
Ep 2378 Barbara Fitzgerald interviews Barron Beltz | Masterclass US Wine Market
Masterclass US Wine Market
Episode Summary
Content Analysis Key Themes and Main Ideas 1. RNDC's Exit from California: The immediate focus is on the reasons and implications of RNDC (Republic National Distributing Company) ceasing operations in California. 2. Dynamics of the US Wine & Spirits Distribution Landscape: The discussion delves into market consolidation, competition, and the challenges faced by distributors, particularly in major markets. 3. Impact on Stakeholders: Analysis of how RNDC's withdrawal affects various players, including large suppliers, small to mid-sized wineries/distilleries, retailers, and employees. 4. Challenges of the California Wine Market: Specific difficulties of operating in California, such as high costs, intense competition, and the unique role of self-distribution. 5. Go-to-Market Strategy Re-evaluation: The need for wineries and suppliers to rethink their distribution and growth strategies in a challenging market. 6. Future of the US Wine Industry: Broader perspectives on market downturns, the resilience of wine consumption, and the stability of the three-tier system. Summary In this episode of Masterclass US Wine Market, host Barbara Fitzgerald interviews Baron Belt, a veteran in the beverage alcohol industry, about RNDC's recent decision to close all operations in California. Belt provides historical context, explaining RNDC's rapid expansion and the disruptive entry of Breakthrough into California, which intensified competition. He highlights the unique challenges of the California market, including high operating costs and its highly competitive distribution landscape. Belt discusses the significant ripple effects on various stakeholders. While large suppliers like Treasury Wine Estates will likely find new homes quickly, small to medium-sized wineries and distilleries will face immense difficulties in securing new distribution, with Belt advising them to leverage their networks for introductions. He notes that this situation presents a mixed bag, with ongoing consolidation in other parts of the distribution sector alongside RNDC's localized withdrawal. He addresses the viability of DTC (Direct-to-Consumer) models and the overall state of the US wine market, acknowledging current declines but expressing long-term optimism rooted in wine's historical appeal and the eventual economic empowerment of younger generations. Belt strongly defends the enduring relevance and efficacy of the three-tier distribution system, viewing it as essential for navigating complex state-specific alcohol laws. He concludes by offering practical advice for brands to protect themselves from volatility, emphasizing proactive engagement and a ""go narrow, go deep"" approach rather than broad expansion. Takeaways * RNDC's exit from California reflects the intense competition and high operating costs in the state, which has become a very challenging market for distributors. * The disruption will most severely impact small to mid-sized wineries and distilleries that relied on RNDC, as finding new distribution quickly in a consolidating market will be exceedingly difficult. * Major suppliers will likely find new distribution homes without significant long-term issues. * The three-tier distribution system is robust and unlikely to be fundamentally altered despite market turbulence. * Wineries are advised to proactively engage with potential distributors (leveraging networks for introductions), prioritize core products, and maintain direct relationships with accounts. * The current downturn in the US wine market is significant, but the long-term outlook for wine consumption remains positive due to its cultural history and generational shifts. * Distributors, including RNDC, are making strategic moves to consolidate resources in stronger markets. Notable Quotes * ""The wine and spirits pie is not getting larger in these states. It's just getting more divided."
About This Episode
In this Master Class wine market, the speakers discuss the potential disruptions of the industry due to the coronavirus pandemic and the challenges faced by small and mid-sized brands and distributors. They advise callers to find the right distributor and avoid wasting their time with them. The speakers also emphasize the importance of protecting oneself and finding the skill sets best within each team member. The discussion touches on travel hacks for the wine industry, including eating light, getting more sleep, and aligning with the time zone.
