Ep. 579 Jack Cohen Martin & Gaetano Peragine | Steve Raye

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. Hi. This is Steve Ray, and welcome to this week's edition of the Italian Wine Podcast Get US Market Ready with Italian wine people. This week, I'm happy to have as guests, Jack Martin Cohen, of technology platform, Grape Inn, and also Gaitano Baragene of Stra Italian, who is a very creative and unique, producer exporter and marketer of brands from Italy. So I originally met Jack through attending and speaking at a number of conferences. We've been in conversations as his program has been developing, and I'm a big fan of it. And in Gaitano's situation, we met at Vin Italy one year. And I remember sitting with him with my partner, Howard Bernstein, and listening to this guy talking, thinking, my god. He's either brilliant or full of crap. And I turned it turned out he was, in fact, brilliant. And that's why We've got him on the on the show today because he is actually prototyping, using, not prototyping, the system that we're gonna be talking about that doesn't bypass the three tier system, but is a way around it so that producers can maintain control and management of how their brand is perceived, market is sold, shipped, ordered, all that stuff, warehouse in the United States. So I'm gonna turn it over to to Jack for a quick bio. On, how you got to the point where you were even, creating this platform, what it has to do with the wine industry. And then we'll follow with Kaitanya with a little insight into his operation. Jack? Hi, Steve. Thank you for, having me here. It's good to be here. So, yeah, I'm Jack, the founder of Grapen. My background is actually in digital advertising. Prior to Grapen, I was working at a big data company that, was acquired for over a billion dollars. When I was there, I was serving brands, consumer brands, from all over the world. One of my clients was an international producer. And working with that producer, I realized that this industry still doesn't have the benchmarks you would expect when going, digital marketing. That's what sprung my curiosity to look at closer. At the same year, I was traveling in Tuscany and, met with producer. That's where I realized that there is some sort of, of a breakage between the producer and the market in the US. Later on, you know, learn more about the the three tiers and so on. For the past several years, I've been helping, new brands to penetrate the US market, mostly helping them with digital marketing. That's where I learn more about their problems and end up developing the technology platform, which is now called Grapen. Cool. So, Guyana, can you tell us a little about you and how you connected with Jack? Yes. Charles Steve, and, thank you very much for the excellent introduction. I'm Guyano peragina, the managing director of Australian, which means quintessentially Italian. You brilliantly, brilliantly, Steve condensed what we do. I mean, we are creators, producer, and exporters of Italian wine. We've teamed that group of winemakers in Italy in seven regions. We have seven states, and we, add, we have made efficiencies in every single step of the value chain from HR to production to labeling, creating, buying anything you can think of. We made efficiencies. So we can actually, in a team, produce great wine from north to south, and sell it all over the world at a very, very competitive price. So when you're talking about efficiency, really, what you're doing is taking out costs, identifying areas where there's not being value added and finding ways around that so you can, take class out of the system and maximize margins for those who are participating in the system and ultimately being able to Exactly. So, Steve, absolutely. I mean, we do not want to dump on our clients our inefficiencies. We don't wanna price a one eight euros when the one can be easily sold as five euros because if you do your job, well, you'll announce, you know, your housekeeping and you're, you're organizing, you can easily sell at a at a at a lower price doesn't mean the wine is cheaper. The wine is just being sold at a at a fair at a fair price. I mean, I always say that you need to be a farmer to produce a great wine. You also need to be an entrepreneur, a businessman. So you need to organize your wineries in a way that your great product can be leveraged onto the market and be fairly priced, not overly priced because of inefficiencies. Great. And that's the based on a a deep understanding of how the system works both from, the vines in Italy to the shelves in the United States. Okay. So back to Jack, can you give us a top line of what the the Great Bend Technology platform is, how it works, and how it differs from, I would say, the two traditional ways new brands and, small brands get to the US. One is a traditional agency model where the import company takes over the responsibility for everything, influencing the the packaging, but also, logistics of getting the product in, ordering it, paying the money, clearing customs, getting it into a warehouse, selling it to distributors, and getting it delivered to distributors for them to be able to sell to on and off premise retailers. The other model that's probably most common as or common as well is service importers, which basically are perform the back office functions of an importer, but not necessarily the marketing or distribution functions. So where does grape bin fit relative to those two things? Sure. So to focus on, you know, the problems and the, equivalent solutions working in the past several years with multiple brands, new brands. We realized that, they have some common challenges. And, in today's competitive market, high product quality is not the guarantee for excess in any way. The first challenge is usually access to the market. So access to the market is limited. Big distributors are are busy bringing products that are producing in large quantities. And the, let's some of the logistics services are a bit too expensive to start with. Then once