Ep. 1105 Overcome Supply Chain Disruptions | wine2wine Business Forum 2021

Welcome to the Italian wine podcast. This episode has been brought to you by the wine to wine business forum twenty twenty two. This year, we'll mark the ninth edition of the forum to be held on November seventh and eighth of twenty twenty two in Verona Italy. This year will be an exclusively in person edition. The main theme of the event will be all around wine communication. Tickets are on sale now. So for more information, please visit us at wine to wine dot net. Italian wine podcast. A wine to wine business forum twenty twenty one media partner is proud to present a series of sessions highlighting the key themes and ideas from the two day event held on October the eighteenth and nineteenth twenty twenty one. This hybrid edition of the business forum was jam packed with the most informed speakers discussing some of the hottest topics in the wine industry today. For more information, please visit wine to wine dot net and tune in every Thursday at two pm central European time for more episodes recorded during this latest edition of wine to wine business forum. Good morning, everybody. This is Gina Colangelo of Colangelo and Partners. Thank you for joining this session today. It's about supply chain. Supply chain used to be an esoteric subject, of interest to very few people. And now, every day, it's front page news. Supply chain is affecting, how Americans do business, how Americans shop. And, and it's particularly critical at this time as the economy starts opening up, but getting products to market are becoming more and more difficult. Today, we have the pleasure of welcoming Alexi Cashhen, who is the CEO and cofounder of Ellen Kenny imports. Hi, Alexi. Hi. Good morning or good afternoon. Yes. It's five forty five for Alexi in the Bay Area. She is a trooper. It's never that early. So supply chain, again, a subject that a year or two ago, who would have thought that it would be in the mainstream media every day. And yet as a a a result of COVID, getting product to market has become not something we can take for granted anymore. And it's a subject that's for wine executives, is top of mind every day and, you know, being in stock, being out of stock, cost of shipping. These are all subjects that you're dealing with, in the wine business. And Alexis can help you navigate. So Ellenton imports is a logistics distribution and knowledge based company that essentially helps clients get products to market in the most efficiently efficient way possible. Alexi herself is the co founder and CEO, as I mentioned before. She has been in the business in the in the hospitality food and wine business for nearly twenty years and and founded Ellen co founded Ellen Tanni imports. More than ten years ago. Alexis is referred to as the chief executive optimist who who's always spreading the gospel of customer service looking for solutions to problems. And these days, there are no lack of problems to solve in the supply chain. And, again, working with clients, consulting with clients to get products to market in the most efficient, cost effective way possible. So I'm gonna pass this to Alexi. Alexi, I know this is a subject on the top of mind for many people in the wine industry. And please explain to us how you can help clients get product to market, what the holdups are in the light chain and how they can be overcome. Take it away, Alexis. Thank you so much, Juno. I'm very excited to be here. This is my first wine to wine. So I'm very, honored and excited to present, this this presentation to everybody today. So, I will start out by just reviewing a little bit about what I wanna discuss overall. So, yes, supply chain is of man top of mind as you as you pointed out Gino. So in this seminar, we basically wanna run down the the status of the current supply chain, understanding where we are right now in October two thousand twenty one. I also wanna address the consequences for our alcohol industry overall because, of course, the supply chain affects all industries globally. So we really wanna narrow down specifically on how it's affecting alcohol. And then, how you personally might be able to overcome these disruptions, whether you're, a winery, or you're an importer, you know, how best to navigate these challenges and also maybe to consider new solutions that you have not yet. Thought about. So the pandemic, as we know, has created the biggest shipping challenge that we've seen in the last twenty years. And so the context about how that's affecting the wine industry in the US and what we can learn from it is really important. We can't run away from this. We can't hide from the current reality. So really understanding what actions can we take right this minute, and how can we learn from where we've been over the last fourteen, eighteen months is essential. So we know, of course, that the record pace of import cargo plus shortage of warehouse space, challenges with labor, these things are all expected to go through the end of this year and well into two thousand twenty twenty. And we also understand, of course, that they supply chain issues are affecting our alcohol industry, particularly. And it's a it's making challenges with products reaching the US market, reaching them in time for the holiday season, but Again, there are strategies that you can take. There are ways in which you can, potentially have more control over your supply chain in the US. So when you leave a seminar today, I hope that you'll understand again how you you can maintain inventory more effectively, even with these