Transcript
Barrin's rich and expansive career in the beverage alcohol industry has spanned over three decades. And he's led executive roles in both wine and spirits distribution and winery capacities. He spent six sixteen of those years with RNDC in Texas and Oklahoma where he began as a sales rep and progressed into vice president of sales and marketing. He's now president of South Napa Vittners, a part of Sonoma spoke, which is a custom producer of ninety plus point rated California wines and private label brands. So in this episode, our three key takeaways and what we're really excited to learn from you, Baron, are first, what fifth does RNDC's exit reflect in the distributor landscape? So we'll talk about context and root causes. Second, what will be likely significant disruptions for suppliers, retailers? On premise accounts. So the stakeholders and the ripple effects from this kind of near term disruption. And then third, how is this a catalyst for rethinking go to market strategy in California? So we can talk a little bit more about the future of distribution restructuring and trends. So let's get right into it. Welcome to Masterclass US wine market with me Barbara Fitzgerald. In this show, we'll break down the complexities of selling wine in the US. By discussing the relevant issues of today with experts from around the globe. Each episode serves up three key insights to help elevate your wineries presence in the US market. So grab a pen and paper, and let's pave the way for your success in the US. Hi, everyone, and welcome back to Masterclass US wine market. Today, I am thrilled to welcome Baron Belt to the show. Baron's rich and expansive career in the beverage alcohol industry has spanned over three decades. He's led executive roles in both wine and spirits distribution and winery capacities. He spent sixteen of those years with R and D. C. In Texas and Oklahoma where he began as a sales rep and progressed into vice president of sales and marketing. He's also worked in senior sales management roles directly for wineries such as the Hess Collection, Michael Mandavi family, and their luxury import business folio wine partners plus Santa Margarita in Italy and Sokal Bolser in the William Valley. He's now president of South Napa Vittners, a part of Sonoma bespoke, which is a custom producer of ninety plus point rated California wines and private label brands. He lives in Dallas Fort Worth with his wife and two daughters. So, Baron, wow. That is such a great background and a great person to have talk about this subject. So thank you so much for joining us today. Thanks for having me, Barbara. It it's tough to put thirty years into a paragraph, so well done. Yeah. Thank you. Thank it is tough. Well, before we dive into today's discussion, Baron, can you us just a little bit more about your background and how you found your way into the wine business. Yeah. That is a long story, so I'm gonna give the short version. So I was a grocery store manager, and I kept watching all the vendors come in and one day there was a guy that was stalking clearly Canadian. That brand's kind of had a bit of a resurrection, but it's the teardrop blue bottle, you know, with sparkling water and blackberry, strawberry flavor. Anyway, That's how I got my start in the beverage industry. What I didn't know at the time when I took that job was that I was working for one of the largest wine and spirits distributors in the state of Texas. But, about six months after selling water, they called us the water dudes One of the wine managers approached me and said, hey man, you can sell water. Do you know anything about wine? And, Barbara, my response was, well, some of my friends like wine coolers, but I don't care for them. And he just kinda looked at me like, is this guy for real? Anyway, that was my start into the wine industry, and that's what I've been doing ever since. Wow. So you turned water into wine. I think you're in good company. Right. Yep. There's a gray parallel there for sure, but You know, from that point, you know, I spent about equal time both in distribution and on the supplier side. So unique credentials from the standpoint that I understand this business from both sides of the industry because I've spent so much time in in both capacities. So I love this business, but more than anything I love the people in this business. That's what keeps me going day after day. And you gotta like the product. I couldn't sell widgets. So, yeah, it's a good fit. Yeah. But here here, the people of the wine industry may get so special. Absolutely. Well, as you mentioned, and as we discussed, just with your background, you've spent so much time on the sales and distribution side of things. It's also time with our NDC specifically. So we're just a few days out from their announcement of closing all operations in the state of California. So you're gonna help us kind of break that down today, understand what the larger implications of this are. So in this episode, are three takeaways and what we're really excited to learn from you, Baron, are first, what fifth does RNDC's exit reflect in the distributor landscape? So we'll talk about context and root causes. Second, what will be likely significant disruptions? For the suppliers, retailers, on premise accounts. So the stakeholders and the ripple effects from this kind of near term disruption. And then third, how is this a catalyst for rethinking go to market strategy in California? So we can talk a little bit more about the future of distribution