Ep. 594 Harry Zarkades | Get US Market Ready With Italian Wine People

Thanks for tuning into my new show. Get US Market Ready with Italian wine people. I'm Steve Ray, author of the book how to get US Market Ready. And in my previous podcast, I shared some of the lessons I've learned from thirty years in the wine and spirits business helping brands enter and grow in the US market. This series will be dedicated to the personalities who have been working in the Italian wine sector in the US, their experiences, challenges, and personal stories. I'll uncover the roads that they walked shedding light on current trends, business strategies, and their unique brands. So thanks for listening in, and let's get to the interview. Welcome to this week's show. This week, I'm pleased to have as a guest Harry Zarcadas of Capies and Main Street Warren imports. Thank you, Steve. Okay. So why don't you give us a little background on you and how you came to Capies and what your background is in the wine and spirits business and what things you're interested in and that kind of stuff? Well, yeah. Thank you. You know, I've been in the wine business for almost thirty years now, and it's been a bit of a circuitous route taking me, through a few different lives in the business. You know, I started, as a retailer, and my second job as a retailer in the wine business was with Capi's fine wine and spirits. I was the, wine manager at one of the larger stores, the one on the Sogus Mald online on Route one. And it was a great experience, but after a few years, I decided I wanna change hats and I got into the wholesale business, with classic wine imports, which was a great experience again, but a different side of the business, as you know, And then after that, I decided to open a restaurant. How'd that work out? Well, it it worked out about like you'd think. And what my accountant told me would happen and what my father told me what happened happened. And, sure enough, I was back, with copies. A certain point, after a couple of years of being back, with the company and working in one of the stores, a couple of us got together and decided maybe it might be a good idea to start a different wing of the company called Main Street wine imports. As a, importer wholesaler and distributor of fine wine within and liquor within Massachusetts, and that's what I'm doing now. So you're not doing the buying for the retail stores as well, or is that part and parcel? Not it. No. Not at all. No. I mean, in a certain sense, because some of the items that we take in for Main Street wine and ports also go into the stores. So I guess in that respect, you know, we serve as a wholesaler, Main Street does to the county stores, So some of the wines that we select for Main Street and sell outside of Cappies, you know, to independent retailers and restaurateurs will also be in Cappy store. So in that sense, yes, but I am not, you know, I am not the buyer for Okay. So why don't you give us kind of an overall picture of the wholesale business in Massachusetts and your role in it? We'll we'll touch on the retail store later, but let's focus on the wholesale. Yeah. Well, Main Street, you know, obviously, it's a company owned, and run by retailers. We look at ourselves. You know, as a young company now, not even three years old, as a company that is a wholesale company, but we keep retailers in mind. We do things for instance. You know, I mean, we select wines that we think are great wines and over deliver on quality, for the price that they're slotted at. But also, you know, things like best price for retailer on case one. You don't have to buy a hundred cases or two hundred cases or a thousand cases to get the best price on one of our great wines. You know, the first case of wine you buy is the price. The tenth case is the same price. That's the price. And that's very unusual. I mean, you know, you're looking any of the beverage books. And so how does that work for you and how do retailers respond to that being a different model? I think, the great majority of them are incredibly appreciative. They respond well to it. You know, in in that sense, it it's easier for me, I think, to open new accounts when I walk into somebody's store and they oh, that's a great wine. It has a nice label. How many cases do I have to buy? And I say, well, one. And, well, what do I have to buy to get the best price? And I say, one. And they go, okay. It's almost like, the car buying has changed from the salesman having all the information and controlling, the sales thing to, it's it's just a more, pleasant, pleasant experience. Yeah. Yeah. Yeah. No. It's a great analogy. You know, I think in a lot of ways, the world, is going that way. And and we think we're ahead of the curve in in having this dynamic, this business model. Well, with the number of things changing, we'll we'll get up to get into the whole issue of COVID and how that's affected things. But I think this may end up being something, that may be an outgrowth of it. I think, well, we'll get it as I said. We'll get into that later. So, how many other wholesalers are there