unpredictable shipping delays. You'll also have a better understanding of how you might optimize your existing market strategy. And then if you're new to the US market, we'll talk about best practices for entering the US. Okay. So current supply chain, where are we now? We know, of course, the the global supply chain overall, not just the alcohol industry is still struggling to unclog the bottleneck. And it's important to understand what the causes and a little bit of the historic context behind these disruptions are. So carrier schedule reliability. So by carrier, I mean, ocean marine vessels or ocean freight vendors. So carrier reliability is at an all time low. The top graph of this chart shows the shipment reliability in two thousand and twenty and two thousand and twenty one performing at around thirty five to forty percent versus what you saw kind of historically is hovers anywhere between seventy five and eighty five percent. Now overall global logistics is an imperfect business. So, you know, targeting seventy five to eighty five percent reliability is actually ideal. So being that we're currently in this thirty five to forty percent reliability, even in the best of times, this is this is really not good. This bottom graph shows the same time period, but it shows the delays are at an all time high. So historical context, eight years ago, the ocean freight carriers consolidated. There used to be about twenty or thirty of them, and now there's only ten. So that consolidation has really, unfortunately, increased the concerns that we're experiencing. And these ten current carriers, and their inability to manage the capacity in real time has ultimately increased prices while simultaneously decreasing the level of service. So part of this reliability decline is due to the lack of fleet ship growth. Since two thousand and eighteen, there's been a decline. So that obviously in this chart, you can see that the error that that this the fleet growth or the need for more ships has been going down. And, of course, it's been going down right at the perfect time when we hit our pandemic. People keep asking, well, there's so much more demand. Why don't you just build more ships? Of course, things like the cost of steel along with so many other materials, there's also just a lack of physical space. There there are a finite amount of warehouse facilities that are large enough have the materials and machinery to actually build these ships. And they're they're all booked. So the inability to build ships fast enough is also causing, a log jam. So you can see that that this demand is gonna go back up But the challenge is, so we're seeing record growth. We aren't yet, of, of poised to meet that demand. But the other question is, you know, has it peaked? A lot of these ocean carriers are concerned you know, sure there's this incredible surge of demand that has a peak and will it back off again. So what's ultimately causing the problem here? This is a chart that shows consumer spending, US consumer spending. And so, typically, the the US has increased their consumption of goods versus services over the past eighteen months. And typically, US consumers, it's about even or fifty fifty between the amount of goods or things that US consumers are buying versus services that they're purchasing. So the uptake of goods and things is really, highlighted the amount of volume along the supply chain. There's also things like pandemic replenishment. So as US consumers are consuming certain items due to the pandemic, the replenishment and the need for those, particularly along medical equipment, creates a huge backup. We're currently, you know, staring into the eyes of the holiday season. So there's holiday buildup, which is always something we experience during this time of year with seasonality, but also because of all these delays, US companies have been forced to build up their emergency inventory to mitigate risk. So, for example, a wine importer in the US might usually by two to three months of inventory in their demand planning. But right now, they might be building up to, you know, five to six to seven months worth of inventory. And again, they're trying to mitigate risk and avoid those delays. The other thing is e commerce requirements. So e commerce has blown up in the last eighteen months in the US. The amount of wine being purchased online through online retailers has just had a really dynamic surge, which is really exciting for the for the industry and very exciting for the for US retailers. But the requirements for those e commerce retailers is such that they need more inventory in more places in order to deliver faster, hence they're, contributing to this log jam. But the real problem is is that all of these things are happening at the exact same time. So, heart congestion, we've all seen images of cargo vessels that are stuck off the coast of California. So globally, you know, there are certain areas across the, across the globe where port congestion is the worst. And the North American West Coast is one of those places. Experts are actually watching the West Coast in particular to illustrate whether things are getting better or whether they're getting worse. Because if things can't get better, it begs the question as to whether or not our global economic model that's prevailed for the last three decades. Will work for the future. And I think that's one of the really important things to think about right now is, great. We understand what worked in the past. We understand how we're waiting through things in the in the current space, but How are we