restructuring and trends. So let's get right into it. Yeah. Let's do it. So like I said, we're gonna start first with kind of context and the root causes. So give us the big picture. What are the major factors that brought RNDC to the point of exiting California? Yeah. I think, you know, if I may, I may start with a little bit of history just to kind of paint, you know, the background, you know, then how we ended up at to today. So, you know, in two thousand eleven, that's when r n d c had partnered with Young's market company in Arizona. And later, that became a partnership between Young's market company and RMDC, which essentially expanded them throughout the West Coast. So California, Oregon, Washington, Hawaii, and several other markets as well. RNDC was a managing partner, you know, within that joint venture, but that's how they ended up getting into, you know, the the West Coast, if you will. They were largely a very strong presence, especially built out of the state of Texas. Then began to build more regionally into the Midwest and then also into Florida. So they had been expanding quite rapidly, especially over the last several years. Just a couple examples of that, like, you know, In August of twenty one, they moved into Illinois. And then in that same year, they also moved into five new control states as well. Then in the very next year in twenty two, they moved into Alaska, New York. They purchased another distributor in Alaska. Then the next year in twenty three, they moved into Arkansas by purchasing a distributor there. So as you can see, there was a very quick and rapid expansion that was happening, you know, with r and d c. And from an outsider's perspective during that time, it appeared to me that what r n d c was trying to do and at a very rapid pace was to catch up to number one, which as you know, as Southern lasers. That national footprint that Southern Glacier has had and continues to grow even to today. That seemed to be the major goal for R and D. C. Was continue to expand and not be a distant second when it comes to, especially the footprint, but moreover the the size and just the sheer revenue between those two companies. So, you know, it seems to me that with that expansion, It became more and more difficult for R and D. C. To continue to execute at the highest level, and California became, especially problematic when breakthrough moved into California in January of twenty three. Now they purchased wine warehouse, but that was very disruptive. In the state of California because, you know, as you know, breakthrough is number three when it comes to US, one in spirits distributors. So That was a major move. Many major suppliers move from Southern Galagers and RNDC over the breakthrough. And then as, you know, there's other questions you'll be asking where, you know, there's more detail about the how and why's, but that gives you a little bit of background about what's been happening and kind of what led to today. There's there's many more factors that led to what's happened just this week. When you mentioned you were telling the story of kind of years of consolidation M and A. So what do you think this signals? Is this a breaking point in this consolidation model, or is this kind of just specific to RNDC that their strategy went awry? Yeah. It's difficult to say Barbara because, you know, while we see, you know, this sort of I hate to use the word disintegration, but for lack of a better word, you know, that's happened in California for R and D. C. At the very same time, literally Johnson Brothers and Maverick announced, you know, that Johnson Brothers would be purchasing the Maverick beverage company, which at that time operated in six states, but that partnership is in four. So that's more consolidation, right, from a standpoint of Johnson Brothers purchasing Maverick. And from my understanding is they'll continue to operate. You know, it's two separate and and wonderful companies in their own right, but you know, there is that sort of consolidation that's still happening on the distribution. And while, you know, obviously, we see this happening to r n d c in California. So it's a mixed bag really. Yeah. Just again to kinda help with the context. What would you say maybe are some of the specific challenges the California market presents compared to other states in the US? Yeah. Yeah. So, you know, in California, one of the difficulties is that it's so expensive to operate in. You know, you're talking about a higher minimum wage, you know, transportation and fuel costs are much higher. Obviously, the cost of living is much higher, especially for like executives and such, you know, within RNDC, There had also been, you know, quite a migration of some top executives moving from within the R and D. C. Footprint, especially in Texas, moving from Texas into California, and you can imagine for top execs in order to have the same sort of a living accoutrement that, that requires, you know, a change there. So, you know, these are all factors that began to really make this more difficult for r and d c operating there. But California as a market in general, is one of the most competitive markets, if not the most competitive market within, the distribution world in the US. So if you look at like California, Florida, New York, Illinois, these are all markets where you have most all of the major distributors plus midsize distributors that are all vying for that pie. Here's the difficulty. The wine and spirits pie is not getting larger in these