in Massachusetts? Oh, my goodness. I couldn't even begin to tell you. Let's say there's a ballpark of forty. And most people, if you ask them in the industry, or at least people I know, if you ask them, you know, how many wholesalers are there in Massachusetts I would say, four or five. Yeah. I mean, and those are the the big guys that everybody knows. You know, and we're the alternative to that. That's how we I mean, it's still about wine. It's still about people. It's still about relationships, but we look at it like there are advantages to dealing with us as opposed to any of those, or especially those bigger companies that, of course, take up a bigger portion of the business. So the focus is not on it's not like, oh, they're a craft distributor or they specialize in, you know, Austria and Chile and South Africa. What you guys really are is a retail and I would imagine on premise friendly wholesaler. Other than the the case one price, what are the other things that differentiate you from, other wholesalers? Well, let's talk about, you know, restaurateur. The big companies are notorious for having one price for retail store and another price for restaurateur and it's a better price, but us, there are other advantages dealing with us with on premise accounts in the sense that, let's say, they only want four bottles of an expensive wine or an expensive liquor with a big distributor. There'd be an upcharge. Broken case charge. Yeah. You don't charge broken case charges? Oh, I think the advantage of us, particularly to on premise accounts and speaking of restaurants, you know, when you want an expensive bottle or bottle of wine or liquor for the list, we don't charge a split case fee for buying three or four bottles. You know, this makes, sense, I think, to the restaurateur, there's a sense of, fairness. I think that they appreciate. And when I talked to, Sanilier at a nice restaurant and they want only four bottles of the seventy five dollar bravo, and, you know, is it gonna be eighty? And I said, no, It's still seventy five dollars a bottle there. Like, how can that be? You know, I think we make people happy with that sort of, dynamic. So that's kind of a big issue that a lot of imported wines, and certainly, we're talking about wines from Italy here. Were restaurant oriented. Not specialty products, but, you know, the the Cognoscente would would know what they are. They took a big hit. People were getting rid of inventory and so forth. Is is there a separate apart from mainstream? For other wholesalers. Is there a separate menu, if you will, or book for on premise versus off premise, or is it just prices that differ or have it? Not officially. Not officially. But a lot of people say, well, you know, a a lot of restaurant tours want products that are not available in retail stores so that customers can't check prices. Of course, now we have wine searcher and tools like that. And just like the analogy we're using about, you know, purchasing a car, used to be the dealer had all the information on, what the costs were. Now everybody has the same information. You you have to be wary of that in our business, whether, you know, in the wholesale business or the retail business. I I see, you know, when I still go into the stores, to talk with our buyers and and show them a wine we're bringing in. When I walk through the stores, just to see how it's how it's looking inevitably, I see somebody looking at a wine and then looking at their phone, and then walking down the aisle a little further looking at another wine and looking at their phone. So everybody in the business has to be wary of that. You know, when I own my restaurant, I had customers who didn't understand that a restaurant return needs to make a little money on a bottle of wine and would, you know, he'd take a pic a customer would take a picture of a bottle of wine and the rest restaurant and say, why is it this price retail and this price in your restaurant? And, you know, what can you say? Yeah. You can't talk about business models to, consumers. Okay. So I mean, that does make sense. I understand the strategy But I think your method of doing the broken cases is kind of a a nice way to address that and satisfy both sides retail as well as on premise. That's that's what we think. And this is our whole, you know, from the main street wine import side of things, we like, all our accounts to know that we're we're the good guy. We're we're being friendly. We're working with you, and we've seen great results from that. Okay. So let let me ask the hard question that a lot of, the suppliers I work with ask Okay. How do I get on their desk? When the day that you're evaluating wines? I yeah. Well, you know, Fridays, you know, Mark and I and Mackenzie and Joe Shelby, you know, or any two or three of us will sit down and and taste, you know, twenty or thirty wines. And some days, there are absolutely zero we're interested in. Some days, there are too many we're interested in. And then we have to look at, you know, what's, in our portfolio that we already have. You know, we're looking for niche wines possibly, you