on the market to generate sales opportunities is is costly, since the market is saturated, when working with, and finally, when working with intermediates, it creates a disconnect between the product owner, whether it's the producer in Italy or creative, some sort of a of a gap between the product owner and the client. You know, our our goal is to basically empower their brands access the US market, but then also give them the tools to generate, sales and manage orders. And the way we do that is by enabling path to market by connecting and matching that supplier with a an importer distributor that can stage their product in the market. Ideally, we're looking for a good match between the products that imported distributor is presenting and their existing portfolio. So you're basically being added to to a portfolio and then and you to both sides. And then once you're on the market, we're leveraging digital marketing to generate b to b leads in a cost effective way, as well as step into local sales reps to present your product in the market. Finally, the platform operate is the supplier's virtual storefront to sell to B2B and manage orders twenty four seven. The supplier gets transparency into sales and direct market feedback. So he or she can log in from Tuscany their morning time and see, see how well their product are doing in, let's say, Florida with Guetano. Without having to even, speak to anyone at that point. So, really, the fundamental issue that I find most producers have is they don't understand the US three tier system. And frankly, they're farmers, non entrepreneurs with a nod to Gaitano. The reality is, they're good at making good wine, and they're that's what they specialize in. So they need help or a guide or a way to navigate the complexities of the US market and still deliver a product to the end consumer that's at a fair price, and high quality to price ratio. That all boils down to taking noise out of the system or removing friction from the system versus the traditional agency brand model or service importer model. So the question is without going into great detail of how Great bin platform actually works, what are the benefits that accrue to the people in the chain? You still have intermediaries. You sell an intermediaries taking margin, but at the end of the day, those margins are lower and the net price to the consumer is more affordable and everybody wins. So tell us how that works. Sure. The so the key concept is to help the producer figure out what's the right go to market strategy for them? When we start working with a producer or a brand owner to that case, we identify in a data driven way, which market are a better match for their products. Then we look for logistic partners that we work with in these markets in order to be able to, stage that product in the market, and we close the loop with online tools that give the producer immediate feedback on how well this product is doing in these specific markets. And what we usually recommend to producers to do is to bring limited amount of product to that market, to that identified market, and then take it to market and see how well it's doing and improve as they go. Instead of growing internationally and get, entangled with the logistics and and the three t regulations, focus on your product, focus on where it should go, and we help you get there. So you will not need to to know much about the three tier. So you can keep focus on your product and the feedback that you're getting and how we can improve it. One of the other things that I think is is pretty important here. I've been a real advocate of this under the headline of optimize the way your brand is perceived online. And the problem is many producers for sure, and a number of importers and distributors don't really pay attention to that. And yet we're in a world where label recognition technology on VIVino, pricing on wine searcher makes a lot of this stuff transparent. And then that's kind of what's happening. The revolution is in transparency where it used to be an opaque thing. You would sell your product to a distributor, and they would or an importer, and they would take it and Take it from there. This system allows you to have visibility of what's going on, influence, and control on it. And a side benefit, this is my point about the, optimize online, is all of this information will be digitized, meaning the way your brand looks is under your control. What label you're showing, make sure it's a current label, awards, those kinds of things, descriptions, tasting notes, scores, all those kinds of things are part of the file that follow this product all the way through. So if somebody decides they wanna sell it via e commerce, that data is in there. They don't have to call up and say, hey, can you send me in high resolution files of the the label image flat and all of those kinds of things. Am I right in that? Steve, Steve, Steve, if you nailed it, Steve, this is exactly what, we're trying to do here. You completely nailed it. I mean, opaque. This is the word that now that the the keyword that it's, it's really working as an obstacle to the producers. To imagine a winemaker spending his, his time on three hundred sixty five days per year looking at the weather. It's gonna be a frost. It's gonna be rainy. And then he gives up control over what it does. He gives up control over his wine production. He sells it to a to an important. And then off he goes to where? I don't know. Is it being priced fairly? Is it being perceived in the way that the winemaker wants it to be perceived on the market? And then today, everything is right there, perception, Vivino, and I don't know how many millions subscribers in viewers Vivino has. So this intermediation This is the key word to me in this, hyper disintermediation. It's paramount. It's it's paramount today. We are we're living in in an hyper connected world. We cannot afford any longer to abide to something that was decided in nineteen twenty nine. The prohibition is error. I mean, we need to