states. It's just getting more divided. And what that means is that it becomes all the more difficult, especially for a powerhouse like R and D. C. To continue to execute, you know, at a top level while getting a smaller slice of the pie. And we'll talk about, you know, some of the supplier moves that have been happening recently too, which, you know, obviously is added to the difficulties for R and D. C. In California. But when you look at all of these factors combined, you know, the cost of doing business in California, and those costs have only continued to increase especially in the post COVID, you know, era. It's just made it all the more difficult and and it's actually sign at the times, which we'll get into more detail there as well. Would you say also, you know, since for people that don't understand, you know, as a domestic producer, you're able to self distribute in the state that you produce it. So we have eighty percent of wine in the US happening in California, which means eighty percent of, you know, wine can be self distributed. Does that add to the competition here? Or Especially in California. Yes. Now in other markets, you know, obviously, when you're talking about, you know, why in Illinois and Florida and such yes in Texas too. They're there, but it's nothing like in California. So but keep in mind that for California wineries to self distribute, it is extremely expensive. Not only that, when it comes to just sheer square miles to cover in the state of California, it becomes very difficult, which is the reason why there are so many, you know, so many distributors in California. But in markets like California, New York, Illinois again, Florida as well. What you're looking at there is there is such a splintering because unlike other markets say for instance in Texas where you have major distributors, In California, you have all those major distributors, plus most of the notable midsize distributors, but add to that importers, you know, like wine bow that actually self distribute their own portfolios in places like California as well as representing other wineries and distilleries too. So California is especially difficult and is the most competitive market in the US without a doubt. We don't want that to scare anyone away because it's kind of like a very important market too. Some of the largest parts of wine consumption happens here, but definitely you need to go in with with a really well thought out strategy. You know, you'd asked earlier about the consolidation piece. I mean, one, you know, one factoid I wanted to add here is, look, in the mid nineties, you know, there were close to three thousand distributors in the US and a little less than two thousand wineries. Right? But by twenty seventeen, twenty eighteen, the distributors had shrunk in number by nearly two thirds. Right? And then you're looking at eleven hundred wineries that, you know, inflated five x. To ninety two hundred wineries in the US. Right? So you've got more brands, more wines than ever today, but less distributors than ever today. And at some point, there's a breaking point there where it can't happen anymore in a, you know, a classic and terrible example was vintage wine estates, you know, which opened, you know, with a with a humongous IPO, but just several years later, was filing for bankruptcy. And and again, these are all signs of the times. It's very very different marketplace today than it was, especially pre COVID, but even going back a couple of decades. Yeah. Well, let's now to talk a little bit about who's impacted and how they're impacted. So, of course, you know, the many employees of RNDC, California who will be the hardest by this withdrawal. But aside from that, who's impacted the most small brands, big suppliers or retailers? Yes. So all the above, and it's difficult to say most. Yeah. Because they're all so impacted. Look, when it comes to the big suppliers, they will find another home and quickly. Obviously, you know, with Brown Foreman and other major brands as well. They were already moving and shifting to other major distributors, especially, you know, like Reyes, for instance, which is more of a classic beer wholesaler, which we can get into that if if you want to, but that's part of what's been happening. Right? So when it comes to those larger suppliers, they will be able to find a home. Right? There's plenty of places to do that. But when it comes to especially the small to mid sized wineries and distilleries, It is going to be exceedingly difficult for them to find a home. But look, I I have two things to say there. Right? One is the reality is most distributors in the US have been shedding brands and suppliers. For the last few years, especially, you know, due to the the decline and and consumption and and such. But look, number two, a piece of advice there for winery and distiller owners that are more in that small to mid size. Call your friends network. Ask your friends. Who are they doing business with in the state of California? And then secondly, ask them to give you an introduction. To that distributor because I can tell you most distributors are getting a lot of spam from a lot of wineries and distilleries these days. And how else are they going to pull through and find those that are really worthwhile. Phone a friend, ask them to give you a reference, and that's gonna be your best bet to try to find the next, you know, your next home from a distribution standpoint. That is really great practical advice. So thank you for offering that. Absolutely. You