gonna move into the future? What are the ways in which we're going to look at demand planning, supply chain so that we continue to prevail? Beyond port congestion, We're also experiencing trucking congestion. The trucking industry has experienced multiple setbacks, but long before the pandemic. We've experienced reduced lanes, which increase costs. Which has really been a challenge on the trucking industry well before the pandemic. So to give you a sense similar to the ocean, carriers, trucking industry in the US has also experienced a huge consolidation in recent years. And so companies are consolidating, which has also consolidated the lanes, the actual trucking lanes that, or routes that trucks are taking in the US. And these are all ultimately good things. It's good to have you know, more efficiency, increase reliance on technology, better standards for truck drivers, an attempt to reduce carbon emissions and leave a better carbon footprint. Those are all things that have been really important to the trucking industry. And unfortunately, that industry is just still in the middle of a major growing pains cycle. So our current predicament with the supply chain in addition to the trucking industries already growing pains they were experiencing were left with truckers that are overworked, underpaid, and exhausted. So what does all that mean? Well, it means price rises. When you have increased demand, lack of carrier reliability, poor congestion, labor shortages, prices do increase. Price containers of surge, we've seen headlines where some containers cost upwards of thirty thousand dollars. Now those examples are from Asian lanes, so mostly China to, to the west coast. However, I just read yesterday that there was one container from a domestic winery in the US. Where they needed to buy glass bottles from China, and they had to pay twenty thousand dollars for twenty thousand glass bottles. Aside from that, you know, most of our lanes from importing are from Europe, from Italy. And so the cost of those lanes have also dramatically increased. Emergency surcharges, which is the thing that these ocean carriers are passing on to importers have tripled, actually more than tripled. And so it almost feels like our industry because went through this relief of the wine tariffs. Obviously, we weren't affected with wine tariffs from Italy per se, but the US wine industry has definitely suffered from that twenty five percent tariff. And it feels like it's just been immediately replaced by these tripled emergency surcharges. So overall, what does all this mean for the alcohol industry? Well, I'm proud to say that our industry is extraordinarily nimble, very creative. There's a lot of ingenuity, a lot of great minds trying to think of ways to improve our current situation. But it's a challenge because our wine industry's supply chain is really intricate. Like any delay of shipment or labor shortages, plus things like the pork ingestion and all this increased demand have really enormous sequences. In the past, we would feel similar effects, but due to weather, if there was an enormous snowstorm, or if there was a traffic log jam, sometimes those events could have, you know, even just like two days of a snowstorm could have two weeks effect on a port. So now that we have these enormous delays due to so many other influences, it's really, really making things challenging. And all across the supply chain. Many companies are feeling the effects of labor shortages, restaurants, retailers, warehouse personnel, truck drivers, port workers, just the sheer lack of human personnel to help unlock these bottlenecks is extremely challenging. So we've had this unprecedented volume for fourteen months. It's created this extreme swelling of inventory. And just to give you a statistic, So, yes, there's more demand. And Elantenia imports, my company, which I'll get into our services here in a little bit. We are a service based freight forwarder, and then we also do distribution clearing for brands and importers. So we work with lots of different warehouses across the US. And our current inventory is sixty percent higher than what it was in October of two thousand nineteen. So again, that's two years ago. No pandemic, no tariffs, getting ready for the holiday season. We should have had more inventory than, you know, notably because of seasonality. And yet today, two years later, in the midst of all this chaos, we have sixty percent more inventory. That takes an extreme toll on this entire supply chain. Warehouses are frantic. They, in many cases, are running out of room, nor they just can't put wine away fast enough. So even though wine might have successfully arrived in the US, it's it's endured the delays of ocean carriers. It's endured the delays going through ports, traffic jams, trucking delays, But it's just sitting at the warehouse. There is not enough manpower to actually put this wine away so that we can even start selling it. So unfortunately, even when wine lands, it doesn't necessarily mean that we can turning it around fast enough and start selling it. So that holiday preparedness is key. Our industry runs on seasonality, and that current bottleneck is all from these demands that I've just shared. So it's mid October. There are still delays. There's still out of stocks. There's definitely inventory that will not make it for the holidays. So looking forward, despite the fact that experts say that it's gonna get a lot better or a lot worse before it gets better, there are things that we can do as I'm as I'm trying to to highlight here. There is not a lot that