know, something that fills a void in our portfolio as to how you, you know, we're we're easy. You know, you can look us up on online and find out where we are and send us a sample, and, you know, we'll we'll get to it. And that's that's pretty much what we do. But I I like, of course, this last year and a half has been a different world. We can't, or we haven't been able to go visit a winery. It's it's changed the game completely. There's there's nothing like trying and talking to the winemaker in the vineyard and picking up the soil, picking up a rock, you know, smelling the grapes on the vine. There there's nothing like it. You can't replace it. You can't really gauge water lines all about without visiting the winery, but the next best thing is sending us a bottle. That's that's all we can do at this point. We're still not traveling. So Okay. So you've tasted a thousand wines. What percent make it through to the shelf, well, to the distribution company would say that's about right. And our our we joked about our motto, which would be, you know, we taste the bad ones so you don't have to. And consequently to to you, we have to copy's, shelves. I mean, we're constantly reassessing everything in the stores, you know, these days, as you know, supply, you know, inventory is an issue. We'll supply is another issue, but inventory is an issue. You know, so I think we're thinking of ways to make our shelves in the copy store reflect more of what Main Street's doing aside from that. We are certainly taking in, you know, one or two new wines a week into our portfolio. But maybe we're getting rid of something else too at the same time. Well, that's the issue. Obviously, in a retail store, if something comes in, something's gotta go out because you know, all the shelves are full. That's not the case in in distribution, but it probably does give you a sense of, what the trends are and, where things are going. It it certainly does. Talk talk about that and what you see as some of the trends have. Well, you know, Cappies, we'll go back to the retail side of it now. For instance, is a retail chain, you know, twelve flights in the state independently owned, family owned, but it started in nineteen forty. Can you imagine how different the business was then? And the amount of SKUs you had to carry in a store then compared to today. You know, the stores are larger. You have to be more adaptable, and those are two things that don't necessarily match being larger and more adaptable. Now we have computers and things now and people to check on inventory, but it's harder. The challenge is always there. And there's the challenge of, competitors in the state, which feel like they don't have to make a dollar one or penny one on an established brand. And that puts pressure on you too. And now with the pandemic and the ensuing supply problems, not I'm not talking about natural, you know, fires or droughts or frost. I'm just talking about you can't get a container from point a to point b, these are other problems. So there's a a myriad of things that go on all at once. The key is to be adaptable and to be fast and being a small independent retailer and being a small independent wholesaler, we can adapt. I think that's our great advantage as well. So, you know, being that size that we are, it's easier not to get stuck. Although, when the container doesn't show up, you know, then you have some explaining to do. Everybody's been dealing with that lately and trying to to do the dance. And, you know, and it's pretty frustrating to everyone if a container is, like, three months late. And we've It it really is. I mean, honestly, Steve, we've ordered things in December that have not arrived yet. We ordered something in January that has not been scheduled yet. Or I mean, it's just Well, let's flip the the negative on that to the positive. So what kind of, things are happening in Italian wines? Are there, regions? Are there varietals? That are making things happen are getting noticed. Obviously, you know, we've had the prossecco Muscato, pinot grigio thing over the last ten years. Yeah. But even even with prossecco, you mentioned prossecco, there's still a great new trend in prossecco, and that's the new deal of prossecco Rose. And I think that's taking two wonderfully, popular things in putting together. So it's like a cross trend. Everyone likes prosseco. Everyone likes Rosse. So now there's prosseco Rosse. And I can tell you in my portfolio, in the main street portfolio, one of my most popular wines of the year has been, you know, the short year so far, been a prosecco Rose. So that's a nice trend. You know, it's something old, but still something new. I think that's fantastic. You know, other trends out there, I think, you know, when I'm visiting other retailers, or restaurant accounts. The people I see drinking wine in the stores, believe it or not is, or the restaurants, they're younger. That denotes, you know, more adventurous to me. And I see that. Like, you know, when I was a younger man, I was a musician, you know, but growing before that, I'd like to listen to music. I didn't