Ep. 850 Steve Melchiskey | Get US Market Ready With Italian Wine People

Welcome to the Italian wine podcast. This episode is brought to you by Vinitally international wine and spirits exhibition, the fifty fourth edition of Vinitally be held from the tenth to the thirteenth of April, right here in verona, to discover more about Vineetalee and get your tickets, visitvenetalee dot com. This year, the Italian wine podcast will be live and in person in Pavilion six. Stand a seven. So come on down and say hello. 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. Hello. This is Steve Ray, and welcome to this week's edition of Get US Market Ready with Italian wine people. My guest this week is Steve Melchowski, who is the president of USA Wine West, which is one of the more well regarded service importers, in the US market, and we'll get into some details of what a service partner, a service importer is. But Steve, welcome to the show. Thank you very much, Steve. Glad to be here. Can you give us a brief outline or, you know, bio on, your experience in the industry and how USA wine West came about, and then we'll get into some of the later manifestations of the company. Well, I've been involved in the wine industry for, probably over forty years in some way or the other. Fell in love with it on a German vineyard in nineteen seventy six. So it goes back aways. I spent time working both at the retail level and then managing a small wholesale import company in California. During that time, I started to see a need to have a company that would be able to provide access on the import side to wineries from all over the world who couldn't otherwise find a way into the United States. I've spent time being a sales rep on the street. I've sold wine to restaurants and retailers. I've worked in the retail sector. So I have a very broad a base of experience from which to operate. And I think that also gives you, I think a, a better background to design the services that you guys provide. Can you tell us the difference between, in general, between a service importer and what I would call a traditional agency brand importer? Yes. So traditional agency brand importers handle the importation and also the sales and marketing, so the technical aspects of importing and the legal aspects of importing, but then also have a sales and marketing team behind them that then commercialize the wines in the marketplace to distributors, state distributors or to retailers or wherever they decide to do that. A service import company really just handles the back office piece of the whole equation. So we handle the administration, the compliance, the, the, the logistics behind it, the warehousing, the invoicing, all the accounting pieces of it. But the sales and marketing is left to the four supplier to step up and handle by themselves. When you think about exporters, prospective exporters to the US market. What do you think their fears, their anticipations, or their concerns are when they're first talking to you, and how accurate are those for what actually really matters? I think that there's a, so you have to separate into the this this answer into people who know nothing about the US market and have no experience and those who do have experience. And both of them have a set of of concerns and miss misapprehensions about the US market that are a little different. Right? I mean, that's just the way it goes. So people who don't know the US market always say to me one thing. I want to export wine to the United States, which immediately makes me a little bit, uncomfortable because the United States is really fifty different markets in a lot of ways. And so it's very difficult for someone who thinks that the United States is like any other country, like exporting to Germany or exporting to Japan. It's not. It's a very different animal. And that that's one thing that I hear that they just don't understand how the US is organized from the first part. People who have experience here are trying to figure out how to tackle that bigger issue of. I have an importer here. I have an importer there. I have five importers, but I still can't conquer the entire market. How do I have some unified system that allows me to move forward? And those are kind of the so there's two things at play there. Okay. So there are a couple of things that that that popped up in that about how how how to be a bigger player and so I think when somebody asked the question, I'm look I get this a lot. I'm looking for an importer and I push back and say, is that what you're really looking for? Or you're looking for a route to market solution for the United States that fits your brand, which is not necessarily a national order for your brand because you may be only making fifty thousand cases or fifty thousand bottles, and you only have enough to service one or two markets anyway, so there's no reason to go naturally. So that that misapprehension, as you stated, it is is often in terms of what they see as they're stated objective and what the services are that you can provide relative to what they need. You know, I love what you just said because so many people who come to me and say, I want a name, a national importer. I wanna sell wine here. I The first thing I say to them is, you know, how much wine do you produce? What is your best route to market? And route to market is really, I think, at the at the heart of all this. Because if you have a route to market that that meets the export needs, in the United States of your of your company, then you've succeeded. How big that is, how small that is is sort of irrelevant as long as it meets your needs. And remember, I think that no one in any country who produces wine needs one hundred percent of their wine to be exported to the US. They should set aside a portion of that to come to the US. Look at the portion. You might be happy with an importer who handles two states and be done. And so those are the things that, you know, are really, like, that route to market is in spot on, Steve. So how did somebody get educated in the US market other than trying and failing by making the same mistakes everybody else made again for the first time? Honestly, I kinda like the failure failure. Well, That's how