Ep. 1270 Deborah Gray | Get US Market Ready With Italian Wine People

By now, you've all heard of Italian wine Unplugged two point o. The latest book published by Mamma jumbo shrimp. It's more than just another wine book. Fully updated second edition was inspired by students of the Vin Italy International Academy and painstakingly reviewed and revised by an expert panel of certified Italian wine ambassadors from across the globe. The book also includes an addition by professor Atilio Shenza. Italy's leading vine geneticist. The benchmark producers feature is a particularly important aspect of this revised edition. The selection makes it easier for our readers to get their hands on a bottle of wine that truly represents a particular grape or region to pick up a copy, just head to Amazon dot com, or visit us at mama jumbo shrimp dot com. Thanks for tuning in to Get US Market Ready with Italian wine people on the Italian wine podcast. I'm Steve Ray, your host. And this podcast features interviews with the people actually making a difference in the Italian wine market in America, their experiences, challenges, and personal stories. And I'll be adding a practical focus to the conversation based on my thirty years in the business. So if you're interested in not just learning how, but also how else, then this bond is for you. Hello, and welcome to this week's edition of Get US Market Ready with Italian Wine People. I'm your host Steve Ray. And this week, I'm really, really pleased to have as a guest Deborah Gray, who is the author of the book How to import wine. Deborah, welcome to the show. Thank you so much, Steve. It's wonderful to be here. To give the people listening, a point of reference on this, I've been consulting with clients on how to come to the US market for probably thirty years working on on brand development stuff. And then one day, I found somebody wrote a book called how to import wine. And and I just called you up on the phone and said, my god, this is the best thing I've ever heard of. I mean, how come I never heard of you? Who are you? Where did you come from? And I was I was probably, like, maybe ten, fifteen years ago. But from that that point in time, I've just always been amazed that what you've written. And now it's come out in the third edition. Tell us about where the book came from and what your background is and how you came to do it and why is there a third edition. Oh my goodness. Okay. Well, starting at the beginning, I suppose, and trying to go through quickly, you know, my background or we'll be here all day. I started my wine importing business in nineteen ninety two to help my, family, my father, as brand. He had had two disastrous experiences with, US wine importers. And I thought, even though I'd never been in the wine business, had never had any experience in any facet of it. I I thought, look, I really would love to do this. So I started the business then with, several Australian wineries. And, and embarked on what was a really great and growing career, an important career, you know, lots of very, very, learning curve challenges and so on as you proceed. But Australian wines went from, when I started from unknown to very, very popular. And I I was very busy and traveling the country and so on, and then the recession hit. So two thousand, end of two thousand and seven, the wine sales were were dropping around the country, and really coming into two thousand and eight, the real beginning of the recession, I suppose, for most people, they ground to a halt. Exchange rates went in the wrong direction with Australia. There was real pushback to ratings that, for lines that were falling apart. Even though they got high ratings, there were all kinds of things. And as a result, I had almost no sales, even for very highly rated family owned well regarded vineyards. So in I started pivoting towards some, other things, helping other people who had lost their importers. And in two thousand and nine, I had a lot of time on my hands. And as they say, necessity is the mother of invention. I decided it was time for me to write a book. I had wanted to do it for a long time. I felt a real need to help people learn things that they didn't have to, reinvent the wheel to learn like I did. I had nobody in the business when I started that would help me. I had my first, distributor in Atlanta. I was in Atlanta at the time. My first distributor said, don't do it. And when I went we went to him with the the idea, I wanted to do this with my family's wine, don't do it. Terrible idea. You'll never make it. So I learned everything by myself. And, through terrible trial and error, the executive editor of wine spectator said when he reviewed my book, these were often painful lessons And, and they it's true. I thought of it as I'm just gonna get through this. I'm I'm stubborn. I believe in getting through to the other side, and I was just gonna do it. So I thought I wanted to write a book. And that's how the, the first edition of how to import line came about. I then thought I've got to find a, publisher. I was told, don't worry about finding an agent because, and it won't be of interest to an agent because they won't have enough sales to have commission. I