wanna listen to what my father listened to or my mother listened to. I wanted to listen to my music. And I think, you know, this new generation is saying, I don't wanna drink what my mother and father drank. I wanna try something different. So that's a good trend in the business. And we keep a close eye on that. You know, maybe somebody, a younger drinker, the mother drank Pina Grizio, so she wants to drink vernaccia. You know, it's still a great wine for the similar food for the time of year, but it's just different. You know, maybe somebody's father drank chianti. So instead, you know, they're gonna we're gonna drink at at Marasso. And, of course, the Kianti that they were drinking with Well, came in a straw basket, you know, so that's a world of difference. I I thought it's inter when I discovered that it was, the bottle is called a fiasco. And the Italian word for fiasco means mistake. And the reason why it was a failure at the the glassworks. And so they put it in a straw bottle to cover it up. But now it's in the common parlance as you know, describes that bottle of wine. I don't think I've seen one in thirty years, and now Kianti is major league stuff. Oh my god. It's it's it's still the most, popular Italian red. But, you know, The the other thing that's that's good about Italian wine is its diversity. You know, Italy runs, you know, by the grace of mother nature north south. And when you get that, you're crossing different regions and climates. And you're getting the grapes and the styles of wine that go along with that and with the cuisine. And that is so important. And I think what people like today, whether it's in in culture or lifestyle or wine, it's diversity. And Italy has that diversity to match the the taste and trends of today. So what's what's next? I mean, I I didn't project Prosecco, although it should happen a lot sooner. I mean, it fits the bill, especially on the sweetness scale for Americans, you know, it's o it's okay sweetness there. I think I think actually there there is, like, a backlash to the the sweet wines, the sugar added wines that have been so popular over the last ten years. So I do see a little nascent trend already happening. And again, it's most mostly with younger drinkers, looking for drier wines. I think it's an offshoot of natural wines or organic wines. So I think there are some people out there. This this little trend that's starting who are paying more attention to lighter drier wines. I think it's another good thing. It reminds me of a backlash to Okei chardonnay that was some years ago. It's not that Okei chardonnay still isn't a thing, but, you know, there was a a trend to, get away from it. And I think there's a trend to get away from those sugary wines, so those drier wines. And I like seeing that. I like seeing that with the newer wine drinkers and the good part of that for our businesses, these people will be drinking for another forty years, fifty years, you know, when you see that, that's a good trend to follow. The other trend I well, you mentioned, like, Italian, different Italian wines and varieties To me, the other thing about Italian wine that's new is really what's old. You know, not everyone. I mean, I've tasted it. I love it. I love a rueche, you know, from Monterey. I mean, it's love to to sense the nose of the lilacs and being in the middle of a garden. You know, flower garden, and I will sit with a glass of ruke. I remember the first time I had it, it was probably fifteen, twenty years ago. First time I had a glass of ruke. I didn't take a sip of the wine for thirty minutes. Yep. I just got there. The nose is so fantastic. I don't wanna drink it because then it'll be gone. I just wanna smell it. And I want somebody else to have that experience. So, you know, our buyers in the retail stores, when they have a small production bouquet, that's, you know, very few people know. Even though it's an older, great. You know, they can give somebody else that brand new experience. And I think, you you know, there are a lot of with Italy, there are tons of varieties you can do that with, and that's that's my job. And to me, that's the fun part of the job. I mean, you know, with Norello Masca or Colorado or, you know, Freelano, which used to be tokei, Freelano, you know. I mean, I think all these are grapes that even though they're old and ancient grapes, that people now can discover and make their own. It'll be a first time experience for them. So that's that's what it's all about. Right. We're all on on a journey of discovery, and we all start at zero, really. So it may may be old and may be may date back to Roman times, but I don't. One other thing we were talking about last week was, how people are shopping, and I'm biased towards the issue, even though I have research that says it's not true, that people do read back labels. Not that they wanna read back labels. It's because there's not enough information about the wine on the front label because it's there as a billboard if you and one of the one of the points you guys made was a practical one about reshippers and and colorful reshippers