evolve. We cannot really give up control over what we sweat and work every day of our lives. I mean, we want to give the drinkers of our wine, our way of explaining sharing our production, the passion that we put into it, the communication, you you don't you cannot afford of giving up control and communicating your own product your territory, your land, your territory without all this, it will be only commodity. But we don't want to sell Coma. We do not produce commodity wine. We sell wine with the soul. So we want to communicate the soul of our wine to our consumers. And I think a key point to make here is the system is very much three tier compliant. There's no way to get around the three tier system in the US market, but there are ways, especially for smaller brands, to be three tier compliant in a much more efficient and transparent way as you said. So Guitano, can you give us an example of a product you're working with and how it's moving through the system and what are some of the problems and solutions you've come across using this platform? Right. Yep. You choose your best shots. You choose your three, four, five use, they really are your top production. You package them well in, you know, in three, four pilots. We get, of course, TTP compliance. We get the back label with the, with the importer's name or the back label. We send the three, four pilots with our best shots over to a temperature controlled warehouse over into the on the US territory. And then as we said before, still in charge of communicating the land territory in the unique selling point of our products without any filter, we decide the wholesale price the price for which the product will be sold to the trade buyers. It will be sitting on gray pin, which is a, a lead generating tech platform. So in a nutshell, we are here what we're doing. We maximizing the chance of success. The chance of reordering at the chance the chance of customer loyalty because to me, sending four pilots once it's not exporting. It's just shipping wise. So here, the solution is that you will be shipping the wine, your best shots, We'll be sitting in Miami. We'll be sitting in San Francisco. We'll be sitting in New York, temperature controlled. You will know at any given point. At any given time, you will know what is the stock there. If it if it's going out for testing, if we've acquired new cast customers, what is the feedback from the ground. You can fine tune the offer. And if you go, you have a you have a cell, eight thousand kilometers. So five thousand miles, like you were selling down the streets where where your winery is in Italy. So you don't give out control, but you're selling it five thousand miles away from you. And you know every single step of the way from production to selling it to a bar in Florida or in New York. Okay. I get that conceptually. So the question I think some listeners would have is, okay, so what's the importer's name that you put on the back of the label? What warehouse is it going to? Are you going to, like, you know, public warehouses like Western carriers or or like those. I imagine in each of those stages, you're trying to save money. So, like, who functions as the importer for you? Jake, you wanna take this? Because the answer is, we will pick and choose who the importer's gonna be depending on where the prod what the product is if it's Florida, if it's width wide, it's gonna be me. For instance, right, onion, ink is gonna be on the back label. If it's something more, for California, for instance, it's gonna be my partner in San Francisco. So it depends on what production is. We'll actually tailor made an importer for you, we'll put that important on the backplate. Yeah. So in that sense, it's kind of like the service importers because, like MHW, you'll see Manhattan, New York on the back label. It would be the DBA of the company of the the producer company and an address of Hassett, New York in the case of Park Street. It would be Miami. Yeah. Let let me let me try and and get the, and take the answer to the previous question, Steve. So the key for the program is to first connect the or match the produce with a an importer that's on the market that has, some some good synergy with the product that, that producer is producing. So the first step, as mentioned, is to identify the market, then find a good partner in that market. And we consider the logistic partners, the importers distributors, the owner market is is partners that help the producer stage the product. This way, the producer does not give away control over the representation of the product And the producer has a say in how the product is being positioned, what images and other information is being presented to the trade buyer and eventually to the end consumer and even input on the price. The strengths of having technology involved is by closing the loop with immediate feedback from the market on how well the product is is doing. The producer can sit in in his house in in Tuscany and see how many samples are being requested, how many are delivered, what orders are in the pipe and also get feedback directly from the trade buyers, and the sales reps on, how well a specific label is doing, how the price is being perceived, that allows them to improve and and make changes to the product if needed. Steve, we have forty three thousand winemakers in Italy and really to match all those winemakers with an importer in the US. It's practically impossible. It will not be doable and only few of those, I think, five percent, maybe, of the big guys, of the guys that produce why in Italy in in in some sort of volumes export to the US. So this is a way to give everyone a chance to say, hey, but is my one good enough? Can my one be can my one be, of a success, a sort of success in the US. Let's have a go. I don't have any importer. I don't have any distributor. Bowers, I want to still have a chance to be represented in into the United States. If I go to Southern, they will never talk to me because they have such an encyclopedia of