It's not enough to grow the grapes, make the wine and get it safely into the bottle. Sooner or later you have to sell it, and that often involves the world of distribution. The relationship between wineries and distributors is definitely one of love and hate. As both the wine and distribution industries are seeing their small guys gobbled up by a few large players, the dynamic is becoming more complex. Add in the winery focus on direct shipping and things get downright antagonistic.

I thought it would make fascinating reading to get some distributors around the lunch table and talk about their business and how wineries can succeed in the distributor system. Although distributors have a reputation for being a secretive lot, not prone to openly discussing their business practices, two distributors accepted my invitation and had quite a bit to say about their work and what wineries can do to bridge better relationships with their distributors.

Dominick Favuzzi (right) is senior brand manager with Epic Wines, a medium-size, statewide distributor with an excellent book of wines. His experience goes back to 1983. He worked for several wineries and a string of upstart distributors before settling on Epic Wines, where he is working on a current six-year stint.

Jerry Henry (left) has worked in the New Orleans wholesale business for more than 40 years. He spent 10 years with Comisky before moving to Magnolia, the large venerable New Orleans distributor. He served in their premium wine division, Heritage House Wines, as a salesman, supervisor, manager and finally "wine educator emeritus."

Currently, the biggest news in the industry is that the Supreme Court has struck down laws in Michigan and New York that ban interstate wine shipments, reasoning that those states "discriminate" by at the same time allowing intrastate wine shipments. What is your take on that decision and how it will affect distributors?

Jerry It's going to affect distributors a lot, especially in my neck of the woods. It seems like they are trying to break the three-tier system, which really concerns me because the three-tier system is what I've been foolin' with for 40 years, and I hate to see it thrown away. The way of doing business is going to change. The smaller wineries might love it, but the bigger wineries might not. Distribution is going to change. Big restaurants, chain restaurants and grocery stores will likely start ordering direct from wineries. But if they bypass the distributor they won't get the wide-range placements in the city. It's a funny situation, and I hate to see it happen.

Dominick Here in California, a lot of wineries go direct already. It will take a lot of time for states to work this out. Over the last two days, I was in the company of distributors from around the nation, and we were talking about this. The profile of the person who's going to order wine from, say, Peter Michael, is maybe a person in a faraway place, not convenient to a package store, so he'll order a case from the winery and it will be shipped directly.

But will wholesale buyers order direct from wineries? I don't think so because of the logistics of, say, A&P in New Jersey calling Kendall-Jackson to say, "I want to order six pallets of wine." I think the logistics of doing that, and the lack of service that distributors provide, will preclude that. Distributors provide inventory service, merchandising service and timely delivery. If customers attempt to do this from a long distance, it will be difficult.that distributor to generate some viable sales?

Dominick If that winery comes into the book as just an independent winery, then it's going to be tough. You have these marketing groups, like Constellation and Diageo, that carry a whole bunch of wineries with them when they go to a distributor. As such, wineries that are part of those groups benefit from a small army of sales reps that work for the parent company to foster sales.

A small winery traveling on its own across the country is alone unto itself. That independent winery may have two or three people covering the whole country. They don't exert the leverage that these large groups do.

Jerry I think the only way for these independent wineries to succeed is to cut themselves away from the other 50,000-case wineries; there are so many of them out there. I think you need a presence in the market. You need someone in the market that actually knows the buyers. I've seen these group reps come into town, but they can't give attention to one winery. All at once the rep's got to connect with 10 to 15 wineries in two days; there's no way he can do it.

So, placing attention on the brand is what you've got to do. That means working with the salespeople, doing tastings, stuff like that. But you find less and less of that happening. In New Orleans we find fewer people traveling. The big guys, the ones with 500,000 cases, have guys in the market and they live there. That's why they get the attention.

Dominick First and foremost, wineries need to make the very best wine that they can because that is going to be the bottom line, no matter what. When I sit down with wineries—and there are so many new ones—there's one question that always brings up the "deer in the headlights" look: "Who's your competition?"

My rep is not going to go into an account, whether it is on-premise or off-premise, and make a sale that is not going to be at the expense of someone else's placement. The number of slots on a shelf and the number of wine placements on a page are set. My ability to sell your wine is going to be at the expense of another brand. Who is that brand?

These winery salespeople look at me and go, "Well, we're a really fine winery, and we have these hillside vineyards and do barrel fermentation and..."

I have to repeat the question: "Whose place are you going to take in the market?" That's what a distributor's rep needs to know because that rep needs to go to the buyer with something new and exciting that is going to compel that buyer to make a change.

Jerry What I always used to say to winery salespeople was, "What separates you from all the rest of the 50,000-case wineries?" Your portfolio? Your style? What do you do that is different? Give me something I can hang my hat on that makes you different from everybody else.

Years ago Gundlach-Bundschu came into the market, and what made them different was that they had a sense of humor. Their posters, labels and corks were different. That really separated them from the rest because most of the people in the wine business don't have a sense of humor.