researched publishers, looked in, you know, online and also in places like Barnes and Noble. And I'd look at wine books, and I'd look at business books, and and one stood out for me, and I I rang that publisher because I didn't see their submission guidelines. And I ended up speaking to the editor, which I thought was very unusual, but I said, look, I have this book, and this is the subject matter. And he goes, we don't have anything like that. And I said, I know. I've researched this. I know. And I didn't have any help when I first started. And that's why I've written it. Because you've written it. And I said, yes. It's finished. And he goes, well, send it to me. I I I want it. So that was the start of my publishing journey. So fast forward. It was two thousand Came out in twenty eleven. Lots of editing and so on. And as you do, there's all this formatting and insertion of photos and diagrams and templates. So and then it missed a publishing kind of, you know, optimum time in two thousand and ten. So it came out two thousand and eleven. And you've you've revised it once, and now the new third revision is out and tell us what's different about the, third revision from where you were originally in in addition number two. Well, The second edition came out in two thousand and eighteen, I think. So it seems like not that far back. But in fact, a great deal has changed since then. You know, we were in the middle of a recession when I wrote the first one a very deep global recession, and we were in the midst of the pandemic when I wrote this third one. You should stop writing books, just point of reference. My writing precipitates, and I think I I I see what's happening, and I think we've got a lot of things changing. And of course, trends were changing, buying habits were changing, all sorts of of things that were, I think, important to address. In addition, regulations and licensing and how TTB, the alcohol tobacco tax and trade bureau was operating, did, would change because everything also was online. And there were no for licensing, for example, you didn't go into an office anymore. There was so much that was now put online or you handle with phone calls and so on. Lots of things changed. As a result, I and and apparently, I can't stop writing. Because I not only revised the entire book, but I added a hundred and two pages. Great. Yeah. I'm I'm just thinking about somebody once told me a creative director of mine when I was on the advertising side said, writing is is very easy. You just put a blank piece of paper in the typewriter. That's how old this is. Right? He says, and open up a vein. That that's right. Exactly. Yeah. Well, I love writing. I love research. I love writing, and I love the pursuit of details to get them right. So it took me, you know, a year or even though it was a revision and not a new book, took me a year or so just to to do that. I mean, very fortunate to be the recipient of wonderful reviews and very kind remarks, but I live in fear that somebody points a finger and says, no, it isn't like that at all. And so, you know, I I really, take pains. And not that I won't have made mistakes or I'm not completely up to date in some area perhaps, but, I hope that it's worth, buying the, another edition, even if somebody's had well, certainly, if they've had the first one. You know, so many things that would be completely outdated in that one. So, somebody did wanna buy the book, give us the title, and where would they go to buy it? It's how to import wine an insider's guide. It's the third edition, and it is available currently only on Amazon. Now it's Amazon in any country, but that's the only place at the moment. Okay. So go to amazon dot com and, order how to import wine, an insider's guide. Third edition. I self publish this. And where, because I my publisher has not pay my books continue to sell. Steve, even though, you know, it's not a New York Times best seller. It's still thousands and thousands of dollars. He hasn't paid me royalties in three years. And I finally, instead of suing him. I gotta, because that's been a lot of money for me to pursue. I got an attorney to get my rights back. So he didn't pay me anything of the thousands he owes me, but I got my rights back, and and I didn't realize, and you learn a lot along the way, but the you get your rights back to your content, but you don't get your rights back to the books that are out there. So I had to get a third edition out there to UC to stop, not stop because he can still sell the the second edition, apparently, in the first edition. But to supersede those sales if possible. Cool. Very interesting. I I never would have thought about them. Yeah. It kinda is a a great phrase. I like to repeat that experience is what you get when you don't get what you want. So now you've got all this experience and Yeah. Let's flip over to what do you do for a day job these days other than writing books? You've got the third edition out there. That's that's that's great. You had at one point in time a, an import company called Bluestone imports, and I believe at the time you're living in Southern Cal, San Diego? Mhmm. And now, so what do you do for a day job? Well, I, primarily consulting. I