Overview of options for wine and spirit exporters to find an import solution for their products in the U.S.

1. © Bevology 2015
U.S. Drinks Market:
Options for Suppliers to
Enter the American Wine
and Spirits Market

2. © Bevology 2015
Hope is Not a Strategy

3. © Bevology 2015
Model Has Changed
Suppliers
Distributors
Importers
Consumers
From To

4. © Bevology 2015
What Importers Want
• The right “CHEMISTRY”
• Fills an identified void in portfolio
– Brands with existing US volume they can grow
– New brands they feel their expertise can develop and grow
– Brands that have a unique positioning
• Enhances image, value and profitability (Synergy with
importer’s mission)
• Strengthens importer’s position within the trade
• Supplier understands the U.S. Three-Tier system
• Financially sound, budget to invest and support the
brand.

5. © Bevology 2015
Presenting Your Brand to Importers
• Company description/history
• Product description – varietals, style, ranges, proposed US retail
price by line/sku, and price structures
• Brand point of difference/value proposition for consumer; why THIS
importer should be interested in you.
• Marketing materials as background
• A defined target audience
• Production Info
• Past history of importers, distribution agreements, list of
distributors/brokers of products and volumes by state
• Price structure for U.S.
• Marketing support budget
• Samples

6. © Bevology 2015
Read the Book

7. © Bevology 2015
Your Options
1. Large
National
Importer
4. Specialist
Company that
both Imports
and Distributes
3. Regional or
Multi-State
Importer
5. Set Up Your
Own Import
Company
8. Chain
Retailer
Exclusive Brand
9. Direct Import
thru Control
State
7. Large
Distributor that
also Imports
2. Specialist
National
Importer
6. Nat’l
Licensing,
Import and
Services
10. Wine Club/
E-Comm/
Flash Site

8. © Bevology 2015
1. Large/National
Importer

9. © Bevology 2015
1. Large/National
Importer
Pros Cons
Existing national distribution network Small brands get lost in portfolio.
Clout with distributors, your brand
benefits from their portfolio strength
Agency brand gets lower priority than
owned brands.
Large sales force Importer controls pricing, margins
On staff marketing department, existing ad
and PR agencies
Internal competition for company
resources
Participate in their sponsored events:
portfolio tastings that attract more and
more important trade, press than you
could reach on your own.
Importer determines marketing strategy,
creative, promo, POS…fits your product
into their portfolio
Existing business with chain accounts Set up to work with bigger suppliers, focus
on big volume brands
Use importer’s existing licenses Margins to winery will be lower/shared
with importer.

10. © Bevology 2015
2. Specialist
National Importer

11. © Bevology 2015
2. Specialist
National Importer
Pros Cons
Existing national distribution network Smaller brands less important to
distributors.
Participate in their sponsored events:
portfolio tastings that attract more and
more important trade, press than you
could reach on your own.
Importer controls pricing, margins, brand
priority, creative look and feel, fits your
product into their portfolio
Category expertise Specialization may mean limited appeal
On staff marketing personnel Limited in house marketing and sales
resources
Existing business with chain accounts Sales management presence in multiple
states limited.

12. © Bevology 2015
3. Specialist,
Regional or Multi-
State Importer

13. © Bevology 2015
3. Specialist, Regional or
Multi-State Importer
Pros Cons
Smaller, more focused and nimble Limited geographic reach
Get more attention/not lost in the portfolio Limited capital, credit, payment history may be a
problem.
Specialize in specific area (country of origin,
indigenous varietals, price)
Smaller/limited resources, limited capital
availability, often no marketing staff, small sales
staff, hire out PR on project basis.
The smaller you are, the smaller the importer
should be
Tend to be with smaller, specialty distributors so
don’t get wide off and on premise distribution.
If you only make 50,000 btls, you don’t need
national distribution, you need strength in a limited
set of markets.
Limited interest in investing in the brand, likely that
the majority of
marketing has to come from brand owner.
If you have multiple importers, will need multiple
labels …implications on inventory, compliance

14. © Bevology 2015
4. Specialist
Company that
both Imports and
Distributes

15. © Bevology 2015
4. Specialist Company that
both Imports and Distributes
Pros Cons
More motivated to work with you because
they control two levels of margin
Relatively limited sales force
Focus on major markets/cities, not
outlying areas.
Limited geographic reach
Specialize/known for something: country
of origin, wine style
Different importers in different states
require separate labels…inventory
management issues
Smaller/limited resources, often no
marketing staff, small sales staff, hire out
PR as projects.
May take lower margins at each tier
because keep both.
Not sustainable price structure if move to
traditional importer/distributor
relationship
Marketing has to come from brand owner.

16. © Bevology 2015
5. Set Up Your
Own Import
Company

17. © Bevology 2015
Pros Cons
100% of attention to your brand. Bear the complete cost of everything, can’t
amortize anything, need volume to make
it work.
Have complete control of everything:
marketing, sales, pricing, distribution,
margin, focus, message.
Need people with lots of skills: marketing
sales, import logistics, warehousing, which
can take your eye of what you should be
doing…promoting and selling.
Works better for spirits than wine. Not your expertise
Keep importer margin
5. Set Up Your
Own Import
Company

