Ok, before you all say I’m crazy… yes, I do want to start a small wine distributorship focused primarily on North Carolina, with potential expansion to SC, VA and maybe a few others with due time.
So here’s my motivation… I currently live in NYC and will be moving to NC soon. I’ve come to love all the wines that I can get in NYC and I know for sure that many of my favorites are unavailable in NC (or many places outside of NY/NJ/CA for that matter). My goal is to bring my favorites to NC and keep things small, boutique and ONLY sell to places that appreciate the wine. Idealistic as it may seem, I’m also not motivated by money, but would like to cover my costs.
So I know there are some logistical things I’ll need to get… permits, storage transportation just to get started. So what advice would folks have for a budding entrepreneur in this business?
Not ITB but let me ask a couple of foundational questions…
If the wines you’re interested in are not distributed in NC is there a reason why not? More pointedly, is there any market for them? NOT do you like them and hope there is, but IS THERE? I’d do market research before worrying about the operational issues… determine if there’s a market and try to think about why no one is serving that market.
It seems like overkill to think “Damn, I won’t be able to easily get the wines I like” to starting an entire business around distributing wines. Not knowing a thing about shipping to NC, wouldn’t an easier approach be to buy wine elsewhere and have it shipped to you?
Oh #3… I’d start off by talking to the importers who handle the wines you’d like and see if they can supply you, what the terms would be, etc. That will give you some idea of the capital you’ll need for wine, etc. Then start looking at facilities - NC gets HOT… where will your wine be stored? How will you control the temp? etc etc. Then I’d contact the NC liquor board or whatever they call it and see what it takes to get licensed and about how long it takes (then double that )
get some experience on the selling wine side of a distrubtorsip.
Get some expereince on the business management side of a distributorship.
Get some experience on the compliance/admin side of a distrubtorship.
Get some expereince in the market you want to be in as it is all about relationships.
Based on laws in the Carolinas, (correct me if I’m wrong), human beings can’t start up/own retail wine stores, nor sell wines on line. If that is in fact correct, the next closest thing to selling/drinking wine is a “small distributorship,” so you can support your “passion.”
Selling the wines you like won’t work. What will you use for income after you sell and/or drink what you like? After all, refrigerating a 6,000 square foot storage facility in the Carolinas will probably cost $1.00 per square foot/month in the summer months and $ .10 per square foot/month to heat in the winter.
Personally, if it were a viable option, I’d move to a state where you can open a real wine store. At a wine store, the reps come to you or you call them when you want something. A distributor, or his “employees,” beat the pavement and I mean a lot of it, if they are to be successful. Worse, reps are often considered nothing more than traveling salesmen unless they can show their passion for the wines they are selling. They are the only people I know that are treated worse than me by my wife, THE WINE BUYER and renowned, Wicked Witch of the West.
If your goal is to build your business around several specific wines that you have to bring down in small amounts from NYC, your pricing on those wines will be so far out of whack with similar wines that already exist in the market you won’t get a second look. Many importers are DI-ing container loads through Wilmington, Portsmouth, VA, and probably even Charleston or Savannah. The better boutique importers may only get a few containers a year, but they still are cuting out middle men as much as possible. At least 90% of the 1,200+ imported wines our store has are bought from a direct importer, which is why there are quite a few nationally represented brands that we don’t give a second look because they are sold in VA by a secondary distributor, and our wholesale costs are closer to the average retail price nationally. With all the built in costs for registering brands, licensing, warehousing, delivering, etc. (not to mention time and effort), you would be spending the same amount per bottle buying 20-30 cases in NYC and driving them home a few times a year.
If there are specific brands you were looking for, you NEED to speak with their importers to see if they are even interested or capable of representing those brands in NC. For the most part wines are sold exactly where the wineries and importers want them to be sold, and if they are selling through everything already it’s not in their interest to short their present market in order to sell in another state. They may be in NY/NJ/CA because that’s all that can supplied. There are many great wines in VA and NC that aren’t in other states, for that matter, so you may be just as happy expolring the new retail scene for some possible new favorites.
If you want, PM the producers you are thinking about and I could do some research to find out their situations in Virginia, or perhaps find some comparative possibilities that already exist.
My advice - don’t do it unless you have at least 8-12 months operating capital available AFTER you set up shop and bought all your inventory. There are way too many distributors out there with your exact vision who can’t pay their bills. And remember, mainstream wines (not things like Pacherenc de Vic-Bilh) in the $80 - $108 case range pay the bills. You won’t survive without these.
Having worked for 3 different distributors in two different states in the last 3 years, the most salient question is how long can you afford to lose money?
What is your capitalization and how long will it last (including all those overhead costs listed above, plus all the others) without significant income from sales? It will take a long time to swim upstream to establish accounts and that process will cost you money each month.
It’s a race to the bottom and I’ve seen too many companies unable to pull out of the dive in this economy. Can you outlast the steep learning curve with a sufficiently large cash reserve?
I’ll have to also take the negative approach here that others are, I wouldn’t want to be starting in an area where I didn’t know anyone. That being said, if you can make contacts and build your business today, there isn’t any reason you won’t be more successful in the future.
It’s going to be important to have sufficient capital, at least a year’s worth I’d assume. I will agree with others there.
Have you spent any time with those retailers which you’d like to sell to? Have you brought a bottle of the type of wine you enjoy and opened it with them? Often they’ll tell you any problems before you sink your money and effort into the business. As an example, we can sell outstanding small production Paso Robles Syrah in the Bay Area for $40 a bottle without any issue, but in San Diego that’s simply more than consumers are going to pay.
I’d make sure the local market was large enough (in parts of the Carolina’s I’m not sure I’d target it). Have you made a list of every retail store and restaurant which is a potential target?
Lastly, I think you’ll find that wineries aren’t going to see that market as a panacea for their current problems. Will you be able to receive a large enough sample allocation to reach all the available retailers?
Although not a distributor I am licensed as one and we’re only a year in. Feel free to shoot me an email, I’m happy to help where I can if it cuts the learning curve even slightly.
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