still import two brands, but as more of an agent than, hands on. I don't do the there is no such thing, by the way, for anybody listening as an agent importer. There's no such term. But if you are doing what I'm doing, it's the compliance and logistics of it. My licenses are in place and current. I have a licensed location in California. So I'm a licensed importer and distributor, but my current location is in Australia. So I import these two brands and somebody else's during the sales in the US. In addition, I am consulting which is probably my primary business. I enjoy that tremendously. I consult these days over Zoom or WhatsApp on email, which a lot of people use, to ask me questions. I do a lot of other services for them, which you'll gain online or email. And till recently, I was, teaching at San Diego State. I was teaching wine importing and distribution for nine years. I had give that up. Unfortunately, I had to give it up because of the location here. And, it was with such regret, but, you know, that's that's one of those things when you, you know, trade off, but because I I love teaching. I loved my students. I loved the classes. And so primarily consulting, doing some more writing, and the, importing. So tell me a little bit about the consulting. I mean, you and I kind of operate in parallel ways. I think we're we're we we work in different modes and models, but we're doing the same thing. We're working with, export brands who wanna come to the US market and help them address and overcome the challenges. In many cases, they don't know what the challenges are. That's the reason you wrote your book and I wrote mine, but even with the information published in the book, when it comes down to actually making things happen, it's still challenging. So knowing all the parameters about it is very different than being able to do it. Having done it many, many times yourself, it becomes much more efficient and insightful when you're doing it. What kind of services are the clients coming to you and asking for? And is that the kind of services that you think they should be asking for or that they really need. Interesting question. Well, my current book is four hundred and twenty two pages. And if I were to cover everything that people need, to start their businesses. It would be two thousand pages. And even then, I think somebody would come to me and say, oh, but I still need this or I didn't quite get that. Or I I got all of this information, but how do I apply it here? So the kinds of consulting I do is a a great percentage of them as new new importers or people who are wondering should they become importers or should they become distributors I have, so called foreign wineries, non US wineries who, come to me and ask how they can get into the market. They're looking for an entry point. They're looking for the way to attract an importer, and and and the logistics of maybe, you know, doing it. So there's all sorts of things. They often no. They usually don't understand anything about the actual, mechanics of it. And I always tell people my objective is to not just demystify it for you, but to save you time and money in avoiding the pitfalls that I, for example, fell into every single one. And I I think the benefit, you know, my experience is a great asset in trying to help these people navigate the US. Right. That's great. The way I've I've phrased that is help people not make the same dumb mistakes everybody else made before them again for the first time. It seems that people seem bent on doing things that don't work that everybody in the industry knows it doesn't work. But since they're not familiar with the industry, they think it will work. You use the term, agency brand, usually for the benefit of the audience, the agency brand means that you're selling the products to the importer and the importer then takes on some, almost, if not all of the responsibility of actually selling it, so they would have a sales force and so forth and distribution network and all that kind of stuff. But what seems to be happening in the US is there's fewer and fewer importers who are maintaining that agency brand model and going much more or there there's movement towards having some stake of equity and or ownership or in the brand itself in some manner, shape, or form. I've seen this in a lot of the contracts that that I've been negotiating. Have you been seeing that as well, and what's your point of view on that? I have not, to be honest with you, Steve. I know that there are many different ways that people are now trying to navigate the new markets, the new, ways of doing business, I I'm asked often about online sales and how they can go about getting direct to consumer. I know that they want to not only reach the end user, and, but get those extra margins. I I don't get a lot of people, who are invested in the brands as much. Although the brands themselves often want to partner with some sort of a compliance company in the US, which can be very attractive, but they have to understand that if they're going to use that kind of a model, they have to also have somebody on the ground. Because it does provide the licenses. It does provide a lot of the logistics and