we can do for this q four or this holiday season if those ideas and plans and shipments haven't already been in motion. But my company, Ellen Tenny, works with brands and importers every day to help them navigate these challenging times. And I think having a trusted logistics partner and a compliance partner means that even when the news is challenging, our customers are able to hear from us in real time. And we're able to talk through what we can do differently or maybe what they can expect differently. Okay. So what can we do to overcome some of these challenging times? So in addition to supply chain bottleneck, Italian wineries, you know very well that the US's three tier system is a bottleneck as well. There are three tiers, which if you aren't familiar, there's a importer tier and then importers sell to distributors who ultimately sell to retailers. And that distributor's control really controls the success or failure of a brand's presence at retail and in restaurants. And in many cases, brands feel out of control about their US presence. That bottleneck between going from importer to distributor to retailer really can feel inefficient and frustrating for a lot of brands. So my company, Elanteni's services, really allow brands to take more control in their US presence. Instead of selling through a traditional importer, so Elanteni can help Italian wineries do the following. We can import your products to the US. We offer, customized LCL to less than container load or FCL full container load shipping solutions that allow flexibility for shipping exactly the volume of inventory that you need in order to support the US market. So essentially, you have stateside inventory that's in the US. And without waiting for your POs to begin that shipping process, when your distributors order, the inventory is already in the US. It's ready for pickup. Without having to set off that, series of steps of packing into the warehouse and then going through the entire shipping process. So we are licensed in all fifty states to sell to your distributors So we manage all the compliance and brand registration, plus we offer a direct to trade distribution option. So this is where you actually employ your own sales team and can sell to restaurants and retailers directly. So those states that we offer this are in New York, New Jersey, Illinois, and Colorado. So our compliance experts help wineries like you navigate the complexities of selling alcohol throughout the US. Our customer service team helped manage your day to day logistics, order fulfillments, inventory management, and relationship with all the warehouses that we work with. And you get real time information from great technology so that you can grow your business throughout the US. So our model is the same model we've offered since we launched in two thousand and ten. And it occurs to me that right now, given where we are with all of this craziness, with all of these costs increasing, that L and Tenny solutions can potentially help you offset some of these new supply chain costs. So Potentially, an Italian winery can rely on Ellen Tenny to sell their existing to sell two year existing wholesale distribution network without taking margin that a traditional importer does. As I mentioned, you can employ your own sales team. You can take back a little bit more margin by selling direct to trade in markets where we offer that service. So a lot of wineries that are potentially new to the US definitely begs the quest despite the current situation is the time right for you to enter the US market, or as an established Italian winery, is this a good time to evaluate your US strategy? Well, I don't know exactly who you are, and it takes a lot more questions to get to know you and understand your winery, your your experience in the US, your current strategy, and then maybe think through others that might work for you. But Our experts would love to talk to you about our solutions where you can control your own destiny in the US market. We'd be happy to talk to you about your current importers and how maybe they can outsource shipping needs to Ellen Tenny so that they can focus on sourcing and sales. But moreover, there are opportunities to sell in more channels and to gain more margin even though costs are rising. So what would it look like if your winery already had inventory in the US? Avoid this just in time shipping to your wholesalers and your retailers. Well, we would offer you peace of mind, we which would help keep your brand on the shelf and out of stock. Inventory management from our shipping solutions are less than container load offering really helps brands and importers improve cash flow by only shipping exactly the volumes that you need. Let's face it US compliance is complicated and a pain to navigate without experts. So our dedicated compliance team does all the heavy lifting. We've invested in technology that allows real time information so that our clients can control their business from wherever they are in the globe. And we have a full team of employees who are headquartered in New York City that provide daily customer service and we offer that coast to coast. And again, our services allow you to access all fifty states for wholesale distribution and five states for direct selling to restaurants and retailers. So a little bit about me, Elentenney was founded in two thousand and ten, two thousand and ten, Tim Ellenney is my partner and co founder, and both of us came from, a wine wholesale background working for or owning wholesale companies selling throughout the US and then wanted to try our