know, you already spoke to this a little bit, but the announcement was made, you know, for all intents and purposes, June first, that they're gonna shut down on September first. Is there time to pivot? I mean, let's say you're a small winery and then let's say you're treasury. Like, what is the timeline look like for these, you know, two kind of divergent two ends of the spectrum over the next three months? Yeah. So, you know, I've done a lot of distributor transitions in the past. And, you know, one thing, at least for my model, my strategy was to do it very methodically and very thoroughly. Part of that is literally going through interview processes with for perspective distributors. You know, look, that typically takes a couple of months to have those conversations and in some cases you wanna get out. You wanna see the facility and, you know, meet the people and break bread together and those kinds of things. Look for me, that was typically a four to six month process from the standpoint of starting those conversations with potential new distributors in a given market, all the way to actually making that transition having inventory on the floor for day one of the go live with that transition. So here we're talking about ninety days. We're talking about three months versus four to six months. So, yes, It is possible. But again, I just point back to that tip that I just gave that's going to be your best bet is to is to find the right distributor for you. One other thing I would add there too is Look, it shouldn't just be a race to find a distributor that can put your stuff on a truck and get it to that great restaurant tour retailer. Right? The thing is try to find the DNA match. In other words, is this distributor someone that you would like to enjoy interfacing with on a daily or weekly basis? And then number two, are you at that sort of size or model where you need to be in every single account possible from convenience stores all the way up to the costcos of the world. Right? Or are you more concerned about being in the right accounts based on your consumer, your clientele. It's important to make sure to identify these things. These are the sorts of questions that potential distributors are going to be asking you as well. And here's the other thing. Don't walk in with a goal of growing ten x over the next two years while our sweet industry has been in year over year declines for the last three years. So unless you have the newest latest greatest and can prove it. You know, you've really gotta come in and talk about the why, what makes you unique. And then, you know, the way that you wanna work with your distributor, and is this a match? But ninety days, three months, That's going to be exceedingly difficult. My advice to you is start yesterday. Kind of to that point, do you think that a brand that was currently working with RNDC in California should be rethinking their own growth strategy over them, like, should they be considering if they haven't already polling production back or something like that? Do you think the implication will will go out that far or is it kind of just a short term that there will be this disruption. Yeah. I mean, both. Right? The disruption, it's just there's no way to avoid that. It's going to be exceedingly disruptive here for the next ninety days because it's not just you and your winery that wants to move It's, you know, hundreds of your closest friends, at other wineries that are wanting and needing necessarily to move as well. Right? So it is going to be disruptive and it's going to be, you know, difficult. Right? And you had asked about treasury as well. You know, look, treasury, if I remember right, had an agreement alignment with R and DC in twenty five states in the US, California was one of those. Alright? So Treasury has gotta find a new home as well, and it's not just the smaller guys too. So I can tell you from a distributor standpoint, most of them have been telling their winery partners, look, you've gotta dial it back. Right? The market is not growing, and that's not just a US problem as you well know. That's a that's a worldwide issue aside from, you know, some emerging markets in Africa and and Asia and whatnot, but outside of those kinds of markets. No. You really need to take a very methodical and deliberate approach that probably means dialing back. Most distributors would ask you, you know, look, you have fifteen different wines that you offer now. You probably need to start shaving and get down to the core, the ones that really drive your day to day business, especially from a distribution model. DTC is a whole different, you know, conversation when it comes to cool and groovies and new limited production and those kinds of things. So, yeah, that would be my advice. Definitely, you know, look to dial back again unless you're just one of those few that actually have something hot that's flying off the shelves. That's an entirely different conversation, but I would tell you it's also unicorn in today's marketplace. So Do you anticipate independent smaller distributors responding to this opportunity? Is this kind of a gold rush for them or a logistical mess? Yes. So a lot of your questions I've been answering with with, yes. Yes. Because it's all the above. Right? I mean, look, with the smaller distributors, it is a wonderful opportunity for them to you know, for instance, maybe it's to fill some of the gaps in their own portfolio. Right? So especially in California, you have a lot of, distributors