After many years on the periphery of the wine industry (market and and economic analysis), I have many contacts with small to mid-sized wineries from a widely underrepresented US region. Their wine is incredible. They include entry level to premium labels and wines with 100-point scores. Many want very much to be represented in my state and region, but have not found a distributor. I have also spoken with wine bars and shops that have expressed an interest in carrying them. This leads me to think about starting a distributorship. Am I nuts? Any pointers to share? FWIW, I have started successful businesses including my 20-year consulting practice, a value-added orchard, and soon a small vineyard.
It is generally a pretty bad business, gross profit margins are on average 25%-45% which is very thin compared to other CPG categories. Distributor consolidation nationwide has also increased the barrier to entry in terms of actually getting the product into the account, retailers/customers are inherently fickle, and the wine category as a whole is on the downward trend of the cycle.
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If the region youâre talking about is truly âunderrepresentedâ then we can obviously rule out California, Washington and Oregon. That leaves the Southwest (New Mexico, Arizona, Texas, Colorado) and New York (Finger Lakes, Long Island). What am I missing? Iâve had numerous wines from all those places and while there has been the occasional winner, itâs been occasional at best. That raises the question of your objectivity - is your friendship influencing your palate?
Even if youâre right and the wines are terrific, thereâs virtually no awareness or consumer demand, so youâd have a major uphill battle to make this a successful business. (And just as an FYI, I am speaking from experience. I was responsible for selling some damn good wines from one of those out-of-the-way places and it wasnât much fun.)
Michigan. Not that it changes your point.
This is a major west coast region, though I canât say much more. It is simply poorly distributed in this part of the country.
If you already have channels to sell the wines means youâre in a pretty good spot. Thatâs probably the hardest part and gives you a steady foundation to start the business.
Enough of them already now with throughput for you to breakeven?
You would certainly not lack for small wineries to represent. Most of the small wineries I know lack all or most distribution. But then again, selling wine is really hard, even established players struggle to get represented in shops/hospitality. But if youâre not afraid to wear the leather on your shoe, Iâm sure it can be done to success.
Yes. It can be done but as others have noted, itâs tough. Most fail. Very few will break through to the upper tier without existing contacts (buyers, not suppliers) and reasonably solid business acumen. I donât actively pimp out my book here but since it is on point to this subject, you can find a link in my profile if youâre interested.
Thereâs usually a good, market-driven reason for that. There are just too many companies distributing these days to leave entire regions overlooked and underrepresented. This doesnât mean the wines canât be sold, but if they are truly appealing to the end consumer in terms of quality and value, someone would be on them. Or if theyâre not, the bigger companies will let you build the brand and then come in an poach the better suppliers from you. Maybe not every single one but enough to âbreak your kneecapsâ so you stay in perpetual struggle.