compliance, but they need to investigate further and see whether it's also going to provide the sales help Yeah. The, another word for that is service importers and and some that we're all familiar with. And I've worked with in the past, include MHW, Park Street, Ellen imports, USA Wine West, So you you but you you mentioned something I think that that's critically important here. And that is people are looking to go direct to the consumer. They're looking to bike past the three tier system. And, you know, the argument is, gee, why is everybody else making more money on my wine? Than I am when I have to own the land, deal with the weather, and the equipment and personnel and the risk and weather and all that kind of stuff. They're looking for, an easy way around. Is there a way to bypass the US system? Or is this just a pipe dream? Bypass is not the right term these days. There is no way to bypass the three tier system. There is a way to find new ways through it or to take advantage of more margins. So, unfortunately, it's very three tier system, which for anybody who doesn't know, and that may apply to many people listening, is in the case of the imported brand, it is the, importer. It's it's when it comes into the country. So it's the importer, the distributor, and the retailer. So at each of these places, there are markups. And the the the the the US model, which came in after prohibition, required this kind of separation of tiers, as a way of, I suppose, of protection. But what is really protecting is each state's distributor. And those distributors in those early days post prohibition had enormous power to legislate and lobby and get laws in place. They have, in many cases, since being challenged and successfully challenged. So there's a lot of of opportunity and very porous areas of the three tier system. So that you can do, all aspects of it in some ways, for example, in Oregon and California. You can use a third party. You can be an importer and distributor, which are two wholesale tiers. And and get a third party to do the retail tier, but you still control it. So there are ways to do that. There are ways to, in a way, circumvent the distributor, but you're not really by selling to a chain in a state. So you're not really selling to that chain as the important, for example, or the winery. You are selling to their clearing distributor, and something happens called Touch The Doc. Your product goes into that state. It has to go to the distributor's warehouse in effect touching the dock, strange paperwork, and on it goes to the retail chain. Now because that clearing distributor is making a very nominal amount. You have a very attractive arrangement with that chain, and it's in their best interest to continue to do business with you because their markups can be really good, and your markup can be really good. So there are many ways around, if you will, the traditional three tier system, but it's still firmly in place in a lot of states. Italian wine podcast. Part of the mama jumbo shrimp family. You touched on an issue there, and I think it it's really important. There's there's a tendency to think we'll as I said, why is everybody making more money on my brand than I am? And that has to do with the markup at at at each level. But it doesn't mean that the distributor's not doing anything. And in fact, in in absolute counterpoint to that, the distributors do a ton and they're the ones that have the relationship with on and off premise retailers, and can facilitate doing all this stuff. So it's not something that you don't wanna do, but you wanna find a way where everybody in the in the system is making money. The bottom line is you can't manage somebody else's margins. So figure out a system that works for you so that you are making an adequate amount of money in the US. There is because of the three tier system, generally speaking when it comes to wine, we look at, you know, retail prices being something like three and a half to four times the accelerate price. And that's where a lot of people get, you know, very upset about, but the reality is each of those tiers is doing something very important. And that's been basically part of the system since prohibition in in nineteen thirty three. So rather than trying to find ways around it, the the better solution I found is to find ways to work within it. Very true. And also what people don't perhaps think about or recognize or understand is that those price markups are not those margins are not profit margins. They are tracking and warehousing and state taxes and local taxes and, salespeople and so on and commissions and whatever. There's a lot that goes on within, the, that, each tier. That takes a lot of money, and the importer travels, and the importer is spending money on shipping and trucking and and so on. And an incentivizing and all of those things. In some cases, though, it does give you if you can control more of those tiers in a way that still works within, the legal system, it gives you not only better margins, but it gives you more control over your brand. And and more exposure to more places to sell it. And at the end of the day, that's what we all wanna do is sell more, four more, two more. And, that's