Evaluating export partners
While a lot of time and energy is invested in seeking and pitching to potential buyers, trade partnerships work both ways. You also need to evaluate whether a partnership is actually right for your business.
Evaluation should happen during negotiations with channel partners such as distributors, importers, retailers, wholesalers and agents. It’s best to vet them properly before you spend (or waste) time conducting due diligence.
Here are some key factors to consider.
| FACTORS | QUESTIONS | |
|---|---|---|
| Portfolio | Category experience | Do they have a successful track record with the product or category? |
| Portfolio capability | Is your variety and price point in their portfolio? How many comparable products do they have? | |
| Business alignment | Are your business goals and objectives reciprocated by the distributor? What are their sales projections for your wines? | |
| Longevity and industry reputation | How well established are they? What is their reputation? | |
| Geography | Market/territory coverage | Can the distributor demonstrable success or potential success within your desired geography? |
| Channel | Channel/client focus | Are your desired sales channels achievable with this distributor? |
| Relationship with key buyers | Do they have proven connections with your chosen sales channel? | |
| Scale and scope | Sales force | Do they have a team that can manage the volume? Are they knowledgeable and do they have a reputation for professionalism? How many salespeople do they have and are they exclusive to you? |
| Sales, revenue or other performance | Do they have some form of evidence that they reach sales and income targets? What margins do you need to factor in? | |
| Size of distributor | Does their size reflect the size of your business? If you’re unsure, check the size of other wineries in their portfolio. | |
| In-house and outsourced promotional capability | Do they have a promotional capability – either in-house or outsourced? What are their marketing and service strengths in this market? | |
| Facilities | Warehousing and transport facilities/services | Do they have facilities and complementary services that are appropriate to your quantity of wine and target channels? |
Managing incoming enquiries
You don’t always have to pitch to partners – they may come to you. While an unsolicited enquiry may result in a new distributor for your wine, there are some people and organisations who seek to take advantage of exporters. Protect yourself and check the credentials of any enquirer.
Before sending any information or wine to an enquirer, confirm they have a legitimate business, and that their enquiry is genuine. Also keep an eye on Scamwatch, which contains a list of known scams.
If a potential partner is genuine, they will expect you to ask questions such as:
- How did you find out about our business and wines?
- Do you have a website or company profile I can look at?
- Are you an agent/distributor/importer/retailer?
- How long have you been in business?
- What other Australian wine exporters do you work with? What other overseas exporters?
- What are your plans for working with my company?
Conducting due dilignce
One of the biggest pitfalls for wine exporters is failing to conduct partner due diligence. This stage involves undertaking a detailed examination of your selected distribution partner, necessitating direct discussions between key parties and conducting final background checks, as well as consideration of contractual elements.
Here’s a quick checklist to run through before signing any contracts. Most of these due diligence checks can be conducted through online research, trade interviews and market inspections, although some will only be possible when meeting in person.
Due diligence checklist
Financials – obtain credit reports with third-party specialists (e.g. Dun & Bradstreet Business Credit Reports) and credit references from key suppliers.
- Producer relationships and sales performance – seek relevant feedback from other producers who have an established trading history with the distributor, most notably regarding meeting performance expectations.
- Key account relationships – obtain appropriate information from key accounts (customers) being serviced by the distributor.
- Interactions/reputation with industry and government organisations – seek helpful feedback from in-market representatives from Wine Australia, Austrade and state government trade offices.
- Geographical presence and penetration – check the distributor has clear presence and penetration in the areas you hope to export to, with a clear route to market.
- Current portfolio – ensure the portfolio of their distributed wines matches the level of penetration, presence and country/state/provenance/city that you would like to achieve.
- Route to market – check the distributor currently sells to the places you hope to have your wines in, with reliable partnerships and quality routes to market.
- Promotional calendar, activities and awareness – ensure the distributor has a clear understanding of the promotional activities that are involved and evidence of achieving this.
- Business objectives – ensure your goals and objectives meet the intent of the distributor.
- Physical premises – investigate the location and size of physical premises, with a direct route to market or on-sold.
Related reading
Wine Export Ready has been developed in partnership with Austrade.