wines. Yeah. It's an accelerator program that is defined in time and budget, and you get an immediate, feedback on whether it's succeeding or not. You don't need to sit and wait for an importer to pick you up. In order to not to get anyone aggregated. What I would say is that we're working with importers and distributors, supplying them tools to streamline their own orders. And then when we're doing matching, we're actually matching a producer with an importer distributor when there's a synergy with the portfolio, it forms accelerator program. Let let listen to this real life example. You are VIN Italy, an importer comes to you and says, I'm gonna sell you ten containers of wine. The wine is good. Okay. How how much is the price? It's three years now. Why? I'm gonna send you ten containers. So, okay, two forty, no, two thirty five, then two thirty. And then it really screws you to the last drop. Two thirty. The wine, it's sold one pallet first to see how it goes. I don't know if he's gonna pay me one hundred twenty days. And then it, it doesn't order anymore because god knows what he stole this customer that the wine is. It's, in Bernelo rather than it's in Montalcino or whatever. The other scenario is, I'm not gonna go and ask for begging, and I'm not gonna beg anyone from, you know, there was small guys, like a little bit of opaque. I'm gonna sell myself. Instead of selling for two forty, I'm gonna sell it for three years, x works. Plus, I'm gonna decide to sell it for twelve dollars at a bar in San Francisco. So not only I'm gonna be the one to say, hey, this one is made a, b, c, d. This is what's going into it. This is the process. This is the way, you know, the unique way of making it. This is our land. I'm gonna make I'm gonna sell more because I'm I'm gonna tell my consumers what the wine is about. And higher margin because it's easy to say, hey, I'm gonna get one pallet, five pallets, but the price I tell you. Okay. No three euros, two thirty. Okay. So for the sake of selling it, you know, you're gonna sell for ten cents for twenty cents. Because this is this is reality, guys. This is the reality. So I'm not I don't wanna the reason why it is try telling Inc. Myself, it's exactly this. I don't wanna be screwed by a guy that comes from the US and says, hey, you're gonna pay. I'm gonna try to tell you to pay because I'm the guy, that says no. And then the guy that ends up working the land. Twenty four months a year gets ten cents, and the guy gets whatever. And that maybe he's not even able to sell the wine. So I'm gonna have a chance myself with my production. This is what this does. Okay. So, Jack, we have the logistics issues identified. We're taking noise out of the system. We have a way of identifying, the markets that they should be in and matching with an import and distribution solution. Then what happens? So, yes, Steve. What we did is launching our accelerator program, which we call key to market. The idea is to help producer get to the market in a way that is controlled. The timing is defined that the length of the program as well as the budget. And during the program, the producer is able or the product owner to that extent is able to get immediate feedback on how well the product is doing and get feedback from the market, what what was good. If the price was was okay, is the label need changing. And in order to and the way that it works, we practically, build a network of service importers and clearing distributors that are using our platform to streamline and sell their own products. Once a producer start working with the platform, we add them, to an existing portfolio of one of our partners. At that point, their brand is basically being added to debt service portfolio. As part of their portfolio, they enjoy direct channel to existing active accounts, and that's, especially important these days, with COVID where a lot of accounts shut down, and up again. Sales are then driven by reps of the platform and reps that are working with the distributor where we are able to leverage digital in order to generate more leads and more awareness to the brand. The platform is basically becoming a self serve for, trade buyers, to discover new products and reorder existing products. Okay. So in a sense, is more opportunity for more brands. We're talking about smaller producers here to find distributor and import options to get their products into more of the country. What I really like about that is it's a way for the little guy to compete with the big guy in a way that makes sense for the little guy and doesn't, shut down or preempt the three tier system. Again, what we're doing is taking noise out of the one other point you guys mentioned, and I think is really important is that it's not a decision that you have to make that is forever decision. And I like that strategically when somebody's coming to the US market, what I tell them is you wanna push off forever decisions way down the road because you don't know right now what's going to be the right thing. So one benefit of service importers as they exist now with MHW and Park Street and so forth is you can hire them or participate. You pay a fee, and you you have a contract and it's six months or a year or whatever it happens to be. In this particular system, you can basically do the same thing. But since you can monitor the the activity as you're going, you can see on a month by month basis, what's happening is your brand's successful. Is it not? If not, how to pivot and start to change things and not wait for a two month old account sold report or depletion report, from a traditional import. Gaitano, give me a sense of how all this impacts or affects the distributor side in the US. Sure. I mean, we will be their partners, really. I mean, this will allow US distributors to feature a wide range of Italian wine, practically with direct enterprise. Without locking any capital, which happens when you order in big volume from Italy to get competitive price competitive prices, economy of scale. So you will have no