you learn. Right? Yeah. It's it's hard, though. It's real hard. It's very hard. And sometimes and and look, it's not it's not the not the same for everyone. But many times, I'll look someone in the eye who is small, but has bigger and never been in the US and has no experience. And I'll tell them, why don't you start with one place, find one person, and get some experience? Get a little bit of knowledge underneath your belt and see where it goes from there. Come back and see me in two years after you do that. That might be a good piece of advice. I think the other way to do that is And rarely taken my I would suspect. Rarely taken. The other way to do that is to talk to people is to really do your homework, talk to people like you who understand the market, who understand the route to market, talk to people like me who, you know, I I have, you know, thirty years of experience in doing this kind of work, and then actually come to the US and talk to retailers, talk to wholesalers, do your market research, spend a year, traveling to the US into various places and and and observing. Learn. Don't start selling. Nobody wants to take that advice. They wanna come to the US. They wanna come to the US now. They want an order. Now they wanna be in market before whatever happens to be coming down the bike. And all of those things tend to be, inappropriate, and probably problematic to them. And they are not gonna help success. They are going to maybe cause problems. So so the thing that I one of the things that I always tell people who wanna come into the US market, and this supplies across the board is your sale is not to a US importer. You need to get that piece out of your mind that you would exceeded if you find an American importer, a United States importer to import your products into the US. That's just stage one. Don't be popping the prossecco at that. So and and I mean that in a very serious way. There's a stage two and three, and you if you're not willing to invest the time and effort into making stage two and three successful, then you won't be successful in this market. And what are those stages, two and three? Well, I I think stage Stage one, of course, is finding an importer, finding someone who will actually accept you here. An an import solution, maybe a better way of stating it. Thank you very much. An import solution, whether whatever that looks like, and it can look like something a service import or a regular import solution, however big. The second piece is is to focus on finding a distributor in a state who will say, yes, this product is is something we wanna promote and help help sell. The third piece is now helping that distributor sell the product And actually, unfortunately, there's a fourth piece, which is sometimes helping the retailers in that market sell the product. So it's not as easy as the old days where you could, you know, sell a container to an importer and walk away, but it actually has a a continuity across time and space that you have to be involved in all in all spaces. And I think that's kind of a rude awakening for a lot of people that in every other market, they sell to the imported. And the importer takes on the responsibility of marketing the wine in the US, that's not the case. And and I like to to turn it around on its ear and say, let's start with establishing a, demand in the United States or create some orders. By you coming to the US and meetings and people and dining at restaurants and making some early sales so that when you come and talk to an importer, a distributor that you can assuage their concerns of how do I know it's going to sell by saying I already have people who I have pre orders on. That's gonna yeah. The biggest the biggest concern they have in my mind is I've I've heard a thousand of these this week. About how great my product's going to be, and ninety nine percent of them fail. So the assumption is yours is not gonna be any different. You've gotta differentiate yourself. And frankly, it is not I don't think that hard to differentiate yourself from the majority of everybody else by just doing your homework. So to that end, you are going to be Advent, Italy, as will I. Today is March twenty second. This interview will be airing on April fourth the week before Vin Italy. How would people connect with you, make an appointment with you contact you in advance of in Italy so that you can teach them all about how the US market works. Well, thank you. You're welcome to go to my LinkedIn page. And we can, you know, throw up a a link to that. Steve Melchowski. If you just use my name, you'll find my LinkedIn page. You can send me an email at steve at usa wine west dot com. And I I pick up the phone and call me as well, and happy to give out that phone number because I I tend to pick up the phone, people call. It's two zero seven six five three three two nine three. And that is with a zero one for the US. And the interesting thing about that is that's a Portland main phone number. Why are you in Portland and every other employer seems to be someplace else? Not everybody's in New York anymore. Or LA or San Francisco or Atlanta or Chicago, but very few of them are in Portland, Maine. You know, I, started my my my career by going to law school in Portland, Maine. And this is in the early nineteen eighties, and I, got my law degree in practice law here for a while before I moved to California and, you know, got involved again in the wine business. When I had children, I decided, you know, Maine's a pretty nice place. It has beautiful outdoors. We hunt, we fish, We canoe. We kayak. We, you know, sail on the ocean, and it's a great place to be. So, it really kinda doesn't matter where you're located in the US to be an importer, honestly, because we travel all the time anyway. And one of the problems with having a an office only in California, and we still have an office in California, is that communication with our European partners was very difficult because you're nine hours away. So you can't solve problems in an easy manner. So our California office tends to deal with a lot of things out of, Australia, New Zealand, and our, main office tends to deal with a lot of issues that come out of Europe and other places. Okay. That