kinda what the distributors have is the relationship with the many retailers in a in a in a territory. But back to the the point about the import structure, one of the other options that a lot of people ask about is, well, can I set up, my own import operation in the US? In many cases, it's the ones that have done it and have done it successfully. I think of Santa Margarita USA. Pasco has just recently done it. Obviously, I'm thinking in terms of Italian wines, Zonine. It it allows them to get a hundred percent of whatever the resources that they have in the US are focused on their brand exclusively. The flip side of that is you don't get the benefits of all that a distributor is bringing to the party. But for a new to the US brand, is that a strategy that someone should even consider? It is definitely an option, but it is a more complicated option. It's one that could have tremendous rewards ultimately, but the logistics of it can be quite complicated and would need guidance. I think that to to avoid having it really be a failure or not even get off the ground to begin with, you'd need some consulting, help and, really some some expertise to be able to do it. It is doable for certain people, but it would have to, be planned out. So that's what you and I exist in the world for now. Somebody kinda parsed their way through this. I actually have done that for a couple of people. I and it and the people who, knew to the business, have some resources, had some, ability to set up an office Both of them had happened to be California, although I consult to people all over. They were one was from Austria and the other from Mexico, and each of them had, the right components in place, but really needed those steps that they didn't have. A lot of missing steps along the way. It's like being able to see to the other side of the canyon, but not having a bridge yet. Yeah. Great great analogy. So that leads to this question. What are can you give us, an example or two of the common mistakes? Many people knew to the US market. Make? How long do we have? Not long enough. That's how long is your book four hundred and twenty four pages. Right? Pick a page. Putting together the wrong mix in a portfolio. Having wines that compete with each other, for example, and and as I say cannibalize each other, not considering your market. Looking at your own palette, or relying on your own palette, and not a buyer's palette. Going to friends and say, what do you think? Oh, I love this, and they're all drinking away, you know, at this in the sunset, and you go to an an actual buyer. And somebody with some Alier or somebody who really has some knowledge. And they say, yeah, this is quite good. How much is it? Oh, no. Couldn't do that. That's way too expensive. It's also not considering are the right mix in your portfolio and bringing in too much of it, not considering warehousing fees while it sits there getting older. It is many, many things, and really not looking, you know, one of the biggest things And I'm not a big, finance person. That wasn't really my back. My education was in management, but not in the wine industry, but not really finance. I've got a rudimentary knowledge of spreadsheets and things. But I think it's extremely important to put together a budget. A mission statement and a budget. Now the mission statement doesn't have to be something that you put anywhere or put on your your your website, but something that you say. This is what I wanna accomplish. This is how I wanna go about it. And the budget says this is what I'm allocating to freight, to licensing, to the purchase of wine, and so on. And that way you see, oh, gosh, I guess I'm not either this one I can't afford to buy because it's only gonna sell it this, or I can't I don't have the money to start with this amount of of purchase. One of the things that people do, and I'll I'll stop after this, I think, because I could go on as really I could go on forever. But one of the things that people think they need to do is put together a whole container. And they because it is, yes, it's more economical per case if you can fill your own container. But if you factor in how long it's gonna sit in a warehouse and not having the distribution and how long it's gonna take you to sell it and having you have to pay for it. It's not economical. It's much better to bring in a pallet or a few twenty, forty, fifty cases and see, you know, really keep within that budget. Okay. One of the first things that potential people in the trade, importers, distributors, retailers, whoever you're talking to, are going to ask is do you have scores? And oftentimes the reason they're doing that is because they want to end the conversation because if the answer is no, they can politely say, well, when you get scores, give me a callback. Goodbye. So they don't have to waste their time to do it. So having scores is something that preempts, a no answer. So I like to counsel my people to get scores and get numbers. There's a lot of argument about whether, you know, wine spectator, but wine spectator doesn't allow you to enter brands that are not currently sold in the US and on and on. But scores seem to have a very significant play a very