as well. I've had wine geeks as salespeople in a wine store, and sometimes they are more interested in showing off their obscure wine knowledge than in selling me the
bottle of wine I came in to buy!

Bruce
"Bruce you are correct."--Andrew Kaufman, 3/24/13.

Collin Dahl
GCC Member
GCC Member
Posts: 103
Joined: March 16th, 2016, 7:10 pm

Pros/Cons of becoming a distributor

#15 Post by Collin Dahl » May 13th, 2018, 8:12 am

I'm not sure from the original question if this is intended to be a full-time, put-food-on-the-table endeavor, or more of a "hobby" venture. I think knowing the answer to that would help to focus the advice (though, if the answer is the former, then the advice given above is already pretty strong).
itb | retail

User avatar
Scott Butler
Posts: 7466
Joined: January 28th, 2009, 9:32 am
Location: Greenville, SC

Pros/Cons of becoming a distributor

#16 Post by Scott Butler » May 24th, 2018, 9:49 am

Sorry, work has been beating me down, but thanks for all the replies. Giving me a lot to think about.
WOTY:61 Chateau Verdignan

User avatar
Scott Butler
Posts: 7466
Joined: January 28th, 2009, 9:32 am
Location: Greenville, SC

Pros/Cons of becoming a distributor

#17 Post by Scott Butler » May 24th, 2018, 12:43 pm

Collin Dahl wrote:I'm not sure from the original question if this is intended to be a full-time, put-food-on-the-table endeavor, or more of a "hobby" venture. I think knowing the answer to that would help to focus the advice (though, if the answer is the former, then the advice given above is already pretty strong).
PS- it would start as a "hobby" venture, keeping my current job. The only way that would change is if I discovered I was really good at it.
WOTY:61 Chateau Verdignan

User avatar
Emily Richer
GCC Member
GCC Member
Posts: 263
Joined: August 10th, 2010, 8:32 am
Location: Napa Valley

Pros/Cons of becoming a distributor

#18 Post by Emily Richer » June 18th, 2018, 3:22 pm

Just from a producer perspective, I have in the past never turned down anyone who asked me if they could distribute my wine in their state. Oops. So I do all the work to get the license, pay fees, file reports in states where, truth be told, the "distributor" was a "hobby" and more likely, just splitting up the one order with his friends to get wholesale pricing for his personal collection. It's super annoying, wastes the producer's time, does not build goodwill.

I suspect the buyers, also, would not be favorably impressed if you only came 'round when it was fun for you.

Basically your supplier and your customer want you to mean it, be reliable and dedicated--and pay promptly. I learned sales on the job; what I learned is showing up is everything. Sometimes, it's just being in the right place at the right time. I sell my own wine, and frankly the moments of success are always random surprises, when I just happen to walk in at the moment some space clears on the floor and say its just before mother's day and I say let's do a 3-case stack (I have really beautiful case boxes) of dry rose' and BAM, I get it!! The envy of Constellation Brands, Kendall Jackson, etc.

Other times I call the account, disappointed to learn the buyer has turned over, but the new buyer is all eager enthusiasm, caught him before the grind got to him and he orders a case of everything (just 3 wines in my case).

Not sure hobby action will earn you any money nor goodwill; in fact, the mention of it seems to have shut down the postings here? That said, if you had just a few supplier/producers and you had a few very good buyers, and you were consistently available and solidly delivering orders for both sides, could work.
ITB - VIRAGE NAPA VALLEY

User avatar
Chris Blum
GCC Member
GCC Member
Posts: 8923
Joined: October 10th, 2009, 1:40 pm
Location: Home of the Mayo Clinic

Pros/Cons of becoming a distributor

#19 Post by Chris Blum » June 18th, 2018, 3:39 pm

pRoS:

• Piles and Piles of Cash
• Freedom to work when YOU want to
• A sweet Ride, 100% tax deductible
• Constant supply of the choicest beverages as “free samples”
• Constant attention from Hot Babes/Hunky Dudes who are dying to share your new lavish lifestyle
• Admiration/Jealously from dudes/chicks who want to be like you

ConS
• You only have so many hours in the day to live the dream.
"Well, wine only turns into alcohol if you let it sit" -- Lucille Bluth
"The Packers f'n suck" -- Todd French

User avatar
Emily Richer
GCC Member
GCC Member
Posts: 263
Joined: August 10th, 2010, 8:32 am
Location: Napa Valley

Pros/Cons of becoming a distributor

#20 Post by Emily Richer » June 18th, 2018, 3:49 pm

Oh, your question, "Did you get any trouble from the big distributors?" is an interesting one... They could care less! You're no threat to them; the big distributors own the market. They treat producers like crap, but they are entrenched and have some brand or two no restaurant/retailer can do without so they're doing a regular order... any rep breathing and half-capable can probably sell a couple other items while they're on site (sorry for the snark but that's my impression as a small brand).

SOMETIMES, and I previously enjoyed this in NYC, a sales rep for a big distributor has true love for a small-production wine and actually gets some great placements, it's pretty cool. But when he leaves, it's all over. I was so delighted in those days, I flew out to visit all my accounts personally, I remember visiting some FAB restaurants in NY. Ate great meals at several of them, bought the cookbooks :) Then I remember the frustration when the awesome retailer (ASTOR Wines) was running low and I couldn't get anyone's attention at the distributor to take a darn re-order... sigh. The frustration that all these great placements should have made the next sale easier... but my supporter had moved on, and nobody gave a crap.

It's a tough business, you can have a great wine and great placements and great value and still no actual sales...
ITB - VIRAGE NAPA VALLEY

Doug Schulman
GCC Member
GCC Member
Posts: 4645
Joined: October 21st, 2009, 9:42 am
Location: MA

Pros/Cons of becoming a distributor

#21 Post by Doug Schulman » July 7th, 2018, 7:25 am

Emily Richer wrote:Just from a producer perspective, I have in the past never turned down anyone who asked me if they could distribute my wine in their state. Oops. So I do all the work to get the license, pay fees, file reports in states where, truth be told, the "distributor" was a "hobby" and more likely, just splitting up the one order with his friends to get wholesale pricing for his personal collection. It's super annoying, wastes the producer's time, does not build goodwill.

I suspect the buyers, also, would not be favorably impressed if you only came 'round when it was fun for you.

Basically your supplier and your customer want you to mean it, be reliable and dedicated--and pay promptly. I learned sales on the job; what I learned is showing up is everything. Sometimes, it's just being in the right place at the right time. I sell my own wine, and frankly the moments of success are always random surprises, when I just happen to walk in at the moment some space clears on the floor and say its just before mother's day and I say let's do a 3-case stack (I have really beautiful case boxes) of dry rose' and BAM, I get it!! The envy of Constellation Brands, Kendall Jackson, etc.

Other times I call the account, disappointed to learn the buyer has turned over, but the new buyer is all eager enthusiasm, caught him before the grind got to him and he orders a case of everything (just 3 wines in my case).

Not sure hobby action will earn you any money nor goodwill; in fact, the mention of it seems to have shut down the postings here? That said, if you had just a few supplier/producers and you had a few very good buyers, and you were consistently available and solidly delivering orders for both sides, could work.
Excellent post. Distribution does not work as a hobby business. It's all or nothing. Anything in between is a waste of time and money and leads to the nothing option, probably after creating bad relationships with both suppliers and customers.
ITB - retail sales and education

Post Reply

Return to “Wine Pimps”