all makes sense. So just recently, there was a change in, structure in your company. Can you tell us about that and the significance? Yes. Thank you. We were acquired by a a larger company in the service in Port area called MHW. And, that acquisition happened last October, after about a two year, get to know your period. And, we feel very good about it. MHW offers us some resources that we didn't have in terms of, a backup for administrative issues, but they also offer some clearance options so that we can go direct to retail in markets like New York and New Jersey. So it it's been a it's been a really great opportunity for me, having run a company by myself for so many years to have colleagues who have extensive experience, on my level and to be able to discuss things with them. So it's it's been a really good good move. Okay. So you're still operating independently as m as USA Wine West, and MHW is operating separately from you. Is that correct? Yes. Yes. They are. We we cooperate. We we work together. We talk together. I'm on the executive leadership team there. But we're we're our own sort of wine focused. MHW is very spirit focused, so I don't wanna make this a whole wine thing. We also handle a lot of spirits USA One West does, but MHW is very involved in the spirits, side of things. Wine as well. But we have a very, very strong focus on a lot of wines of terroir, wines of regional importance. You know, we deal with people like Abaziano Novicello, Elboro, Otatuscany, Elena Vals, Cantina Ermays out of Sicily. So we have a really broad base in Italy already of of companies we work with, Cantino de Swave, a lot a lot of a lot of companies we we we work with. And and it tends to be a little bit of a smaller business, less than a hundred thousand cases in general, but we have some that do more But, that's our strength and that is something that will be separate. That's kind of what I've seen is that I don't wanna call them craft producers. We would call them farmers. I think that's a better, you know, smaller production of state produce things that need, perhaps, more hand holding or need a lot of hand holding and explanation. Go ahead. So all all I'm gonna say is that is that I do believe, you know, to your point, I think that wines of terroir of regional specificity of importance, like, like, some of these places need a presence in the US market because they need to be in restaurants. They need to be they need to have a have a have a way to be in the US market and having and they need to be able to shift very quickly. And a company like ours allows that to happen because we have a very, you know, a very service oriented ethic in our work. So is this something that that is a long term or permanent solution, or is this something that is a, introductory or roll out period solution. You know, I, I've had the thing I always tell people is we either make things better for you, and you have a better access to the US market, or if you gain a way to do it better, then we wanna make it easy for you to change. Because the idea here really is to let people succeed in the US market. Right? And to do that, we wanna have it be that it it works for you. And as soon as it doesn't work or you have a better way, we we help you make those transitions. And that's my philosophy So I like to think about it as, you know, when people are saying I'm looking for a US importer and then kinda separated into your forever importer and your route to market solution or import solution to get yourself started, launched, and rolled out to the point that you actually have some traction in the market. And then you have some other assets now that you can shop to other people where the fit might be even better because they would include sales and marketing and and those type of solutions. That's right. Exactly. So so now MHW brings in some of those other other pieces of the puzzle that might help down the road. And and don't forget, we also work, you know, to say that I don't do marketing and sales would be an understatement We have some very talented people we've worked with for a long time, who are independent companies. We have we have brokers that we we can refer to. We we run trade shows sometimes. So you can bring sales and marketing solutions to the party as well, which, I mean, that has to be part of it. The thing is if, you know, if you just do the logistics piece and you get it in a warehouse, great. You've made progress, but you haven't really accomplished the end goal yet, which is to sell it to somebody. I I can I consider that that our advisory role and referral role by giving people lists of state distributors by helping them find the right spot to land and having relationships with distributors ourselves that who trust us say this is a good company? You should look at them. Those are things that we can help. We can't carry that through all the way, but we can help. So one of the issues that I think ties into a lot of this, and I've been very active in discussing this subject and a lot of the people I've been interviewing over the last few weeks over the next few weeks, we'll be focused on this, is the issue about e commerce for imported wines. We're just gonna lay that on the table right now and let you react to that. And I'll ask some specific questions after I gauge your reaction. Thanks a lot, Steve. You don't have the answer? You know, my view is that e commerce for imported wines is a is a minefield and probably at this point in the development of legal structures and physical logistical structures may be maybe more more you may find a better way to approach the US market than trying to invest in that. I'm not saying it's not developing, but I'm saying that I am not a huge e commerce. You know, me e commerce direct to consumer model person in the US for imported wineries. It's very difficult. Yeah. So to to clarify, if you're a domestic winery, the three tier sys you have a you have a pass on the three tier system. You can sell directly to consumers in about forty four states. If you're an imported winery, you don't have that. You have to go through an importer. And right now, many of the laws are either gray or preclude an importer from selling directly to a consumer. There's a