that deal with mostly imports. Right? So in those sorts of cases, this may be a chance for them to begin to expand a bit with their domestic offerings, especially, obviously, California offerings. Right? So it's definitely a time to be able to find the right sorts of wineries. If I were one of those smaller distributors or midsize distributors, I'd definitely be looking at that list of wineries and distilleries that r n d c is doing business with and like, make your shortlist and start making phone calls today because all of these folks have gotta find a new home in the next three months. Right? Yeah. Another great piece of practical advice. Like, get your call list going and make sure you know You know the brands that you're calling. Right? Because they're probably in Right. A huge state of stress and chaos right now. So show up and be somebody who can help them navigate that. No doubt. Did trust me, they are looking for those phone calls you know, those wires and distiller. They're looking for those phone calls, so for sure. Yeah. And what about pricing and availability in California? Do you think this will be affected in the short term? Yeah. I mean, it's already being affected. Right? So we're already starting to see discounting that's happening because they're just large amounts of inventory and whether, you know, unfortunately, that was that was grapes just hanging on the vine that never got harvested, you know, into Obviously, the bulk wine market where there's more wine in bulk than probably ever in history. Right? The reality is that there has got to be a necessary downsizing when it cut you've heard about literally thousands of acres of vineyards being pulled not only in California, but in many markets, especially, you know, France and other major producers as well. So this is affecting everybody. Right? It's a difficult time and people have got to find a way to survive, and that includes distributors. So take the right steps to do so and be methodical about it. Right? But, you know, number one, survive. Figure out your survival method at least. And, maybe here in one or five years, it'll be time to thrive again, but it looks like it's gonna be difficult for the short term. Well, that's a good segue to start talking about broader implications of this. And what it means. So I think a big question on everyone's mind is do you think this is a one off or do you sense difficulties more kind of chaos coming from other states? Specifically with RNDC, but maybe, you know, national distributors in general. That's a good question. You know, as I mentioned a moment ago, it's an interesting marketplace right now, right? Because While you'd like to say it's a one off, there's been a lot of downsizing within both on the supplier side and on the distribution side. As you well know, r and d c, you know, unfortunately, has had to go through several iterations of downsizing and eliminating positions. Southern Glacier has been doing the same thing as well just most recently with the Atlantic Division that they had due to Constellation selling a lot of brands off to the wine group. So you know, it's a difficult time right now. Right? And it's hard to say if it's a one off. I mean, what I see r n d c doing right now is, making a necessary move. I don't only think it's for survival, I also think is strategical as well. So in other words, they're not going to go hide in a in a dark closet somewhere. No. I think what r n d c is going to do is move especially those financial resources that they've been using in California, move those to some of their states where they're more entrenched. And in some cases potentially double down and start to execute at a higher level. Than maybe over the last few years where every distributors had, you know, difficulty with execution. So like you said, more of a of a national picture, it's really hard to say. You know, I've seen some smaller distributors that had to, you know, shutter their doors for one reason or another. We've also seen again, you know, with Johnson Brothers and Maverick, where there was more consolidation on that end. So really a mixed bag, but I think more than anything it's gonna be dynamic right now. I think there's gonna be a lot of both happening both on the supply side and on the distributor side as well. And what do you think? Is there an opening here for more hybrid or DTC models to step in? Well, that's difficult. Look. DTC is is hard. Right? I mean, those that are really thriving in DTC were the ones that were able to set up shop before COVID happened. They're the ones who are really thriving at this point as long as they've been able to continue to, you know, service their service their members well. Right? But DTC and especially those that really thrive and do well It's difficult to dial that in, and it's really a unicorn, you know, sort of model. So I would tell you if you're relying on distribution for ninety percent of your sales and you're only ten percent DTC, I would tell you it's probably time to, to get some help, you know, on on that end of things because obviously DTC represents the highest possible margin for you internally and can obviously help to offset some of the the woes and difficulties that we're having right now from a standpoint of having to discount in order to be competitive in the marketplace. So, yeah, I would say get into it if you're not there, but it's difficult. It's tough going. You know, also it's equally it's bleak here in the US right now. The declining numbers. Yeah. It And necessarily