The distributor reps are the front line of defense; so if they don't like you, then you're in trouble. But if they like you, then you've got it made.

We had a winery salesman who rode with the distributor reps and talked with them, and just had a sense of humor. It meant a lot to the reps when they'd sit in meetings all day on a Friday and that winery salesman didn't keep them for 40 minutes. Instead he would give a funny presentation, taste a couple of wines and get out in 10 minutes. When distributor reps hear something refreshing, they with on a daily basis, and this is something you really need to respect. He's letting you into his inner world. Ask for his advice for approaching each different account. Take copious notes of your conversations and make an effort to get back to the individual buyers by following up with their interests.

10 Distribution "Do's" for Wineries: 1. Make the best wine you can. 2. Know your market. Know who your competition is—whose place are you going to take in the market? Do your homework! 3. Create a presence in the market. Have someone from your winery in the market, someone who knows buyers. 4. Know what makes your product different. Be able to articulate what separates you from the rest? Portfolio? Style? What's your hook or niche? 5. Work with a distributor whose culture fits your winery's culture. 6. Maintain an open, ongoing relationship with your distributor rep. 7. Keep product presentations short, light and to the point. 8. Don't get so wrapped up in your own story that you ignore the needs and likes of your buyers. 9. Run realistic programs for your market. Meet with your rep to tailor an individualized, realistic plan. 10. Ask your distributor rep for advice on approaching accounts. Take notes on "ride withs" and always follow up with buyers.

n your experience, what percentage of people from the winery do that?

Dominick I'd say 15 to 25 percent of them do that.

Jerry I think a lot of them take notes, but very few of them actually follow up.

Getting back to reps riding with winery salespeople, the first thing is to meet the rep away from the office because the rep will find 10,000 ways not to leave the office. Once you get in the car, check it out. Does he have your point-of-sale materials? Is the car clean and neat? This is your chance to endear yourself to the rep. Talk about his family, about this and about that, same way as you would talk to a customer.

It's selling, and you're selling yourself. If you make the sale to the rep, then he likes you and you can't do any wrong. He'll sell your product. Try to understand his plight; that means a lot to a rep. Ask him for his opinion, and it makes him think he's giving input.

Dominick So often the distributor rep will take the winery salesperson to see the buyer, and the buyer will say how much he likes a wine. The next time the distributor rep returns to the account, the buyer will say, "I didn't really like the wine. I just didn't want to embarrass you in front of the winery salesperson."

That's why I tell my reps to tell their customers to have the cojones to tell the winery salespeople when they don't like a wine. If the distributor rep and the winery rep both follow up on a call, it makes it more difficult for the buyer to back out of it. Administration is very important on this job.

As the consolidation of wineries continues—that is more and more wineries are purchased by large group corporations—there seems to be more shifting of brands between distributors. How is this affecting the distribution business?

Jerry As a distributor, you never know what you're selling until you go to work that day. Thguerrilla in their tactics. Some only look for certain wines and accounts. Wineries need to fit in with the culture of each distributorship.

What attracted you to distribution and gives you the most pleasure?

Jerry I wanted to get into sales, and liquor was one of the few jobs open at the time. After I got into it, I enjoyed it. Then I got into the wine, and I enjoyed that more. There's a challenge to selling wine that you don't get with liquor. You get a bottle of gin, and it's going to taste the same today as it did 20 years ago. Wine seems to change every year; it's never constant. I like wine, and I like to drink it. And there was a little bit of "I know something that you don't know." When I started selling wine, nobody knew anything about wine. I could pronounce "Cabernet Sauvignon," so I was at the top of the heap, and it made me feel good and I was making money at it.

Dominick I went to college so I wouldn't have to be a salesman. I found that if I was going to make it in the wine business it wouldn't be as a winemaker. What enchanted me about wine was that it's a little summation of the arts. I mean, in a glass of wine you've got culture, geography, history, climatology: all of these come together to make wine different. In the old days, some of the most educated people were the wine merchants because they traveled to foreign places and came back with stories. I realize that in this business, everyone has a really unique story to tell.

When it comes to wine sales and the three-tier system, "the times, they are a-changing."

Direct sales will not mean the end of the distributor network, no more than Diageo and Constellation purchasing winery after winery portends the end of small wineries. Like all other things in the wine business, things ebb and flow. The direct shipping controversy captures the attention now, but soon enough supplier/distributor relationships will evolve to the next stage.

When that happens, it will all boil down to how you get your distributor to perform for your brand. Listen to Jerry Henry and his 40 years of experience: "Separate yourself from the rest and tell a story with a hook that the rep can use." Fortunately, as Dominick Favuzzi reminds us, "In this business, everyone has a really unique story to tell." wbm

Note: This is the fifth in a semi-regular series of WBM roundtable discussions.
Previous roundtables can be found in the following issues:
July 2004 (Ripeness, p. 23),
October 2004 (Fermentation, p.12),
March 2005 (Pest Management, p. 42),
May 2005 (Barrels, Alternatives & Aging, p. 20).