Ep. 459 wine2wine Session Recordings | The Next Normal

Italian wine podcast. Chinchin with Italian wine people. Italian wine podcast as wine to wine twenty twenty media partner is proud to present a series of sessions chosen to highlight key themes and ideas and recorded during the two day event held on November twenty third and twenty fourth twenty twenty. Wind to wine twenty twenty represented the first ever fully digital edition of the business to business forum. Visit wine to wine dot net and make sure to attend future editions of wine to wine business forum. Hi, everyone. My name is Steve Ray. I'm the author of, how to get US market ready and book right there. And I also do the Monday slot on the Italian wine podcast. My day job is president of Bevology Inc, which is a consulting company specializing in helping export brands, wine brands in particular, enter and grow in the US market. Before I introduce our featured speaker though, I'd like to make a quick shout out, to Stevie Kim and her crack team in in Verona. And that's Land Lou, Enrique Avasani, Pauline Rosa, of Mikaela, Rachel, Jacob, there's probably about twenty of them there that are making all this happen. The this I think the whole thing is breaking new ground ground on how trade shows are conducted going forward, and it's been pretty exciting. Okay. So in this session, we're gonna focus on what steps each of you watching and listening can do right now to adapt to the rapid changes caused by COVID nineteen in the US market. So let's get to the heart of the matter. And, oh, by the way, we're only be talking heads for most of the session. We'll have a couple of slides at the end with the key takeaways. And we will be making them available at the end of this session. So let's get started, and I'm pleased to welcome Ed La May. Ed has a long history in the United States wine market having worked in senior sales and management positions at constellation, Treasury, Robert Mandavy, Kendall Jackson, all major names. He is also associated with Sonoma State as an adjunct professor and former board member for the university. So he knows his stuff, and he's here to share what he knows with all of us. So, Ed, welcome. Thank you, Steve. It's a pleasure to be here. I'm excited for the next, half hour or so. Okay. Well, let's dive right into it with, with a hard question. Okay. We've been hearing a lot about channel shift. Also, we've been calling it the a total collapse of Horeca or on premise as we call it in the United States. How can producers get past this headline of doom and gloom about how bad everything is and focus on the opportunities that come along with this kind of revolutionary change. Yeah. That's that's a great question, Steve. And the headlines are pretty frightening. If you stop at the headline, you probably would want to be in a different industry. But as you start peeling that back, there is actual growth in the industry. So the wine industry for, decades had always been growing in the United States. And over the last two or three years, we've actually seen a softening of those trends. And we've actually been in very slight decline. But as you look at all of the data that's available now and some of the data coming from SIP source, so this is, distributor derived depletion data. So very accurate and very timely data. The industry actually is for the first time in about three years in growth. And what has happened is channel shift has absolutely occurred starting for us in the United States on about Saint Patrick's Day. So March seventeenth, most of on premise started shutting down ever so slightly and then very dramatically. So we've had, a collapse, to a decline to the collapse of on premise consumption, but every bit of that volume has moved into either independent retail grocery or online, this new ecomm sector, that's absolutely on fire. One piece of data I heard from somebody the other day, Bevmax, which is a chain of, I think, nine stores in Connecticut, they were averaging normal before COVID, three hundred orders a week. Now they're doing three thousand orders a day. And I think that's indicative to the the kind of change that's happening. Yeah. Steve, that that doesn't surprise me. I think that, according to SOPoship compliant, DTC or direct to consumer, as we would call it, that ecomm channel, it could wind up being a four billion dollar sector for business by the close of this year. Wine dot com just released their, financials, their back half, trends So the last six months of their fiscal year, they were up two hundred and seventeen percent in revenue. And for the full year trailing twelve months, they're up about one hundred and two percent. So their business has doubled. So there is business to be had as long as you know where to go find it and how to present yourself and your brand when you get there. Okay. One of the issues that I hear from a lot of Italian producers is I can't compete with low prices that supermarkets charge or change charge. And our recommendation is the focus shouldn't be on that channel of trade. And wine dot com, for example, says that their average bottle price is thirty nine dollars compared to Nielsen data which shows it's ten dollars in a traditional store. So it strikes me that, e commerce and this whole new thing is really a good thing for imported wines who wanna charge more. It it is, and people have gone from a special occasion purchase online to it being a part of their normal, shopping experience. They will go into grocery and buy beverage alcohol wear legal. But also this e comm platform people are pantry loading by going to wine dot com, going to naked dot com, going to their, local wine shop that has an online presence. So we're definitely seeing this becoming more of a new norm then we are some aberration that's all driven out of, COVID and the the pandemic. So, I'm happy to say this is good news. In in what seems like all bad news. A couple of other trends that are happening is easing of regulations. I've I've you can talk about that change. Yeah. That's been really fascinating because if people if if you've taken the time to get educated, if you've read Steve's book, if you know the way that markets are structured in the United States, things don't change very rapidly. Our beverage alcohol laws are based out of our US constitution out of the twenty first amendment. And things like that don't change that often, but pandemic hits, restaurant