an easy shift. You know, and and to that point, Barbara, I also wanted to, you know, just take a moment and it's a little bit of an aside. So pardon me, but one of the things with this, you know, we're we're looking at this downtrend three years year over year. Right? Where we're looking at the the combined, you know, rate has just been pure declines aside from some brands that that are kinda unicorn, you know, RTDs. Obviously, is one thing that's been growing, but that's the only thing that's helped to improve spirits, you know, numbers. And prosaicco and Saviano Blanc have been doing well in line, but pretty much everything else is not doing so great. But the one thing I would say is, you know, look, humankind has had a love affair with wine for over eight thousand years, and it's not about to end on our watch. It's not going to end today. You know, what I would tell you is that when you look at those baby boomers and gen x, right, that gen x was a very tiny generation. And what we have in those next two generations with millennials and gen z are much larger generations, right, and numbers. But one of the difficulties that both of those are happening, especially with gen z, is that it's tough going right now, and it's difficult to make money and to be able to set aside some sort of budget for wine and those kinds of things, but here's what I can tell you is for those families which was increasing for decades in the US. Right? Families that drink wine. Look, those millennials and gen zers, they know good wine. They've been tasting those wines with their parents. The gen xers and the the baby boomers for years. And look, once the economy begins to improve, once they're able to get that next promotion, they'll be drinking wine because trust me, when you sit down at a business dinner, that's what's happening at a business dinner is popping a nice bottle of wine and, knowing a little something about it also helps too. But look, I don't think the whole thing is bleak here. I think we're just in a really difficult phase, but we're gonna come out of this. So I think we're gonna be fine. A nice little plug to make everyone feel a little better because, yes, it's I love that. It's the, you know, been around for eight thousand years and it's not ending on our watch. No. No way. So a couple more questions on the kind of broader implications. You know, there is a lot of debate right now about the efficacy of the three tier system. People either love it. There's a lot of people that are saying it's outdated. What do you think something like this Like, how can it affect kind of regulatory pressure on the three tier system, especially being that we're in a state like California? Yeah. I I really don't foresee, you know, any major changes when it comes to the three tier system the way that it set up. You know, there's always going to be naysayers about, you know, the three tier system and, you know, obviously, there's plenty of manufacturers and suppliers that wish that they didn't have, you know, that middle man taking their cut But look, the reality is, you know, from my humble opinion, most distributors earn that cut because number one, every single state in our fine union has very unique alcohol laws. Right? And so those distributors are the pros. They know how to navigate those laws, and those are the ones that you need running your business for you, you know, in each state. So, you know, I would also say even when you look at the very strange landscape when it comes to like CBD and THC beverages as well. You're starting to see in many cases those also moving over into more of the traditional three tier system And it looks like in many cases those will fall under the alcohol beverage commissions, you know, in given states. Still a lot to be determined there, but I just think that's another sign. Look, the three tier system has worked. For a long, long time. It's not broken. I don't think it's going anywhere. And and like I said, I think distributors by and large, they earn their their cut in this model. So It's a big state. A lot of places, like you said, so many different regulations and even just surface area. It's a lot to cover. Totally. Absolutely. So you've given so many already great pieces of advice, but kinda any last words you would offer to a blind brand who's really kind of looking to protect themselves against this kind of volatility in the future. Should they be reevaluating their channel mix? Should they be reprioritizing territories? Yes. You know, that's difficult because, you know, as I'd alluded to earlier, it seems like well, it doesn't seem like, especially for the last three years, and even leading up to COVID, twenty eighteen, twenty nineteen, We were starting to see, you know, some signs of decline that was actually happening, you know, when it came to wine and spirits in the US. So it wasn't just COVID and then the bounce back from COVID and then the precipitous fall after that. There's been signs that this has been happening, you know, for a while now. But when it comes to protecting yourself, you know, look, I would tell you, make sure that you're not depending on the distributor to do all the work for you. It's very important for you to, dear friend used to say, Baron, we just need your shoe leather on the streets, you know, in Texas or Florida or wherever it may be. What that means is from a supplier and manufacturer standpoint, look, get out there. Shake hands, meet people, you know, do those kinds of things. Build your own connections, right, within