Our business, this adult beverage trade that we all work in, is undergoing an enormous shift. We talk about the Internet impacting our business; we talk about DTC as if it is a panacea, and we mention a three-tier bottleneck casually over coffee like we are speaking about the Golden Globe speeches.
Talking about the retail landscape is commonplace at baseball fields all over Napa and Sonoma. But nothing ever changes.
I have been consulting with all three tiers in the alcohol beverage business for the better part of a decade and, having no “skin” in the game, this allows me a fresh perspective.
There is no time like this in our history where change will come as quickly as it will, and we will measure small victories as if they were seismic.
This is a battle cry for my brethren in business. The wineries, the distributors, and the retailers need to look long and hard at the landscape and ask themselves; who will Sherpa them through the coming change?
In the last week alone, I have talked with leadership of Bacardi, Nomacorc, IRI, Veev, Glazers, Southern and more. The one point that runs center down the list is that go-to-market-strategy is changing.
Distributors are not brand builders, DTC is helpful – but not a silver bullet, and the web is a huge opportunity that no one can figure out how to attack well, legally, and consistently.
So as the afore mentioned list grows, many of today’s readers choose decision paralysis over active response.
It is easier to do the same that we have always done, than to embrace pending change and even, heaven forbid, welcome it for financial benefit.
Best Buy, Pets.com, Barnes & Noble, and Blackberry did nothing wrong. It was just that someone came around and did it better.
Our dependence on the distribution channel without embracing other opportunities is brand suicide. Distributors are trimming labor heads and can only focus on top tier movers.
That said, if you are 50-150,000 case sellers, there is a good change that your distributor and your brand are not simpatico in sales goals.
Out of 100% inventory at the distributor, 20% of the goods account for 80% of the sales, thus the distributor devotes 80% of sales resources to selling 20% of their goods. If I’m outside that 20 percentile, even by 1%, that’s not a model I want to depend on.
DTC will be a wonderful additive to the three tier system, but the key will be customer capture, social engagement, and digital property alignment. That means changing the ways we engage the guest in our tasting rooms, mailing lists, and socially.
Off premise communication is critical to selling out of distribution into retail. The only problem is that after chains, grocery, and big box; all that is left is a spider web of 140,000 independent retailers in America.
They are a difficult sell and incredibly fragmented. But they will be a salvation to wineries and brands when the chains, big boxes, and grocery start to dictate pricing back up the three-tier system
Not possible, you say; won’t happen, you chuckle. It will happen, and it has begun.
There are only x number of places to sell goods. Brands are stealing customers from each other, as we are not creating new drinkers or new shoppers. When the retail places, bars, and restaurants close their doors, and the customer is buying 3 bottles at a time from DTC, we will be at the whim of the very monster we clammer to sell to today.
Rosen Retail is not suffering from Chicken Little syndrome, and we will all be just fine in the scheme of things, but the handwriting is on the wall. When my clients, many smarter than me, ask why? and how? and when? It gives me pause.
I can bring you all to the edge of the river, but at some point you need to drink. If you continue to do the same thing over and over again, and expect different results. That is the true definition of insanity.