hand in logistics and this service offering. So in the last eleven years, we've helped thousands of brands navigate the three tier system. We've helped them expand their market reach in the US. And have really enjoyed, you know, the creativity involved with trying to strategize and offer something that's meaningful that's innovative and that ultimately helps businesses grow. So you can learn more about us at ellentanyimports dot com. You can also email us at support at ellentanyimports dot com, and we can leave a little time for some q and a. Are you enjoying this podcast? There's so much more high quality wine content available from mama jumbo shrimp. Check out our new wine study maps. Our books on Italian wine including Italian wine unplugged, the jumbo shrimp guide to Italian wine, sangiovese Lambrusco, and other stories, and much, much more. On our website, mama jumbo shrimp dot com. Now back to the show. Great presentation, very, timely, very topical and very to the point. There are some questions, and I'm gonna start with a question about provenance, you know, with all those supply chain disruption, how can wineries be sure that their wines are being shipped, not only getting shipped efficiently, but getting shipped properly. So for fine wine companies, you know, having, you know, wine sit in hot warehouses or on trucks is is, you know, anesthesia to what they're trying to do as, you know, delivering great wine to their to their ultimate customers? It's a great question, and I'm glad you brought it up because there are plenty of solutions to in to ensure, the quality of product as it's shipping So we we almost always ship reefer containers. So they're temperature control refrigerated containers. And those are refrigerated from the moment they're loaded into that container. So it doesn't matter where it is in the life cycle of that shipment. Whether it's being loaded onto a container shipping through the Panama Canal, and at the very bottom of the vessel, and, you know, is or or the very top of the vessel where there's temperature variation, that temperature remains consistent. Especially shipping to the West Coast when you do ship through much warmer climates. It's it's incredibly important to ship reefer in winter months as well when you can have below freezing temperatures. So, yeah, so even though your container, if it's shipping, if it's ship reefer, you can rest assure that it's in the utmost control of temperature, whether it's sitting on a truck or waiting in a warehouse and it's taking, you know, days or weeks to unload. How about once it once it's here? And you mentioned bottlenecks and warehouses and and not enough, workers to load cases into warehouses and not enough space in warehouses. So, again, provided that that equipment is, you know, scheduled in advance. Those containers can remain, outside. And and the log jam in the warehouses, it's not that there's your containers just, like, sitting outside somewhere. In many cases, they are able to unload that container, but it it's just putting it away. You know, I mean, warehouses all have different systems and uses of technology. So it might just be that the containers unloaded and the palettes are just stacked up on the dock, but they they haven't yet been, you know, bar coded and scanned into the system and then ultimately put away into the correct location so that they can then be re picked for sale. K. And, there's a question from one of the attendees. You mentioned that this was the worst supply chain crisis in twenty years. So what happened twenty years ago? Was that a round number or was there was there a specific event twenty years or so ago that created similar supply chain problems? No. There's not a a particular event, and it is more of less of a round number, but it is important to to note the just that con that historical context about the ocean carriers and the just the consolidation that they experienced prior to, you know, a lot of that consolidation in the last, you know, maybe eight to ten years, it was just very unreliable because there were so many companies doing it so differently or just lack of technology where there were it was just very inefficient, an industry that definitely needed modernization. So, yeah, I mean, I think when when you think of twenty years ago and you think sort of pre technology and and ocean marine, cargo shipping. A lot of it was just, you know, pen and pencil and fax machines. So, you know, I think that when once you start to see, those types of changes, I guess that's what I'm comparing it to. Okay. That makes a lot of sense. There's another question about how new, newcomers, Italian wineries, smaller Italian wineries, can enter the US market. You talked a bit about the three tier system. And, how your company can help companies overcome the challenges of the traditional three tier system. Can you talk a little bit more about how a small winery might enter the US market with your type of services. And, again, I mentioned, you know, we would love to talk to people individually after this seminar just to get a sense of you exactly where you are or have you had any market presence in the US So so, typically, our services work better for a winery who does have some existing distribution, or at least a solid plan or a path forward, or pre orders, because it it does not make sense. And so I talked about you know, hey, you can have inventory in the US, which is already here, and then that can potentially circumvent the delays that then, an importer might see having to pick it up at your winery every time from from the from the