Overview

The easy part is making it; the hard part is actually selling it!

How to get your wine to a consumer is one of the hardest issues a winery is faced with. With a plethora of new and established labels all competing for sales, the wine producer needs to consider their options of how best to sell and distribute their wine. Will their brand suit a supermarket/multiple, a high street/banner group chain, or is it destined for the independents?  This consideration is borne of a number of factors including volume, price sensitivity, and an understanding of the patronage of each establishment.

The Big Picture - The Changing Landscape

Most wine is consumed within 24 hours of purchase. If that is the fate of the wine then it can follow that most people’s buying decisions are skewed towards convenience, affordability, and reliability. Wine as a category however retains some of its romantic allure, and while a range of wine is sold on these criteria, the sheer diversity of wine encourages many consumers to seek out what may be perceived as more interesting, better quality, or linked to the romantic notion of actually coming from a real vineyard!

The ‘Big End’ of Town

Supermarket chains – offering supermarket or warehouse settings, with high volume sales, low margins and hence generally cheaper retail prices, these retailers offer a comparatively ‘no frills’ service predominantly on larger mainstream brands. Purchasing, ranging and operational decisions are generally managed from a central and or national perspective.  As relative newcomers to liquor sales, supermarkets have changed the landscape of wine retail throughout the world.  Their influence has seen wine move into the category of a fast moving consumer goods (FMCG), with their pricing and discounting structures encouraging quantity purchases, akin to grocery shopping.  While these changes have proven difficult for some sectors of the industry to adapt to, the proliferation of wine into non-traditional outlets has brought about some ‘democratisation’ among consumers, engendering the category a broader, mass appeal.  While securing ranging through these national retailers can provide a wine label with mainstream status, disadvantages may include a lack of freedom to recommend retail prices, as supermarket retailers ultimately compete fiercely on price points.

The Front Line

High Street chains/banner groups – offer a more specialized service, and a stop gap between independent and volume retail.  Smaller to medium brands will feature more prominently, and while individual stores may be given some operational freedom, a group or chain offers advantages in collective purchasing, advertising, store branding, and marketing.  Stores offer a generally personable though formulaic layout, providing convenience through location and opening hours. Depending on the particular focus and ethos of the chain, staff service and product knowledge tends to be of an intermediate to high standard.  Chain retailing offers many advantages for wineries in allowing wide exposure as with supermarkets, with a greater service focus and perhaps more dedicated marketing efforts.

Independent Minded

Independent/specialist retail – These settings cater to the wine consumer with specialist tastes and a high knowledge base, and access to small artisan and boutique wine producers.  Back vintage wines and a selection of more ‘experimental’ wine styles such as alternative varieties and imports are a primary focus driven by specialist customer requirements.  Service is a premium in independent retail; staff may hold qualifications such as wine marketing or Wine and Spirit Education Trust, or will have significant industry experience.  Many independent retailers compliment their ‘bricks and mortar’ operations with online facilities, or trade solely via the Internet, reflecting the increasingly international nature of specialist fine wine retail. Advantages for wineries with independents include brand building through the ‘hand selling’ approach, and often a greater control of retail pricing.  Disadvantages include the smaller volumes moved, and that each outlet must be serviced individually.

A Case In Point - Sarah MacMahon, Sales & Marketing – Kaesler Wines and Vineyards, Barossa, South Australia

“Yes, of course there’s life outside supermarkets! It really depends on what size your brand is and what your brand positioning is – and this of course reflects your company philosophy and culture, and your winemaking style. If you’re a brand of significant size with volumes to sell, then you need to sell to supermarkets – they sell large volume products and are very good at doing it.

However, if you are a smaller producer of exceptional quality wine then you can also choose the distribution path of on-premise and independent retailers. This is a slower route to market, but one that is usually very brand loyal if wine quality to price point are maintained. It can be very successful. But you have to be willing to invest the dollars to service these customers directly, or have control over your own distribution company. The on premise and independent retail channels are very much the ‘hand sellers’ of a brand – they help build brands and promote the story behind the label.

The size of your company, price level and marketing philosophy should all determine your route to market. Working out where to sell your brand is determined by planning where you sit in each of these areas. You have to select distribution channels that fit your brand and company philosophy, and be prepared to stick to those plans. Grow with your market, don’t over produce and then try to sell to a market that may not be there. It’s all about finding out what your customers want.”

Kaesler Product Line-up

Summary - Know Your Place

As supermarkets refine their operations and grow their influence in wine retail, divides are becoming apparent in the industry.  Generally speaking, large wine companies feed large retailers with well marketed, popular brands.  Unable to compete with the economics of volume, smaller retailers by necessity are drawn to smaller wine producers, who in turn are often unable to meet the supply conditions of national retailers.  Short of direct sales through cellar door, Internet or wine clubs, producers and their distributors or agents need a solid understanding of the different retail options available, and the implications and opportunities of each sales channel.