the industry. If you're going to rely on your distributors a hundred percent to do that for you, Most cases you're gonna be disappointed because you really need to see those accounts as your partners too, not just the distributor's partner, and especially as as competitive as the business is right now. It's more important than ever for manufacturers to get out there and and shake hands and and help to sell the wine and tell folks about the greatness of wine and the eight thousand years of human history that we've had. Right? It's gonna take more of that. Yes. Well, that is, again, a fantastic piece of advice. So I think it's a good point for us to kinda start to wrap it up a little bit. And we here at a Mr. Class US wine market like to wrap up with a rapid fire quiz where we ask our guests three questions to help our listeners better understand the US wine market. So if you could answer, you know, as quickly as quickly as you can, and maybe it's kind of more of what you already said just now, but what is your number one tip for mass during the US wine market. I would say go narrow and go deep. You know, the idea is don't just try to expand expand expand more markets, more markets, etcetera. Right? There is that small percentage suppliers who can do that who are built out for that. But I would tell you when you enter a new market as a supplier or manufacturer, make sure you're doing it right, make sure you're doing it well. And that you've established your business, your core business there before moving on and spreading out your own resources. So go go narrow, but go deep. Yeah. I mean, that targeted engagement is the way to enter VOS market. Yeah. Yep. Okay. Number two, what is something you would have told your younger professional self about selling wine in the US? Well, it's a little bit different answer to the question it self, but I would say, you know, just as as a a wine leader, a wine manager, you know, for so many years, I would just say to others that are maybe moving from that sales rep to that first level management position. What you're not going to do is to create five or six clones of yourself. You need to find the skill sets that are best within each of your team members and look for ways to make that work for them, ensure you can continue to enhance other skills and experiences. Right? You know, I was trying to make a bunch of barons and and look, thank god. There's only one of me out there. So that would be the the piece of advice there. Spoken like a true leader. That's true for any industry. Good advice. Okay. Number three, we do a lot of moving around in the in the wine industry. You even just said that suppliers need to get out there and and shake hands. So What is your number one travel hack when doing market work? It doesn't have to be anything wine related. Just something practical. It's kind of a it's kind of three things for me. So, you know, one is eat light, get more sleep, and then align with the time zone. So there's your travel hacks. Perfect. I have a friend too. When she gets on a plane to travel, she doesn't eat anything from the moment that she gets on the plane until she arrives. So she says that just helps her body set. So I think Yeah. There's other people that subscribe to that philosophy. Yep. I haven't tried that one. I I don't know that I could give that a go. I I'm a I'm a food lover. So Me too. It goes hand in hand with wine. So Totally. No question. Well, Darren, this has been so fantastic. Thank you. You've been so generous with your time and your expertise. How can our listeners get in touch with you? Yeah. So LinkedIn is probably the easiest way to do that. So I I'm not a big social media guy. You know, my daughters continue to tell me, dad, come on. You know? But look, LinkedIn is enough for me. There's plenty going on there. So look me up, Baron Belt, and you'll find me. Fantastic. Well, thank you again for joining us on Master Class US wine market. I hope I get to see you in in California sometime in the future. We will. No doubt it's a small world we live in, especially in the wine world. So it's been a pleasure to meet you Barbara. Look, I wish everyone out there the best. Hang in there, especially for those folks at R and D. C. California. You know, I just wanna mention, you know, in closing that this is not a time to cheer about, you know, the competition failing or something along those lines. Look, the reality is, most of these wonderful folks at r and d c, California are going to be working with you side by side, whether you're a supplier or another distributor in the state of California. So look, Cheer them on, extend a helping hand, help them to network, help them to meet people, and define that next great gig. Trust me. That's what they need. That's what this industry needs. We need to pull together more than ever right now. So let's let's make it happen. That's Robert von Davy told us a rising tide lives all shifts. Got it. The master. Well, thank you again, Darren. Hope to see you soon. Thanks, Barbara. Cheers. Bye bye. Bye. And that's a wrap for this episode of Master Class US wine market. Thank you so much for joining us. If you enjoyed this episode and want to stay up to date with the latest industry trends, remember to like, follow and share our podcast. And if you find value in our conversations, please leave us a review to help others discover the show and grow our community. Stay tuned for new episodes every Monday. Until then,
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