start. So that works when you actually have sales that are gonna deplete that US inventory. It does not make sense to, you know, export wine to the US and just hope that you'll get distribution and hope that people will deplete through that inventory. We definitely have to have a plan. We definitely have to make sure that you have at least some path forward towards distribution. You know, it's it's not like a one size fits all answer of, oh, well, if you're in two states, then yeah, we can help you. You know, for one winery, given their SKU set and their product mix, two states might be all that you need, and then it does make sense to set up that inventory resource in the US. In other cases, it might be that you know, you need a lot more momentum and and had opened a few more states before that actually makes sense. K. And a follow-up question to that. What do you think the future is of the traditional three tier importer in the US There's a lot of, as you mentioned, now that we have e commerce, more direct to consumer, which, you know, imported wines can now sell direct to US consumers in different ways, direct to retail, direct to, restaurant, So where does that leave the traditional free tier importer? Is it too soon to to consider the the end of that model or, will it coexist with these new models? Well, those are amazing questions that I wish I had a giant crystal ball to answer, but, but I can say that, a couple of things. One is that our current, Biden administration put out set out a forum where they were collecting information feedback from the industry in terms of, you know, how might they implement changes or shift some of the framework within that three tier system. So the results are unclear. It'll likely take a year for them to come back or to propose anything after collecting that feedback, but it is encouraging that our current government wants to hear from the industry and and get a sense of where things might change. A lot of energy is focused around the direct to consumer and the the retail tier in particular where more, brands wants to be able to either sell themselves directly and or lack some of the the shipment laws between states so that so that more brands and retailers can access more consumers at home by selling direct online. So I think if I were to guess, I would say that I would I would I would imagine that there would be potentially more regulations around direct to consumer shipping that might be on the on the table for consideration in the near future. But I wanna say too, like, I don't think that the, you know, the tier of the importer is is long in the tooth and that that that needs to transition. I we need importers, but the function of that, the traditional importer. My company does it differently. We offer this more service based, offering. But the traditional importer who spends their, you know, their their company time and and energy you know, traveling abroad, meeting wineries, explaining to them how things work in the US, having a handle on it, having, you know, the the infrastructure to bring brands to market, the relationships that they then have with distributors and ten, twenty, thirty, fifty different markets, that's really invaluable. And so for the right brand, with the right importer, I think that's still an essential role. I think it's still an essential tier that I I can't see it, you know, changing dramatically on the, legal side. And even if it did, I still think it's just naturally that function of of importing of of brokering of procuring an amazing portfolio and spending you know, twenty, thirty years building relationships with the with the right distributors across the US, there there's always gonna be a need for that. K. I have another question here in re regarding freight. What about air freight? Is that an a viable option maybe at the higher end of the market, do you ever handle do you ever use air freight when shipping is bottleneck? We have probably once or twice, during the pandemic. And it's extremely expensive. So, yes, there there might be a scenario where that's, kind of the most necessary option to consider, but it tends to be in much smaller quantities. Like, you're not gonna move hundreds of cases via air freight. It is it is very cost prohibitive. K. And, another question regarding predictions and understanding that you don't have a crystal ball. But when do you expect shipping costs to stabilize and bottlenecks to these. So, again, I think a lot of experts are indicating that is the bottlenecks that we're experiencing. The question is when is it gonna peak? So I think watching for that peak period and then seeing it kind of start to Crescendo back down again is the important, data point to be looking for. Some some experts are suggesting that we might see some relief in kind of late q one, the first part of q two, and potentially that that could be a result of the lunar new year in ch in Asian countries. So when those countries, you know, slow and stop their production and exploitation due to their lunar new year, that that might allow a little bit of time, it's just time. Like, the the whole bottleneck needs time to completely unwind itself. So that's that's one prediction that we're seeing. And, yeah, I mean, in terms of just what to expect from a cost perspective, I don't see costs coming down dramatically, in the in the near future or even through the half year of twenty twenty two. I think that there are still a lot of, there's just a a lot of stress and a lot of strain and those costs just unfortunately are the thing that needs to rise. But I will say about