that look good in a stack. Can you talk a little bit about that? Well, for me, it's an especially, important issue. I said earlier in this conversation, you know, everything. When I'm speaking with a retailer, I'm selling wine, everything in our portfolio is best price case one. Why would a retailer want five or ten? Well, I'll tell you what makes them want it. I mean, the label is beautiful and the shipper. Is beautiful. That is the difference between me selling one case of wine to an account or five or ten for a case stack. I go into these beautiful boutique shops, and they don't want a plain white case. They don't want a plain brown case. But when we have a smart winery, we have a winery from Chile with it's a husband and wife team. He makes the wine. She does the artwork, and she is a true artist, and the labels come out that way. And they made the shipper look just like the labels. And I have a count that just stack that wine for because the the shipper looks so beautiful, and they sell it by the case. That creates velocity, and it creates loyalty for my accounts, and it creates velocity and sales for me. The shipper is so important, you can't overstate it, especially with my company. Because we had a case one pricing. But I think with every company, when you floor stack something, you wanna draw the consumer, the customer's attention to the stack. And the best way to do it is with an attractive shipper. There's no doubt about it. And the reshipper often is the last thing, meaning the not thought about thing when somebody's developing the whole Well, one of the things we decide on a Friday when we taste those twenty bottles of wine, one or two, which you might decide are good enough a portfolio. You know, we sit there at the table and we like the wine and we like the label, then we if we find out the shipper is plain white or plain brown, we need to have a conversation with the supplier or the winery and say somebody needs to do something about this because we take this wine in otherwise, but now we won't. Right. Alright. That's a really important point, people. I love that. Okay. Talk about last point that we have time for. Massachusetts is just a franchise state and and how that changes, both the makeup of the distribution, who who the distributors are and also how things operate. Can you chat about that? It's, you know, it used to not be that way. When I started this business, it wasn't that way. And then it now it is. It's a franchise state that, you know, if you have a brand, it's your brand, it's exclusive and tethered to a distributor. I don't know that this is good for the consumer. Obviously, there's a lack of competition between people who would sell it directly to a retailer or consumer that, you know, allows people to, you know, choose pricing. And this is not a good thing for the consumer. Unfortunately, That's the way it is. But what we do, we are the alternative to all those big brands that are tethered to these distributors, and some prices set at one thing. Maybe it's not a natural set price for that reason. You know, we can find wines that they don't find. They don't take the time. They don't have the inclination because they have these big brands that are gonna sell a million cases anyhow. They don't have to we select the wines that deliver more quality. And at a price point, that's natural. You know, and that can be a problem in a state a franchise state like Massachusetts, but not for us. So does that make Massachusetts? One of the first states you wanna look at as a franchise state for brands that are not currently imported into the US because the distribution setup of who's there isn't just two major players. You've got those forty, and I've heard that there's, like, six hundred in New York. I am minimal, but can you just address that for the suppliers who wanna come to the US? Big challenge finding an importer, all also to find out that the old days of agency brand importers, that model is not working as well now with e commerce and all the other things that have. I think Massachusetts is one of the places that you wanna be as an exporter as a supplier There is, like anything else, there's a little backlash to those set prices and those perceived prices that are the fallout of, a franchise state. You know, we don't play that game as a wholesaler. So, yes, you know, that that's how we make our business. That's how that is our business model. Find these new wines from these different places, these unknown, you know, commodities. And sell them at a natural price where everybody's happy. The consumer's happy. The retailer's happy. The restaurateur is happy. And we're happy, you know, to bring these great lines, to the people and to the retailers and to the restaurateurs at the right price. That's great. But one thing we hadn't talked about, and we don't have a lot of time, but I did want to address is how you're handling e commerce. You guys use City Hive as the, back end. Can you talk about that a little bit? Absolutely. This was so important for us. We began with, City Hive in May of last year. We realized we had to update our