Box Movers…Nothing More, Probably Less
As if there was any question that today’s breed of alcohol wholesalers are nothing more than box movers, here comes a very interesting survey of wholesalers from Wine & Spirits Daily.
They asked wholesalers for recommendations as to what craft distillers can do to better succeed in markets where they have wholesalers. Here are the top 4 recommendations from the survey of wholesalers:
- Provide better branding for their propositions.
- Visit the market more frequently.
- Provide better training of salesforce.
- There should be more investments behind consumer pull strategies and consumer tastings.
I can translate these recommendations into a simple perspective: Do all the marketing and sales work yourself, we wholesalers just stack boxes!
This shouldn’t be a surprise to anyone who has worked with wholesalers over the past 10 years, particularly those small to medium-sized producers of wine, beer or spirits.
At the Wine and Spirit Wholesalers Association website, they describe the job of the wine and spirit wholesaler this way: “They are the local marketing, logistics and distribution experts for the many thousands of brands and products.”
Sure they are…which is why, when they are surveyed anonymously, they recommend that their suppliers do all the work.
There was a day, a few decades ago when the mandate to use the middle tier made sense in the wake of Repeal of Prohibition and the relatively small number of producers. Today, however, wholesalers have become a drag on the industry that rarely offers any added value. They are rent seekers who haven’t contributed any intellectual or practical innovation in decades. The only rational argument wholesalers have today for their continued required spot between producers and retailers is the fact that they can get lawmakers elected.
That’s what we got when Congress and the States let the bootleggers write Repeal Amendment and establish state-mandated monopolies. Craft producers do the work, and liquor wholesalers make the money.
This is the truth of any three tier system, in any industry. If any supplier doesn’t accept this fact and plan accordingly, they are trapped pushing a large rock uphill. The difference in wine/alcohol is the meddling of the government in the free market in the form of requiring use of the wholesaler. In most industries the supplier can decide whether the value provided by the wholesaler is worth the cost. Not so with wine – unfair to the wineries, to say the least.
I got the same picture when talking with a distributor (admittedly, generous with his time in advising me) who said that what really helps is if the winery can bring some really big established accounts to the distributor — (paraphrasing) “Like if you’re already selling thousands of cases a year thru Costco. That’s the sort of winery we really like to bring on.”
With over 35 years experience in the industry, I respectfully have to disagree. I have known Middle Men, Distributors, Wholesalers, whatever you choose to call them, as by and large, helpful, professional and responsible entities. I have worked every aspect of this business except the production side. I was both on and off premise retailer, buyer, rep and wholesaler and now on the product education end, and after seeing all sides of this business, I firmly believe that, with few exceptions, the wholesaler is NOT just a box mover. They build brands, promote products and oftentimes work tirelessly for clients. I have seen them construct elaborate displays for retail operations, conduct tastings, and populate tables at wine festivals and talk endlessly of the brands they represent. I am not sure where this perception of wholesalers that you espouse comes from, but that has not been my experience at all. Tom, I think you know where I stand on this issue and I truly do not think that talk of eliminating the need for the Second Tier is helpful to the industry or the general public.