lot of different end runs around that that are still legal and some that are you know, just not defined or haven't been ruled upon. The larger issue, I think, is we, as Americans, buy everything else via e commerce, the one thing we can't buy conveniently or similarly you know, in Connecticut, my state compared to New York and what's illegal in New York is legal in California or mandatory in California. It varies. Yet where it's kinda like the industry has to be drag kicking and screaming into the early two thousands. When the rest of the world's, you know, doing e com for everything. So so I will I will distinguish e commerce here, and you're absolutely right. I a hundred percent agree with you on everything you just said. And I will wanna make a distinguishing point between e commerce and direct to consumer shipments. I think having your distributor be involved in the e commerce platforms that allow them to work with their retailers to effectuate e commerce solutions. I think that's really important. That's a really growing area of the world, and I don't think we should downplay that. But that really is not the same as direct to consumer shipments, and that, you're right. It's it's just it's just not there yet. It might be there someday, but it's really not for imported wineries. Okay. So, for for listeners, I gave a presentation at wine to wine in October on e commerce in the US where I kinda laid out or mapped out what you were just talking about. That ecom is the overarching thing of it as the umbrella. And, under it are a bunch of individual solutions. DTC generally is used to mean in the US as direct to consumer from a domestic winery, but it's also gets confused with e commerce. So it's really important to be specific about the terms that you're using. And we're also seeing that distributors now are creating e commerce solutions. Provee is one that's, you know, been coming out. I forget who owns that one. Do you remember? Libdip. Do one then there's Libdip. Okay. So Provee and Libdip, which are call them nontraditional solutions to some of these same problems that take slices out of the whole the the series of things that has to happen after you sell it through to a distributor. How does it then get to a retailer? Or to someone who can buy it. And there's a lot of solutions that are kind of taking slices out of that and providing those that may be applicable to brands that are in unique positions. If you've got the ability to actually do the sales or work through selling through a restaurant chain for something Libdib. We interviewed Cheryl Dursley. You can let listen to her interview in, looking at the Italian wine podcast. Gave a good profile of that. And that's just one example. The distributors themselves are setting up these things. I think what's happening is we all in the trade are recognizing it's a freight train where where it's heading. It's the laws are going to change. They're gonna be slow, but they're going to get there and maybe something like, the pandemic has moved along a lot of, you know, like, to go sales and, you know, sales by restaurants of individual bottles. And there's a whole bunch of hue and cry over whether those things are legal, particularly in New York, which is a a whole another subject. But I think you can't separate e commerce, the larger concept of people finding or dealing with the long tail, people finding the wines that they want that are probably not available at their local package store. The only reason being physical lack of space to put them. And so it naturally fits on the internet to be able to shop a virtual inventory or a endless aisle as it's called. Right. Absolutely. But I will also say that the US wine market, in general, ninety seven percent of it runs on personal relationships. That's where it counts. And this is my counsel to every single winery no matter where you're from, experienced or not, that comes in, is that you need to develop personal relationships to succeed in this business because that's how it sold. It's sold by guys like me who in in my thirties, I went out with a bag of wine over my over my shoulder, stored a store in San Francisco selling imported wines throughout throughout the restaurant and retail world. That's where it really happens. And that's where you have to focus really a lot of your attention because ninety seven percent of the business in the US has done that way. Well, but how does somebody sitting in Pescara, Abruso, Italy, you know, develop those relationships and and are there solutions for them of people resident in the US who can help them and work with the brokers. Oh, absolutely. Well, first, I think that person in a brusso should come to the US and start to go into retail stores and talk to people who carry their wines. And sit at a consumer tasting for three hours. And don't say a word. Just listen and absorb. Yeah. Exactly. Listen and absorb. Go out and do the do that work. And then there are people here in the US market who really know how to carry the message and that's in the story. Right? The story is what sells at the end. The story of the winery through to the retail level, to the wholesalers, to their representatives, to the retailers, and then finally to the consumers, and telling those stories can be done either by the winery or by winery representatives who are US citizens or who are sent over here periodically to tell those stories. One of the other issues that I've been really energetic about in espousing is the idea of optimizing the way a brand appears online. And that's a whole another subject. We won't get in it now. I have another webinar that I'm gonna be talking about that. And we will be releasing the the video of my presentation from wine to wine. And in my if you listen in next week, I'll I'll give you the link where you can listen to that for people who are listening. That at the end of the day, the winery is responsible for making sure that their product appears correctly online. What I mean by that is the photos that you use are current, but they're also high resolution. They're in the right aspect ratio, so they're not pulled or twisted or, you know, pixelated that the ratings and reviews are current that, food and wine pairings and winemakers