significant role in consumers attitudes and less so in the trade. Can you comment on that? I think Scores overall play a much, more reduced role than they used to. When I got a ninety eight parker rating from the white advocate, for my wines, which I did. Ninety five, ninety seven, ninety eight, that it just there was no question of having to sell it. It just flew out the door. When the recession hit, I couldn't sell those wines at all. And that became, as we moved into sort of, the consumption trends changing, that became a little bit part of the pushback is that people didn't wanna rely on spores as much. They wanted more of their own, peer, recommendations, experimenting, going and and looking for things to to buy more economical wine and so on. Scores I think are still very important for high end wines, and they're still attainable and achievable and work for high end wines. And I know that from personal experience. But it is in concert with many other things, the working the market, what type of a distributor you have? How good those distributor salespeople are going, at going out and selling the product? What connections they have. How good their reputation is so that they can go in and say, look what I found. I have this great line. You know, you've you need to try it and they will. Now when it comes to finding a distributor, Yes. That that becomes an initial sort of carrot, I suppose, but I think it's still very possible to find them without it, depending upon who you target. And, what kind of wines you have? One point I mentioned when you were talking about margins earlier is one of the tools you had in your earlier editions. I haven't seen edition three yet. I'd look forward to to getting it in a day or two, but you have some price structure tools in there, spreadsheets that people can refer to. Is that correct? I do. And that's a good opportunity for me to say. I don't do what a lot of people do. And this is where going back to saying I'm not the finance person, but I do know where pricing sits. And I make it really, really simple. We cannot, as importers or wineries, we cannot control the distributor. We cannot control the the, retailer, and we can't control the restaurant. So you can't say, okay, we can factor in this for trucking, in this for mock ups, in this for, for for state taxes, and so on. But by making it simple markups at each tier. I believe I've arrived at a retail that covers even sort of higher end places where the retail might be a little bit higher. Maybe it's lower in some places. Maybe it's middle of the road and others, this will be a general retail. And I will say also that it's crept up over the over the years. So that although I think the importer markup is pretty static, and perhaps it it should or could go up. The distributor and retailer is definitely higher. And for when we say their markup, it's not really so much their their markup as all of the attendant costs. Fuel has gone up for trucking. Maybe commissions and salaries and, rents and all those kinds of things. So, but definitely trucking and fuel. So, that's what I did. Bam, bam, bam, three tiers, three markups, three margins. One of the things I like to end, my interviews with is question of what's the big takeaway? Is there something that somebody listening to this podcast can put to use immediately from some of the things that we talked about. What what what's the big takeaway from your perspective? Okay. Well, despite all the challenges that we have encountered as as an economy in the US and globally, I believe this is still an exciting and dynamic industry. And there's still opportunity for new importers and new wineries entering the market, new brands. I'm still passionate after thirty years. And in helping people and about, helping people realize their dreams. I think that the important thing for anybody starting out with it is to understand that they cannot do it without prior knowledge and experience. So they need to have resources. They need to have either people or or tools or mentors or consultants are real guidance because there are too many ways in which to make expensive mistakes. So that I suppose is what I think about how people should approach it in looking at the US market. It's not a throw it against the wall and see what sticks. It can be a very worthwhile endeavor. It can be a very fruitful and joyful and productive endeavor, or it could be something that is just not gonna work if you don't have the right tools. Great. We're talking today with Deborah Gray. Author of, how to import wine and insider's guide, which is available on Amazon. And I highly recommend and has been influential to me. It's a resource I keep by my desk and it influenced me in when I was writing my book and also doing consulting. So, Deb, thank you so much for joining us today. It was my pleasure. And thank you so much for inviting me. I've really enjoyed it, and I really appreciate the opportunity see. So this is Steve Ray saying thank you for listening and join us again next week for another edition of Get US Market Ready with Italian wine people. Thanks again for listening. This is Steve Ray with Get US Market Ready with Italian wine people on the Italian wine podcast.