18. © Bevology 2015
6. National
Licensing, Import
and Related
Services

19. © Bevology 2015
6. National Licensing,
Import and Related Services
Pros Cons
Very efficient at what they do Do not do marketing.
Cost savings in logistics, freight
consolidation, etc.
You will need either a rep in country or
you’ll have to hire someone who can do
the things below
Only pay for services you need Need to do everything else yourself:
marketing, sales planning, distributor
management, marketing, inventory, pricing
etc.
“Incubator” distribution services in NY, NJ,
CA
Handle cash flow, invoicing, billbacks and
other price modifications and distributor
deals.
Need to find/set up distribution network.
Quicker market entry

20. © Bevology 2015
7. Large
Distributor that
also Imports

21. © Bevology 2015
7. Large Distributor that also
Imports
Pros Cons
Built-in distribution network, integration Distributor is focused on satisfying needs
of big internationals like Diageo, Bacardi,
Pernod. You will never be a priority.
Existing sales force Not in the brand building business
Efficiencies and margins of having
combined functions of importer and
distributor
Can’t/don’t work with multi-state chains
on or off premise if have operations
outside their markets.
May get more attention here than with a
large national importer.
Difficult to get distributors in states where
this distributor does not operate. Dist’s
are not interested in helping competitive
distributors make money
Primary business is distribution and sales Not their primary business

22. © Bevology 2015
8. Chain, Retailer
Exclusive Brand
73 stores, 11 states
Anakena
500 stores, 17 states, 39
retailers

23. © Bevology 2015
8. Chain, Retailer
Exclusive Brand
Pros Cons
“Shadow” distributor works on very low
margin, so retailer has more room to price
aggressively
Extra margin does not usually accrue to
supplier
Establish distribution in multiple states
quickly
Limited to selling through only that retailer
or retailer group
Minimal marketing costs (Don’t need to
fund distributor incentives, consumer
awareness programs)
Limited opportunity to grow brand outside
dedicated distribution, no on premise
business.
Immediate volume with first order Business limited to the states in which the
retailer operates. In Total Wine example,
no opportunity for sales in NY or IL.

24. © Bevology 2015
9. Direct Import
thru Control State

25. © Bevology 2015
9. Direct Import thru
Control State
Pros Cons
Getting “traction” in one state can get the
interest, credibility with other import
options.
Only works in one state
An experienced broker with relationships
in that specific state can facilitate.
Broker generally only knows that one
state.
Not a scalable strategy.

26. © Bevology 2015
10. Wine Club/E-
comm/ Flash Site
Wine Clubs E-Commerce Sites Flash Sites

27. © Bevology 2015
10. Wine Club/
Ecomm/
Flash Sites
Pros Cons
An option…to at least get a beachhead. Limited reach to only their customer base
Low support costs for supplier. Retailer
assumes burden of marketing, securing
customers.
No real brand building for the long term.
Can represent good volume via a simple
sales, shipping, inventory, labeling process
to a single customer.
Every sale involves a DTC shipping cost to
retailer, meaning a lower margin to
supplier.
E-commerce allows you sell in states even
where you don’t have a distributor.
E-commerce represents limited volume
potential…now.
Off premise solution only

28. © Bevology 2015
11. Other ideas
• How to get U.S.-based ratings and reviews. Some will work with
brands that do not have a current importer. (Great way to legally
import samples)
– BTI
– Ultimate wine/spirit competition
– New York International Wine Competition.
• US trade shows:
– WSWA/Beverage Alcohol Forum, Nightclub and Bar Show, Manhattan
Cocktail Classic, Holiday Buying Show, Tales of the Cocktail. (updated list
available at https://www.linkedin.com/pulse/upcoming-wine-spirits-
events-competitions-steve-raye?trk=mp-author-card )
• Data on U.S. market, brands, volumes, share, trends: Beverage
Information Group Handbooks for Wine, Liquor, Beer, On-premise;
M. Shanken Impact Databank.

29. © Bevology 2015
Words to the Wise
• Always get a written contract
• When exploring existing importer options,
check the importer’s:
– credit history
– States in distribution network
– Litigation history

30. © Bevology 2015
US Competitions
Do not need a US importer to enter Need a US importer to enter
Ultimate Beverage Challenge Beverage Testing Institute
Wine Enthusiast’s Importer Connection MicroLiquor Awards
NY International Spirit Awards
Indie Spirits Competition
San Francisco International Wine Comp.
Spirits International Prestige Award (SIP)

31. © Bevology 2015
U.S. Market Industry Newsletters
Wine and Spirit Daily (WSD) http://www.winespiritsdaily.com/subscribe.php
($380/year)
Shanken News Daily http://newsletters.shankennewsdaily.com/
Industry News Update Also known as “Mark Brown’s Newsletter” or
“Buffalo Trace”. Email mbrown@buffalotrace.com to
be put on the mailing list.
Wine Business Daily News https://secure.winebusiness.com/u/index.cfm?go=ul
&re=subscribe&sourceid=1000002&pubid=3&ref=rn
_news&listingid=
Modern Distillery Age www.distilleryage.com
WSWA Smartbrief https://www2.smartbrief.com/signupSystem/subscri
be.action?pageSequence=1&briefName=wswa&utm
_source=brief
Wine Industry Insight http://wineindustryinsight.com/
Wine Industry Advisor Afternoon
Brief (Published by Wine Industry
Network)
http://www.wineindustryadvisor.com
Just-Drinks http://www.just-drinks.com/ (Subscription fee)

32. © Bevology 2015
Contact
Steve Raye
Managing Partner
Brand Action Team
1 Darling Dr.
Avon, CT 06001
860-676-7900
sraye@comcast.net
www.TheBrandActionTeam.com
www.BATChat.net (blog)