logistics hassle to do groupage in Italy. So as I just said, no capital it's locked for months. Nowhere are space needed, not two, three months lead time to get the products in case you run out. So this is a way for a distributor in the US to have an attractive Italian range that, you know, at least you need to have thirty to forty skews to have an attractive Italian range coming from ten to twelve wineries, let's say, so logistically financially and even administratively, it's complicated. And I think it's better spend time selling rather than chasing papers. So I would rather sell first then buy what's needed. The stock would be in Florida for instance, or in other selected warehouse across US. Prices, like, you were buying directly from Winders in Italy. So the stock is in Florida, but the prices are it's coming straight from a winery in Montelino. So all in all, you will minimize financial risks, which we know it's amongst the first, course of really going bankrupt at the end of the day. And I've seen many over the last, unfortunately, many over the last six to twelve months. So you will minimize or bring to zero your financial risks. You will expand your returning portfolio, save money, anytime, and just focus on getting new clients. To to chime in. I've been seeing, especially during COVID, small distributors who cannot, travel to Italy or commit to a big chunks of product. And instead of in porting the containers themselves and and, basically risk it not working or coming in late, they're able to tap in, for example, two products that Keitan was bringing to the market that are somewhat proven in Florida, have a mixed pallet being, delivered to their state and know that this product is available, know that it's that it's, that it's close. So, it's gonna be there in a timely manner, and also that it's tested in a different market. That allows them to get a product that is somewhat proved and somewhat proven market fit in in a different state without having to invest too much time on my or money to get it to into their portfolio. Okay. That's a absolutely critical thing. I've been telling everybody all along. At the end of the day, it's not about the wine. Making good quality wine is relatively easy to do. The technology and the science are there. The challenge is getting that wine to somebody who wants it, two or three tiers down the system. So the question that an import a traditional importer distributor retailer for that matter are going to ask isn't how wonderful the wine is, and, yeah, the last doesn't have scores and all that kind of stuff. But what you really wanna know is, how do I know it will sell in my store? So if you start small using this system where you're not looking at container loads, you have an opportunity to work more closely with the retailers and customize your marketing to fit their individual setup. Create a case history that documents this is a velocity removing this stuff at, you know, a case a month and putting in these kinds of support programs, which are extendable and scalable. That's what somebody wants to know. How do I know it will sell? Well, here's a case history of we're doing in Georgia, and I realized George is different from Tennessee, but it still gives you a sense that this is you're not betting on something that's new to the world. There is a track record of it or in in the US. And I think that is is a I see it as absolutely critical because while they may not say, how do I know it will sell? That's the real question they have in their mind. So let's make sure that we're answering the question they have by putting in place a system that allows you to start small, measure what's going on, and then scale and replicate. And that's what I particularly like about this. There are many ways to skin a cat, and there are a lot of pieces in this puzzle. We took a look at one solution that touches parts of the problem, earlier this year with an interview with Cheryl Dursley of Libdib. We're going to be talking about talking to a couple of service importers, Park Street, and MHW, talking about what their programs do and where the strengths and weaknesses are. And this week, we had Great Bend, which is a tougher one to describe, but is a very different approach to the US market. So not that all of them are the ultimate solution, and not that all of them are the exclusive solution. But I what we're trying to present to people here is there are options in the US market that fit within the three tier system that don't look like things used to look like. And given what happened with COVID, we can't look back. We're not going to go back to the way things were. We're going to go forward to the way things are. And we look at these things as options for producers. And, frankly, importers, distributors, retailers, on premise, everybody else in the system is a way to get products to the US. We're talking about Italian products here. That might be stymied in other ways. Yeah. So thanks, Steve. Definitely. Our goal is to have a to supply tools and add value, to players across the three tier, to importers and distributors, help them source better product with less risk and, obviously, to champion the producer and empower them with tool that give them information to the market. And, yeah, hope to see you both, soon in real life. I just wanna thank again to you, Steve. To have, given a chance to, share our, a new proposition for the US market or our Italian white makers friends. So I hope to see you guys very soon in some sort of fair, and we will be having a booth, provide next year. If you need to next year, so I hope to see you all soon. Yeah. Let's get on a plane. Okay, guys. Thank you very much. So this is Steve Ray. That was, an interview with Jack Cohen Martin and Geitano Paragini, talking about the grape end solution for exports to the US market. Tune in next week, and we'll have another interesting subject to talk about. Thanks so much. Bye. Thanks. This is Steve Ray saying thanks again for listening. On behalf of the Italian wine podcast.