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Two-Tier Tension

Posted on  | May 26, 2015   Bookmark and Share
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The relationship between distributors and retailers is often rocky, but both sides profit from cooperation.

The relationship between distributors and their retail and restaurant clients is often a fractious one, reminiscent of a bickering couple long past courtship and all too familiar with each other’s habits, good and bad. Both parties often feel aggrieved, misunderstood, even occasionally unappreciated. Sometimes the tension between these two distinct tiers of the industry can obscure the needs of both sides, not to mention the mutual benefits of cooperation.

We talked with several retailers and restaurant buyers as well as distributors, and both groups quickly agree there are areas where they should -— and sometimes do –— work cooperatively. Some were willing to be quoted, while others were not.

Bill Sciambi, a founding partner in New York-based distributor Verity Wine Partners, set the cooperative tone by giving a few words of explanation. “There should be a proper attitude of how you treat your retail customers,” he says, “but our business is a controlled environment, so there is an unfortunate tendency to do less customer services.” A retailer who asked not to be quoted agrees there is a need for more cooperation: “These people [distributors] need you to make their living” he says, “and we need them to get what our customer wants. This, in turn, will make the retailer, restaurant or bar successful.”

Here are some thoughts about key areas of cooperation we gleaned from distributors, retailers and restaurateurs during interviews. It should be noted, of course, that regulations vary greatly from state to state, especially in matters such as discounts, retailer payment terms and what distributors can or can’t legally do to help make consumer sales.

1. Educating the Staff

“I don’t want staff education to just be brand-oriented,” says Erik Liedholm, Wine Director of John Howie restaurants in Washington state. “It has to be broader. I ask distributors to provide a bottle of their wines A, B and C for our own education, and they all will do that.”

Dennis DiMaggio, Director of Organizational Development for The Charmer Sunbelt Group, points out his firm is a WSET-approved education provider and that he seeks to best provide training “in ways that respect their work time, including use of online.”

2. Co-Selling the Customer

Where allowed, most retailers welcome distributors into their stores to provide portfolio-oriented wine tastings, particularly when introducing a new brand or a brand extension.

3. Putting Producers to Work

“We’ll often partner with a rep to put together customer tastings or wine dinners where a winemaker from California or elsewhere will give a first-hand presentation of their wines,” says Ted Armbrecht, proprietor at the Wine & Cheese Shop at Capitol Market in Charleston, WV. Both retailers and distributors can capitalize on these events by offering discounts to customers who place orders on the spot.

4. Providing Sales Aids

Some retailers don’t want shelf-talkers or product sheets for online information, but most do—and often have problems getting them. Jamie Rystad, Manager of On/Off Sales for Il Forno Classico in Sacramento, CA, laments, “Often, I will have to hold a bottle with one hand, take a photo of it with the other, then Photoshop it. Then I have to write the product notes as well!” Sciambi says Verity addresses this need by offering its retail customers “a two-click service to download shelf talkers and PDFs.”

5. Understanding the Portfolios

A common complaint of most retailers is that distributor reps need to better understand their stores’ business –— their customers, average wine prices, even space capacity. For example, Christy Frank, owner of Frankly Wines in New York City; “We tend to stock smaller growers and estates and distilleries, because we like to offer unique items.”

6. Providing Charitable Outreach Hand-in-Hand

Both distributors and retailers earmark annual amounts they can provide for charity and non-profit events. And when pouring free wine is involved, it often leads to added sales and new customers for retailers, benefits that are passed along to the distributor as well.

7. Establishing Sensible Discounts

Sciambi says Verity likes to “make discounts available to more customers, sometimes for as little as three to five cases, and not 10, 25 or 50.” Smaller retailers appreciate this approach and say they in turn tend to buy more items from the portfolios of understanding distributors.

8. Helping Out Where Space Is at a Premium

Many stores, especially those where rents are high, have limited display space for a wide variety of offerings as well as storage space to take advantage of volume deals. DiMaggio says that Charmer Sunbelt offers shelf-management programs to get the most out of small spaces and sell more efficiently. Frank says she appreciates it “when we see the occasional deep deal or close-out that we’d like to participate in, and the distributors offer a ‘bill-and-hold option’ to make that possible.”

9. Treating Everyone Fairly

A common complaint of retailers is being told by a distributor that an in-demand wine is not available, only to discover a good customer has found it at a competitor. Liedholm further says he sometimes sees price disparities between what he has been charged at his restaurants for a wine versus a deal made to a chain store. “I call the distributor out on it,” he says. “and most savvy distributors will make amends.”

10. Giving Favors to Get Favors

One apocryphal tale recalls a retailer who asked about accommodations at the inn of a prominent winery the distributor represented. The distributor checked through channels and came back with the answer: Two rooms were available at the requested time, one for $200 a night and one for $400. “I’ll take the $400 room,” was the distributor’s response, “but get it for me for the same price as the $200 room!”

Retailers can get presumptuous with their demands, and large distributors often make blanket company policies that tie the hands of reps who want to help. But things usually work out when favors are being asked and given sensibly. Sciambi says Verity routinely makes direct connections between a retailer requesting a personal or customer visit and the targeted producer, removing himself from the middle. When he wants special orders, Armbrecht says he prefers asking smaller distributors—“They appreciate the potential increased business opportunities.”

But as relationship counselors often point out to bickering couples, establishing an atmosphere of trust and respect will go a long way in solving problems and making it easier to work and live together. In time, the back-and-forth may never go away completely, but seeing eye-to-eye will continue to be a noble goal for both sides.


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