industry is really struggling. And suddenly, a lot of laws are being either completely, removed, temporarily, or they're being, relaxed. So it it has never been possible in most states that you would go buy food to go and be able to take a bottle of wine from that restaurant to go with you. Suddenly, all the laws are starting to relax on how you buy alcohol, how you deliver alcohol. How alcohol is accompanied by meals. And most pundits that I talked to, they suggest that the majority of these law changes are going to stay, that you haven't seen a complete, you know, moral K or collapse of society because I can pick up a beautiful bottle of Kianti to take home with my pizza or, you know, whatever my to go option is. So we're definitely seeing some relaxing at the state level for laws that control beverage alcohol? Well, tied into that was something you mentioned to me the other day that, because on premise is no longer an active channel for a lot of brands who traditionally have sold on premise, but now they've become allocatable to off premise. Can you comment on that? I can indeed. A lot of people that are watching this, they have portfolio of products, and they might have some very, small produced lots of wine that is very expensive, and they only want those wines available in white table cloth restaurants. So really fine dining. And there has been no fine dining for the last ten months here. So people that have been successful in recognizing this channel shift, they've changed the conversation that they're having with their importer. It used to be. I only wanted my wine sold in restaurants. And if I found that you sold them in another channel, I would be upset. Well, now I need I need sales. I I need to enjoy the commerce of my wine being sold So the new conversation is now that I can have my wine sold at retail, what type of retail shops would I like to see my wine in, or maybe better stated, Steve, what wines would I like to be sold in the company of? When you when you see this wine, think of my wine, and that could be in some really nice wine shops that had not had the opportunity to buy my wine for a number of years. Okay. So people may be encountering, consumers in US encountering wines that they hadn't seen before in the off premise. So how are consumers finding out about new brands? How are they searching and and finding products? And how can producers who are listening here adapt. Yeah. So there is still no stronger, type of endorsement than a third party endorsement from a friend. So having your wines buzz worthy having your wines talked about by friends, you know, oh my god, Steve. I tasted this, you know, phenomenal wine from the Alta ID Shea if you tried it, you know. So there's nothing that replaces the quality of good third party friend endorsement. But beyond that, people are shopping heavily online. People are shopping in, you know, wine dot com, you know, naked all of these other avenues So brand recognition, label recognition is really, really key. If you are a producer that is currently doing business here in the United States, I would want to make sure that my importer has all of my marketing content, my label, images, bottle shots that show, my wine, you know, in a, in an array of beautiful food, text sheets, any type of sales material, I wanna make sure that my importer has that because it's not uncommon for online retailers to go to the importer and get that information from that source and then pull that into their e commerce environment, and brick and mortar retailers do that as well. Mhmm. So making sure that you have very simple collection of market materials that you bring you bring to the US. One of the things that I recommend to, the wineries that I consult with is a lot of people are going to sites that have, label recognition technology in particular, wine searcher dot com and VVino. And you can do an audit of your own wines. Look at how they're covered on those sites. And if they they don't have current ratings, reviews, winemaker notes, pairing notes, or photos, high resolution photos of both bottles and labels, you can optimize the site by going to them, wine searcher, and so on and saying, I have all these, assets I'd like you to put on the site. So the burden is on you to do it. Don't rely on your imported distributor or retail to do it. You can control how your brand is seen online. You know, Steve, that, that jogs a thought. Back in the day when I first started in this industry, the chore was to go find an importer. And once I found an importer, my job was done. I'm naturally the wine somehow sold at self and reorders occurred. Well, one of the things that we've seen is mass consolidation in the US wine industry, and the consolidation has occurred at the distributor level. So there are simply fewer distributors and they're larger. So the competition, once you find an importer and an importer finds a distributor for you, once you get into that portfolio of products, there's immense competition for what a sales rep should be selling. So the notion that I find an importer in my job is done, that is been changed one hundred and eighty degrees. If I find an importer, That's when my job starts because I need to make sure that I am taking responsibility for constantly selling wine to my district, importer through my importer onto the distributor, and then finding ways to have market relevant. So finding markets that you enjoy visiting retailers and restaurant tours that you keep an active dialogue with once you've come back home from a market visit. So the responsibility really is on the producer to constantly be, talking about their wine and keeping their brand front of mind with retailers, restaurant tours all down through the value chain. Okay. Well, those comments kinda beg the question, number three that I have for you is a common question we all hear. Ed specializes in in route to market and same thing that that I do in different ways. And the common question is can you help me find an importer? And my response is, are they asking the right question? Comment? Yeah. Yeah. So I think the question should be, How can I how can I penetrate the US market and create meaningful, business? How can I see my wine depleted all the way through the value chain? And it it might have been thirty years ago that you get ready for a US launch, that you're ready to launch, you know, all across the United States, that's not a very prudent, strategy