our website, you know, and City Hyve as a host has been such a boon to us. We're able to streamline, you know, our web and app providers into one back end. You know, their operational and customer engagement is Perior. You know, we don't have delivery vehicles. We have twelve locations in the state, retail locations, and we don't have delivery vehicles at every location, but they gave us a delivery presence because they partner with DoorDash. So even if we didn't have our own vans in that particular location, you know, you go to the website and City Hyve provides DoorDash. Before, we were, before the pandemic and before we partnered with City Hive, our online sales at the retail level was about one percent of our total sales. During the pandemic, that jumped up to over twenty percent. We could not have done that without City Hive. And even now, even we're I think we're pretty much at a post, COVID post pandemic world, even now our online sales, and this is during basically summer now. It's hot weather, is four and a half, five percent of our sales. You know, it it it it goes down a little bit in summer because the foot traffic is better, you know, travel is easier. I expect in the fall and winter it goes back up again a couple points. So we're talking about a difference of, you know, from one percent to maybe seven or eight. Who knows? Maybe ten percent. And it's because of city high. I think it's a brilliant thing. And any retailer who doesn't use a a platform or host like that, you're missing out. And that's city high. It's like Behive, city hive dot com. Interesting. Okay. So we're gonna wrap it up now, but, I like to finish with, asking our guests, for what's the one big takeaway of all the things that we talked about? Well, you know, when, you know, there's the retail side of my company copies. There's the wholesale side. There's main street wine imports. And, you know, we deal with consumers. We deal with restaurateurs. We deal with retailers. We mentioned it earlier in our, interview here that, you know, the shippers, the case of wine, really, something people don't think about, but make everybody's life easier. You know, the consumer is drawn to the shipper. You know, the retailer will go for one case instead of five. From my point of view, as a a salesman for Main Street wine imports. You know, any retail who buys from me, you know, they're selling wine quicker, more velocity. I mean, obviously, the first thing is what's in the bottle. But after that, like, you mentioned back label, you know, to me, it's the shipper. These are all things that add up to a successful brand, a successful line, and a successful, relationship. Well, let me ask you a question about, the the reshipper then. It's not just a matter well, is it just a matter of it being colorful or should it sell. And one of the things I teach my clients is you're going to have the case is gonna be cut. A lot of people, you know, will put perforations on it. So make sure you're selling messages on the way down on the bottom of of the reshipper and that the sides are selling something other than just a picture of the bottle. That's not bad. But, you know, if it's a spirit, maybe the cocktails that you make from it. Yeah, recipe or, you know, wine pairing suggestion, you know, for a back label or who knows on the side of a of a reship you know, I think all these things add up to a successful, successful brand. What I like about that is that it's totally within the wineries control, and they don't need anybody else's permission to do it. And it's a way of differentiating themselves from competition in a very, very meaningful way. So strategically, it's one of those don't cost a lot. Well, it costs something. I I get that, but it could be incredibly powerful. If it's the difference between a one case display and a five case display, there you go. Right? Does doesn't need any more explanation? Okay. So wrapping up, I wanna say, thank you to Harry for joining us today. He's is the the the wine buyer for Main Street wine importers, which is the wholesale arm of Capies, fine wines, and spirits. Capies is, one of the major players in Massachusetts with eleven stores, and Massachusetts is unusual, and then it's franchise state. And so for anyone who's listening, if you haven't been to Massachusetts, you ought to come. Oh, contact information. So, Harry, can you give us your email address so that if people wanna reach out to you and ask questions from what they've heard today, they could? Absolutely. My email is harry at main street wine imports, all spelled out m a I n s t r e t w I n e I m p o r t s dot com. Harry at main street line imports dot com. You can reach me there, and be happy to get back to you any inquiries. And cappies is w w w dot cappies k a p p y s dot com? Yes. It is. Well, Harry, thanks again. And we're gonna we're gonna wrap this up. And, we look forward to, having our listeners join us next week where we have another very exciting and informative guest. Steve, thank you so much. Thank you. This is Steve Ray. Thanks again for listening on behalf of the Italian wine podcast.