Ep. 547 Alexi Cashen | Business Talk With Colangelo & Partners

Welcome to the Italian wine podcast's wine business talk series. Join us as we connect with our Italian wine podcast listeners all over the globe on all things wine and business. This podcast has been brought to you by Colangelo and Partners, the leading fine wine and spirits agency in the US. Visit Colangelo and partners at w w w dot calangelo p r dot com. Hello. Welcome to wine business talk on the Italian wine podcast. I am your host, Juliana Colangelo. Navigating the three tier system in the US can be a challenge for any brand big or small. Under the three tier system, a winery distiller or importer, tier one must sell to a state license distributor, tier two, who sells to a retail or restaurant licensee, tier three. This pipeline poses significant logistical and legal roadblocks for alcohol beverage companies who prefer to spend that time advocating for their brands or seeking distributors attention. Ellen Tanni imports is innovating the industry's logistics landscape by offering a modern approach to wine, spirits, beer distribution, and helping hundreds of global companies effectively navigate the US three tier system. Today, we have the pleasure of speaking with Alexi Caschen, co founder, and CEO of Ellen Tanni imports. Alexi, welcome to the show. Thank you so much for being here today. Thank you so much for having me, Juliana. It's an honor to be here. It's nice to see you again. You too. It was great to be a guest on your podcast back in August and nice and fun to kinda switch seats here. So thanks again for joining. Yeah. Definitely. So before we get into today's conversation on the US three tier system and everything that Ellen Tenny does, and we're we're super excited to dive into all that. Let's daydream a little. We all miss traveling. It's been over a year now that most of us have been at home, and this is the Italian wine podcast. So why don't you describe for me your perfect vacation day in Italy? Where are you? What are you drinking? What are you reading? Let's just daydream a little bit. There's so many wonderful choices with that amazing question. I, though, would definitely have to say being that I'm a Colorado native and a skier that I would definitely wanna be skiing. So whether that's in the dolomites or the Italian Alps, I would be skiing. But unlike in the US and Italy, I would be having a lavish lunch and really good bottle of wine at, you know, chalet or, resort hut In between runs. Sounds beautiful. I can picture it now. And a unique answer, because most people sat in the coast, the amalfi. So, a lot, we're switching it up going to the dolomites today. Beautiful. So last episode, we spoke with David Parker over at benchmark wine group. And we learned about Benchmark's direct import model and more about the fine wine market in the US. Today, we're gonna dive further into the topic of imports and take a a step back on the distribution chain. So to start, can you tell us a little bit more about how Lantenney fits into the three tier system in the US. Sure. So when we founded in two thousand and ten, we started the business as a service distributor. So we really set out our mission was to help smaller wine companies and wineries compete by creating a turnkey service. So being a service distributor, you might ask, well, what's a service importer, what's a service distributor? The main difference is that we do function in those top two tiers. So we can act either tier one as an importer or tier two as a distributor. We are doing that and offering that as a service. So we're not taking a percentage margin of a brand sales Instead, we're just charging for the service, the transactions, the maintenance, the compliance, basically a back office serve service that allows, like I said, an end to end offering for brands and smaller companies who want to compete but don't have all the licenses and or the labor to manage the day to day operations of both importation as well as distribution. That's really interesting. And what inspired you and your your co founder to start, Alan Kenny, and and play in the space of the service importer and distributor? So my co founder, Tim, Alan, and I, we both worked, at Polana selections, a reputable, wonderful distributor, porter in in New York City. And we were, you know, eager to compete in sort of, a smaller arena. There aren't as many businesses that do exactly what we do. This sort of service logistics and service distribution. And to be honest, the sort of, you know, reputation of many logistics companies was that, you know, a little tired, perhaps not technology forward, sort of this is how it works, you know, take it or leave it, and what we realize is there's a lot of hand holding that goes in, especially a brand that's really trying to gain market access or to make a a change. They really need sort of that consultative ad. So we do offer consultative services in addition to just this transactional distribution flow to really help and guide brands and companies through that process. But the impetus of starting was, you know, really, it just seemed like there was time for this type of business and this the the model that we created, but to really leverage technology. So we built custom software and proprietary systems from the get go that allowed us to scale a lot faster, a lot of our customers to have access to, you know, self serve information and and integrations with you know, each of our vendors and and just things that I don't think our competitors were wholly doing. Very interesting. So, you know, this last year, it's a pandemic. It's it affected us all in in so many ways, but Elanteni and and your company on the front lines with both importing and just distribution and all all those logistics, imagine it's affected your company quite a bit. So what have been the main impacts the pandemic has had on your business? And what are some of the new realities you're facing as a company? It's a great question. I would say