Home Sales & Marketing Wineries Success in the Face of Mass Consolidations, Shutdowns

Wineries Success in the Face of Mass Consolidations, Shutdowns

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The number of wine products continues to increase, distributors continue to decrease. What now?

—Kathleen Willcox

In 2020, the global wine market was valued at around $417.9 billion, with an expanded compound annual growth rate of 6.4 percent through 2028, according to a recent analysis from Grand View Research. In the U.S. alone, the number of wineries has risen more than 50 percent between 2009 and 2021.

Meanwhile, the top two wine distributors account for more than half of all wine sales in the US, according to Wines Vines Analytics. The landscape has shifted dramatically: in 1995, there were about 3,000 distributors, but by 2017, there were less than half, about 1,200, and the number has continued to drop.

With fewer distributors, it seems inevitable that the biggest brands—the easy-to-move household names—will thrive, as smaller brands suffer.

But despite these challenges, many brands have found (very different) routes to success.

KLWM Logo and NameFocusing on One Distributor

Some producers see their relationship with their distributor as a lifeline to the US market, and will only work with one.

“I work hand-in-hand and in total mutual trust with my long-time distributor,” says Ghislaine Dupeuble, winemaker at Chateau des Pertonnieres in Beaujolais, which produces 280,000 bottles annually and distributes to 40 US states. “I would never consider leaving Kermit Lynch, who we have worked with since 1989. Every year, our sales have grown, and we attribute that to the relationship of trust, respect, and even friendship that working closely over many years brings.”

Chateau des Pertonnieres now ships 70 percent of its output to the US, a feat Dupeuble says would be unthinkable without Kermit Lynch’s steady partnership.

Like Dupeuble, the team at Beaujolais’s Vins Descombe, which produces 200,000 bottles annually, attributes their continued success to one key partner.

“We are distributed nationally through several partners, but we rely on one national importer, Mary Taylor Wine, to manage the network of distribution in different states,” says managing director Kevin Jandard. “Our strategy has created a strong working relationship between all of our partners, and we currently export about 25 percent of our production to the US. We see that continuing to grow with tariffs being lifted.”

Multiple Distributors

To ensure each SKU gets proper play in the 40 states Lavau sells in, he works with eight importers and several more distributors.
To ensure each SKU gets proper play in the 40 states Lavau sells in, he works with eight importers and several more distributors. / Photo: Maison Lavau

For other producers, more is more when it comes to distributors.

“If I only had one large production wine I was trying to sell, I’d probably be better off focusing on one large distributor,” says Frédéric Lavau, winemaker at Maison Lavau, which has more than 450 acres of estate vineyards, and relationships with several other growers. “But I have a complicated portfolio, included Cotes du Rhone, Cotes du Rhone Villages, estate wines, wines from Gigondas and Chateauneuf du Pape, wine from our negociant. So many wines!”

To ensure each SKU gets proper play in the 40 states Lavau sells in, he works with eight importers and several more distributors.

“I work on the theory of 20/80,” he explains. “Twenty percent of our inventory will sell itself, but 80 percent has to be personally pushed and promoted to get placements in retail stores and restaurants. Unless we have the right person selling the wine, it won’t happen.”

Janie Brooks Heuck, managing director of the Amity, Oregon-based 17,000 case Brooks Wine, agrees that an assortment of distributors and partners is necessary.

“We are in about 30 states, and eight of those are with Winebow,” Heuck says. “The rest are with small distributors. We find that working with a lot of different partners works for us, and we’ve been working with many of them for 20 or more years.”

Non-Traditional Sales

The real secret to Brooks’ continued success, she believes, is their increasing reliance on the direct to consumer (DTC) market.

“When we opened a new building and tasting room experience in 2014, we began to flip our distribution model,” she explains. “We wanted to transform the tasting experience in Oregon with table-side service and an immersive approach to tasting. At that point, our ratio of distribution through partners versus DTC was 80 percent to 20 percent. Now that’s flipped. About 80 percent of our wine is [now] sold DTC.”

Brooks believes the tasting room itself ignited that evolution, but it went hand in hand with key media placements.

“Our new tasting room was covered in USA Today and Fox,” she says. “That brought awareness of our winery to people who never would have heard of us otherwise.”

Brooks Wine's in-house tasting experience coupled by media attention helped fuel DTC growth.
Brooks Wine’s in-house tasting experience coupled by media attention fueled DTC growth. / Photo: Brooks Wine

Lavau agrees that depending on forms of sale outside the classic retail and restaurant model is essential.

“The pandemic changed the way everyone sold wine,” he notes. “The internet became our distributor in 2020. Without social media and coverage from journalists, our sales last year—which were fairly normal—would have been quite different.”

Smaller brands, like Domaine Des Maravilhas in France’s Cotes du Rhone, which produces about 45,000 bottles annually, face an uphill battle getting that attention and coverage.

“We have about 10 percent of our output going to the US,” says winemaker Jean-Frederic Bistagne. He worked with one importer from 2015-2018, but is now focusing on working one-on-one with a network of 15 small importers. “With my size, it is preferable to work with local importers who will give my wine more attention, and who have priorities that are more in line with mine.”

But being on the ground himself is key, something that has been impossible for more than a year, until just recently.

“I need to be present in the US again if I want to get the attention of the press, sommeliers, retailers, and chefs,” he says. “For a smaller brand, being present at tastings and fairs is essential.”

Terra Jane, Ownroot Collective
Terra Jane, Ownroot Collective

Three-Tier Alternatives

A number of creative alternatives to classic distribution models have cropped up in the past year. In addition to the proliferation of small virtual tastings with pre-sold bottles of wines, alternative sales models like Terra Jane Albee’s Ownroot Collective have emerged.

“My day job is in marketing and consulting with wineries,” Albee says. “One night, I opened a bottle my friend, who is a very small producer, gave me. I was blown away by the quality, but immediately depressed because I realized they had no route to market that really made sense. There’s a giant population of these very small winemakers who don’t have tasting rooms. They can’t build out a DTC or wholesale model because it would be cost-prohibitive, and growth becomes a dead-end.”

Albee decided to build a road to market. The model is simple: she opens up an offer on one small brand, who sells wine through her platform for two weeks. She takes orders, then places them through the winemaker, and sends out the wine, so no one sits on inventory. Membership costs $8.95 per month, and members get two opportunities a month to purchase micro-lot wines. If they take the offer, they get the wine, and a virtual tasting with the winemaker.

“My goal was to introduce winemakers to people across the country who wouldn’t be able to find these wines anywhere else,” she says. “I have worked with 24 wineries so far, and I look forward to working with many more, and creating long-lasting relationships between our members and these winemakers.”

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Kathleen Willcox
Kathleen Willcox

Kathleen Willcox

Kathleen Willcox writes about wine, food and culture from her home in Saratoga Springs, N.Y. She is keenly interested in sustainability issues, and the business of making ethical drinks and food. Her work appears regularly in Wine SearcherWine Enthusiast, Liquor.com and many other publications. Kathleen also co-authored a book called Hudson Valley Wine: A History of Taste & Terroir, which was published in 2017. Follow her wine explorations on Instagram at @kathleenwillcox

 
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