costs, the wine industry in the US is notorious for absorbing those costs and not passing them on to consumers. So a lot of importers and distributors, and and retailers and restaurants, they're afraid to charge more for, you know, core items. So, you know, your average glass of champagne or prosecco or, you know, what a the, you know, by the glass or should cost by glass. There are a lot of concerns about passing those costs down onto retailers for fear that they'll lose those placements, for fear that consumers, you know, won't pay sixteen dollars for a glass of Prosecco instead of twelve. And that just needs to change. Yes. And, cost is how basic, a sensitive subject for every producer, right, in every importer. And speaking of This is a related question. Do you see the market moving more to domestic wines? The US market moving more to domestic wines because of the supply chain issues and the cost increases for imported wines? It's a great question. And one that I we've been watching closely even during our, period of tariffs where certain, distributors, you know, we watch our do are they have a greater propensity to buy you know, domestic wines now because they they wanna avoid wines that have higher tariffs. And I I I no. I I I we did not see an overwhelming jump in that direction. Sure. There might have been, you know, certain companies that sort of a great embrace that strategy. But for an importer or a distributor who's built their their entire company's, identity, ethos, marketing around importing Italian wines and and selling Italian wines and you know, there's a break there. So there isn't there hasn't in in our experience been that every company's kind of jumping ship in that in that domestic strategy. Okay. And when you say companies, but if you're a restaurateur or retailer, And all of a sudden, you know, you're seeing ten or fifteen percent increases on your French and Italian lines. Maybe you start promoting more of your California Washington state lines or, so you don't foresee that potential change in the market? So, you know, Italian wine and, and European wines in general have always been, you know, more more economical choices for US consumers, for restaurants, for finding mean, of course, there's plenty of of, you know, high end wine, from every country. But, you know, American wine is not, inexpensive by by comparison to to Italian wines. I I live in California. I will tell you firsthand, you know, real estate is not cheap here. So that's really what trickles into a lot of the effects of, of the cost of wine given its country of origin. So sure, if if a restaurant, you know, is able to buy a a twenty dollar, you know, wholesale cost, bottle of Pino noir from California, you know, versus something that they're buying from Italy that maybe used to cost twelve or fifteen dollars. And now that's essentially up to eighteen twenty. I still think that there's room for those, for those offerings. And it it's ultimately about what consumers demand. I think that over the years, American consumers have increasingly learned about, wines, foreign wines and from Italy in particular, there's there's been a stronger understanding and a a growing education around, the regions and the multitudinous varietals that are offered to consumers. So, you know, once that demand starts to sink in. It's hard for a restaurateur or a retailer to not deliver what their consumers ultimately want. Okay. Great. And speaking of Italy versus California versus other markets, how does your business break down you know, your business in Italy versus France versus other markets, and where do you see trends in that regard, is Italy increasing relative to, you know, to France for example? Italy has been, a strong lane for us shipping wise. France is still outpaces our, our shipping volumes, but, it it it's it's has stayed very consistent. Again, I think during the pandemic, there was an opportunity there for, or sorry, not the pandemic, but with tariffs. There was an opportunity for Italy to sort of strengthen, a stronger place hold, within certain company's portfolios. But, yeah, it's it's it's remained steady. Great. We're coming to the end of our discussion. It was very interesting. And as I said at the beginning, who would have thought supply chain is becoming front page news and topic of conversation with consumers and people who would ordinarily never even know the term level loans, you know, be concerned about their Christmas shopping or their, you know, the wines they're they're able to purchase, you know, at holiday season. Do you have any closing thoughts in terms of the future, the market, the expectation, anything you'd like to add? Just plan ahead. Work with, work with, you know, vendors, partners, and professionals that are experts in their arenas. Again, I think it's, we're not out of the woods, but this is a a smart and, really dedicated and nimble industry. So I look forward to working with many of you. Thanks very much, Alexi. It was really informative, really helpful. And, thank you very much for getting up at five forty five in the morning. No problem. Take care. Thank you. Alright. Thanks to you. Bye. We hope you enjoy today's episode brought to you by the wine to wine business forum twenty twenty two. This year, we'll mark the ninth edition of the forum to be held on November seventh and eighth twenty twenty two in verona Italy. Remember tickets are on sale now. So for more information, please visit us at wine to wine dot net. 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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