that the main impact was also a bit of a telltale sign. So on our freight forwarding service, where we're consolidating freight from wineries abroad, mostly from Europe, importing them into the US, and then getting them to their respective warehouses for our import clients, We we were hit immediately. The impact, because we're at the start of that supply chain, we saw the effects of that pretty dramatically. You know, so as people staved off, obviously, of shipping any new products into the US, sort of the second lens to the pandemic was that because of our distribution service that tier two, we also then saw an immediate halt of sales, particularly, on premise to restaurants. You know, just a different price point that the stuff that was selling was definitely a, you know, a little bit more sweet spot and lower price point. But, yeah, just a ton of business fell off, particularly in the hospitality sector. Yeah. Of course. Yeah. And we saw that across the board and mean, those are sort of the obvious responses. It's continuing though to to have a crunch and an impact despite the improvement of the state of the pandemic. You know, the the currently, the global supply chain is a real strain on a multitude of industries, but for the alcohol beverage industry, you know, the ports of Oakland in New York have just been jammed and that congestion has been backlogged for a few months now. You know, getting containers out of ports, particularly you see the congestion in the port of Long Beach, which then has a really intense ripple effect across the other ports is worse than it's ever been. So even though we saw delays in the fall, for example, just due to several months combined and a shortage of equipment and drainage carriers, the current landscape of that global supply chain is tremendously worse. So that's been a a real sort of shaky effect to, like, the positive side of the pandemic, which is that, you know, Americans are consuming again, and there's more money in the economy. And yet that now that's having this adverse shipping effect. Right. No. Of course. Well, Sounds like from what you've you've told us so far about Ellen Tenny, you're an extremely innovative company that's looking for new solutions to some of these age old problems in the in the distribution system. So what are some ways your company has shifted or evolved to face some of these new challenges brought on by the pandemic. You know, Julia, the sir, our services really work in times like these when we started in two thousand and ten, you know, sort of on the the height of the, you know, the two thousand and eight economic crisis, we were really able to rely on our LCL, the less than container load freight service. So we built up a really robust service in that regard with multiple lanes from lots of different ports of origin. And it really gives companies a lot of flexibility, particularly in uncertain times like this. So, basically, the way that it's more efficient and is useful to companies is that our customers can ship custom time inventory. And so LCL in particular is a service that really works in times like these. Great. So you're you're set up well for to to face these challenges. That's great to hear. So, you know, the US is the largest importer of Italian wine. So lots of Italian wineries are navigating this complicated three tier system every single day. What are some of the biggest logistical challenges that Italian wineries in particular face when they're selling their wines into the US market? So there's sort of traditional routes to market and then there are sort of other routes to market. I would say that a winery is either established in the US. They're trying to get started in the US, or they're trying to make changes to their existing US distribution strategy. So if a winery has, you know, established sales and presence in the US market, you know, their challenges might be that, you know, they're getting lost perhaps in a larger portfolio. The sort of historical trend of distributors that are constantly consolidating and merging presents challenges for for brands that are you know, now one of thousands of skews. So sometimes established brands are needing to make changes because former distributor just isn't working out or they're they're being overlooked in that portfolio. Sometimes they need to make a change too just because of the way that their sales strategy has changed or their products are changing. And, you know, in in those cases, they need a little bit more autonomy. Oantenia imports really offers that autonomy where your brands can sort of take matters into their own hands and take a a lot more control of their brand's destiny in the US back into their hands as opposed to a third party importer who's sort of in control of that brand's success and where it's selling. You know, we can help brands get inventory here in the US And then from that stateside inventory, they can then sort of choose which of their distributors they want more regionally. And then, you know, there's challenges with brands that are just getting started. So brands that are emerging that are looking to gain access in the US And, you know, they can't get the attention of the distributors who again have thousands of SKUs and hundreds of brands to represent. And so in many cases, it's very challenging for a newer brand to find those right relationships and distributor agreements and appointments. And so, again, we can kinda help them start slowly and allow them to have that stateside inventory so that when they do appoint and open up a new market, the inventory is already here. It's ready to go. It could get picked up in a week. So that there's no slowdown of sales, even though their sales trajectory is still kind of slow in building. So it just kinda helps to keep the inventory in the right spot as well as the fact that, you know, the US is comprised of fifty states, and each of those states has their own host of compliance rules and regulation. So if an emerging brand is