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Talkin Tech: Why Distributors All Win by Competing on the Same Platform

Posted on  | December 29, 2012   Bookmark and Share
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As Beverage Media’s online view of the New York drinks market grows more complete it has attracted the attention of trade members in other parts of the country. The initial reaction is very positive with excitement about the product browsing and eCommerce. However as the discussion shifts to the prospect of something similar happening in their home market a common reaction is; “why would you want to show all the products in our market?”

It may be that the conditions in New York City are uniquely suited to encourage a more open view of the marketplace, but I hope not. To be sure the wine scene in the city is vibrant and diverse. Some of the most storied wine and spirits merchants in the country service the city’s consumers, and they dine in some of the best restaurants in the country. The city is home to a unique collection of importers, writers and sommeliers that have helped shape the national conversation about wine, but that conversation has been happening throughout the country.

Our taste for new wine styles has followed behind restaurants trends that introduced us to regional and exotic cuisines. It wasn’t so long ago that sushi and chicken tikka masala were considered adventurous, now we expect them to be available in the prepared foods section of the supermarket. In the past twenty five years restaurant wine lists have progressed from being dominated by French, then Californian and Italian wines, to now including wine from all corners of the world. To be sure some consumers are less comfortable experimenting with unfamiliar wines, but there is a growing audience for Assyrtiko and biodynamic Savagnin.

Attitudes in the trade have adapted to this shift in the market. While the abundance of new wineries on the West Coast reacted to limited access to distribution by pushing direct to consumer sales, word from the wineries is that access to a distributor is becoming easier to find. According to Abe Schoener, who describes his Scholium Project as an off-beat and peripheral winery, there is interest at the distributor level in most markets that is enough to support his product at a few select accounts.

While every distributor wants to win your business over their competitor, it is the largest distributors with exhaustive portfolios and armies of sales reps who are most concerned that a competitor’s sale is a lost opportunity. Why would they want to share the stage with the smaller distributors? The answer is because their customer, the wine buyer, wants to be able to find any product that’s available in that market. Making it harder for them to search available products only means they have to reach out to the smaller distributor more often. In some cases this causes a backlash against the big distributors in favor of the underdog.

This challenge is not unique to our industry. Most towns have an auto strip where competing car dealers sit next to each other; it saves consumers from traveling across town to see more cars. Indeed there is academic research that demonstrates when competing companies are located together they all increase their chances of getting a sale. Malls are popular because consumers can go to a number of stores in a single visit; they comparison shop and can check out a number of similar or even identical products.

The wine market has changed in the past 25 years. You will rarely see the old fashioned wine list that was printed by the distributor in exchange for an exclusive on the selections. What makes a restaurant stand out now includes their enthusiasm about wine that matches their food. Retailers can’t all sell the same household brands and expect to compete on price. It is the most prestigious restaurants and retailers that are turning over every rock to find the most interesting selections and best value. Those wines won’t always be found at the largest houses, and yet that doesn’t mean buyers will turn their backs on the big players.

Ultimately it is the buyer who decides whether a product fits their beverage program and the fortunes of distributors are determined by their selection and pricing. Sales reps still play an important role in a distributor’s ability to place product, but if the buyer wants to be able to view products from all vendors in one location, then it makes sense to support this. The New York trade has adopted this approach and distributors in other parts of the country are starting to confront this shift the market. A more vibrant wine scene across the country can only help the industry overall.

To comment on this column or to learn more about how Beverage Media can help with
a website for your store, visit BevSites.com or contact Ian Griffith at 617-864-1677.
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For a complete listing of all the Talkin' Tech articles, please visit Talkin' Tech on BevSites.com.


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