notes and all that stuff. And there's ways of doing that. And I talk about how you can do that. That doesn't cost a lot of money. Does take a bit of time and takes a little bit of technical expertise, but nothing that's not out of the range of grabbing a twenty five year old walking in front of your winery one day to say, hey, can you do this project for me? And it'll take about, you know, like, a a month and of, five hours a week, and they'll be able to get it done for you. We'll talk more about that in another upcoming show, but I I think it's critically important for producers to recognize they're responsible for optimizing their brand online. So the corollary to that is is the opposite question for you. What is the one mistake everybody seems to make that you wish they wouldn't? Well, let me just Back off that just one second, but I know when someone isn't ready for the US market, when they tell me they wanna export here and I go to their website, and it's all in Italian. And I can't tell you how many times that happens. You can't rely on Google translate. You mean does a? Okay. You wanna sell wine in the US? Don't let me don't let a consumer click on your website and have it say, you know, it has to be, like, really, it has to be in the US. Right? Well, that's what they're gonna say. I read vader. Yeah. I'm out of here. So what is the what is the one thing one mistake that well, I mean, that's my big mistake right there. My other mistake is I think that there's too many companies in in every country that try to throw a bunch of things at the US market. A bunch of labels, a bunch of brand ideas. They have, you know, labels, most foreign wineries, especially European wineries have tons of labels that they can use. And they come here with thirty five labels, and they go to a distributor, and they put them all down, and they go, look at all the things we can do. And, you know, Americans are pretty sort of I don't wanna call us. We're we're narrow minded. We we don't want too many choices. We wanna be told what the message is and what the brand is. One is too few and three is probably too many. That's right. Exactly. That's right. So I want one, maybe two choices, and I want them to be defined, and I want them to speak about your brand. And too often, there'll be four different labels, and this is our line of wines, and none of them will have a continuity of of a brand of identity. And the American market, the US market really is driven a lot by brand identity. And so you need to look at what you're presenting to the US market. It might not be the same as what you use in Italy, by the way. It might be different, but that's the biggest mistake I see is people not predefining what they're trying to sell. The wine is always good. But what are they trying to what message are they carrying? Well, that's kind of the first thing I always ask people is tell me about your wine and invariably the answer I get is I make really great whatever. Okay? But at this point in the conversation with me and potentially with a, prospective importer or attributor, whether the wine is good or not is really not relevant to the conversation at this point of time. We assume that you're making good wine. Everybody makes good wine. That's necessary, but not sufficient. What I need to know is the story about why that wine will sell, how it will differentiate itself from others that are on the market and how that benefits me and how I'll be able to make more money by selling your one. You answer those questions and you preempt a lot of the questions that you'll get of people basically looking for a reason to say no. And then the first question that you get asked in my mind or my experience has been, do you have scores? And for a lot of people, they don't. And then the conversation just ended. Right? I'm not saying scores are a great thing, but if you know that's the first question you're gonna get. You better have an answer that ends with yes. You you know, excellent point, Steve. I'm old enough in this industry and have been a retail buyer in an era where we had to actually use judgment about quality of wine on another level. Right? Wine would come in, and it would be dirty. It would have bacterial infections. It would have re fermentations in the era of modern wine making. That's stuff almost doesn't exist. And so we have a quality level on standards that in the last thirty years have just dramatically changed in terms of wine quality. And pretty much everybody has good wine. I don't find anything in the shelves that I don't think is drinkable. I may not prefer it, but what I'm looking for is something more. Why am I want to buy that wine? What is the like you said it, what is the point of differentiation? Yeah. Okay. My guess this week has been Steve Melchowski, president of USA Wine West, a service importer in the United States. We talked about a lot of things, and there's a lot we can go into in-depth on, but I think for everyone listening, both Steve and I are going to be at Vin Italy next week. So why don't you give Steve an email at steve at USA wine West, and you can reach me if you want at steve at bevologyinc dot com. We look forward to seeing you in Italy. Steve, thank you very much for joining us It's been my pleasure, and thank you so much for, having me on. Thanks for listening to this episode of the Italian wine podcast brought to you by Vignet to the International Wine and Spirits exhibition. The biggest drinks trade fair in the world. For more information about VINitelian tickets, visit VINitelie dot com and remember to subscribe to Italian wine podcast and catch us on SoundCloud, Spotify, and wherever you get your pods. You can also find us at Italian wine podcast dot com. Hi, guys. I'm Joy Livingston, and I am the producer of the Italian wine podcast. Thank you for listening. We are the only wine podcast that has been doing a daily show since the pandemic began. This is a labor of love and we are committed to bringing you free content every day. Of course, this takes time and effort not to mention the cost of equipment, production, and editing. We would be grateful for your donations, suggestions, requests, and ideas. 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