getting started and wants to have that autonomy and control, they need help navigating the really dense compliance matrix. Absolutely. And I think what you're saying about getting started and having your samples and your product in place and ready to go is probably something that gets lost or overlooked sometimes when a brand is looking for distribution, but something that's really important because if you, you know, make an agreement, and then it's gonna take six months to get the product over, you know, you might be forgotten by that point. So having the product ready to go and in market, I mean, that that's key. So I think it's a really great point that you bring up. There's also a compliance element to having stateside inventory because so many distributors and and many brands by DI. Right? So their, let's say, their regional distributor importer in Texas buys direct from the winery abroad. The US is compliance restrictions surrounding primary source, which means that only one source can sell into that state of Texas. So if the importer in Texas is de eyeing and then all of a sudden the winery now has stateside inventory, we can't sell it to them, you know, because there can only be one source. So it's kinda having the fortitude for a brand to say, okay, this is gonna be my strategy. I'm gonna keep stateside inventory so that I have continuity of supply and you know, also it'll just streamline a lot of that compliance so that there aren't any issues with with that source. Right. Right. No. That's super interesting. So, you know, let's talk a little bit more about what you're seeing in the market through your work every day for Italian wine. We know Americans love Presecco. It's been a hot category for a while. Are there other trends out there that we might not be aware of? You're absolutely right. Sparkling is hot in general. Obviously, Presecco is the is the leader there, but I would say that there is genuine interest in others, sparkling, like Lambrusco. There might be finally a growing interest in Italian whites, which are more than half of the country's production, even though Americans always see Italy as a source for reds. And there seems to be a lot of talk about and writing, about Bernelo, which is possibly thanks to the release of the second epic vintage in a row. But in general, I think the luxury category is strong and growing, especially now that everyone is spending money at home. Yeah. Absolutely. That's something that we talked about with Dave on the last episode. The the luxury categories, you know, do doing well right now. You know, the the tariffs were another topic that's been on everyone's mind these days as well. How did Ellen Tanya receive the news that tariffs are being suspended? And since Italian wines were less affected by the tariffs, have your clients that import Italian wine made any changes in response to that news? Great question, especially since the tariff conversation was one that was very near and dear to my heart and one which that I spent a lot of time and energy and personal efforts lobbying against. Unfortunately, when the suspension of the tariffs came, I wasn't entirely relieved. At Elantoni imports, we remained, you know, deeply concerned about the global supply chain constraints. So even though there was this relief on one side, there was still this incredible headwind on the other hand. So, you know, I think that that's definitely been a little bit of a challenge. You know, I I'm certain though that the the supply chain issues that those kinks will unwind themselves. And hopefully, we have brighter days ahead But, yeah, it was definitely challenging to have this sort of lopsided feeling of, like, quasi relief instead of true relief. Right. Right. Well, hopefully, we we get true relief soon. Yeah. I hope so. I hope so. And, you know, in terms of our clients, it's interesting. I I had an importer, an Italian importer call me right after the the tariffs were suspended. And I was surprised by what he said. He wanted to double down on his purchases and inventory this spring just so that he had enough continuity of inventory for, you know, you know, early summer. And this was largely just due to the global supply chain issues. So even though Italy has not been affected by tariffs, I was amazed that this importer wanted to basically double his order volume. And it's interesting because that was the same strategy that a lot of our clients were implementing when they were buying long on inventory during tariffs. So during tariffs, they were trying to sort of potentially circumnavigate, you know, even larger tariffs or maybe the thought that these carousels would include Italy or include Champagne. I think there was a lot of trepidation. And so I saw a lot of that, like, doubling down buying strategy. And it's just was ironic to me that right on the day that tariffs suspended, that that that activity was still going, that sort of you know, more feast or famine buying also though just due to the supply chain constraints. Yeah. That is interesting. I mean, it'll be definitely everyone's waiting to see how the long term effects in in both consumer and trade behavior, following the the pandemic and how things go back to quote unquote normal. Well, time will tell. So thank you so much for joining us, Alexis. It was so great to have you on today to talk more about Ellen Tenny and how your company works within the three tier system. It's super interesting. And to our listeners, you can learn more about Ellen Tenny. You can visit w w w dot ellentenney imports dot com. That's e l e n t e n y, or email support at ellentenney imports dot com. Thanks again, Alexi. Thanks so much. Thanks for having me, Juliana. See you again next week on the Italian one podcast for another app visit of wine business talk brought to you by Colangelo and Partners. For more information on this series, you can visit Colangelo and Partners at w w w dot colangelo p r dot com. And remember to rate our show wherever you listen to our podcast.