these days, to To create a US launch is something that is reserved for really the largest and best funded organizations out there. If you're a small to midsize winery, and the US is a market that you need to get into, want to get into, my suggestion would be that you first understand all of the US laws that you Steve, I would take several chapters out of your book, you know, understand the way markets are structured and how you legally get wine here into the US, but I would focus on a few small, forays into the US. You know, I I read a piece yesterday from Vinepeire And they had looked at some, research done by wine intelligence. And they said if you are a regular wine consumer, there is a high likelihood that you live in one of five cities in the United States. They said twenty percent more than twenty percent of all regular wine consumers live between New York and New York. Or LA to Long Beach. That's in Southern California, Dallas Fort Worth in Texas, Chicago out to Naperville, which is in the Midwest of the US, or in the San Francisco Bay Area. So if you're in one of those five cities, you're really appealing to a very large wine consuming populace. So, the notion of let's figure out how to launch in the US, I don't think that's the strategy. Let's figure out how to get into the US market in one or two markets. Learn how to do business in a very efficient way. And then from there, start growing, start a conquest strategy of the next adjacent state or if my distributor that I'm with owns another, business two states away, can I then grow to that state? So I think there's, start small with a lot of focus and a lot of attention and make yourself extremely relevant, make yourself buzz worthy, have people want your wine, have people talk about your wine, and then be able to move that energy to the next adjacent market. I think that's probably a good way to start. Okay. We have a a question here. I wanna throw out because it's a good one. Many producers are thinking of discounting their wines to promote sales. Is this a tactic worth considering or too risky to damage the positioning and the brand? We gotta that's an hour, but okay. Go ahead and see what you can do. Yeah. I I I will tell you, a retailer in the United States always remembers the lowest price they ever paid for a product. So it's very, very challenging to go down in a significant way to drive volume and then think that you'll raise your price back up at some point. The US market at retail, it does drive on, periodic discounting, but it's not significant and not structural in nature. If I have a wine that sells for twenty dollars in a retail shop, I might choose three times a year to have my product discounted down to sixteen ninety nine. So give a three dollar discount, four dollar discount to drive trial to get people talking about it, knowing that it will be a thirty to a sixty day long period, and then bring the price back up. I would be very, cautious of lowering FOBs. That's very hard to, bring back up. So the ability to sell into the US at your standard FOB, and then through your sales intelligence through your importer through your relationships in the market understand when do I want to program my wines for some, moderate discounts to drive volume and trial? For thirty and sixty day periods and bring them back up. I would think that's more appropriate. Yeah. My thought is discounting is okay for a brand that has an established presence and, velocity in the marketplace, but generally the brands that we were talking to and working with don't. And so it really shouldn't be part of the conversation at all. Because it's not what the retail price is. You don't control that. The retailer controls that in the US. Fifty two different markets, different rules in every state. All you can control is the FOB price or the X Works price, and make sure that you're understanding how a US price structure works in a little, recommendation years on the get US market ready dot com website of the book. There's a couple of free tools, and one of them there is a price structure tool so that people can go into the Excel spreadsheet and start playing with things like margins and discounts and so forth. Yeah. There's a notion, Steve, that you can always go down in price but it's very hard to go up in price. So if you enter at an artificially low price, you might well be stuck at that low price for a long time. Yeah. And and one of the things is another question here about explain how order could use the photos with food or food pairing or labels and convivial scenes. I think the way to think about it is add value, don't discount. Find ways to add value to your brand, and you know, what Italian wines have that many most brands in the United States don't have is authenticity, heritage, a legacy, provenance, all of these things that differentiate differentiate you in a very, very meaningful way. Short comes with some education necessarily, but those are all value ads, and they say nothing about the price. Yeah. When you look at, what I would refer to as a beauty shot, your wine set in a, you know, beautiful setting with, you know, you know, nice prosciutto and melons. It gives people that that sense of adventure. I can envision myself, being there. But those type images do get lifted by retailers, and they use that material on their site. So they show your label, your bottle, your wine, in situ. So that's how that winds up being used. My personal feeling from some research that I've done, so it's not just the feeling, is can American consumers wanna know two things? What does the wine taste like? In words that I understand, not sauteed gooseberries? And number two, is it going to go with what I'm serving for dinner tonight because most US wines are purchased right then and there. So if you can, as a producer, can provide that information, whether it's on Vivino, whether it's in wine search, or whether it's in your POS, whether it's through seven fifty, or a million other ways that you can get this across. That's what what people wanna know. And it doesn't need to be complicated. I use one example of, the back label we did for a Spanish wine. It was eight words. Goes great with tapas, try it with tacos. And I think it speaks to what does it taste like and will it go with what I'm looking at? You know, Steve, you also mentioned authenticity, and video, material. Right. Video content is really important to a lot of retailers. So they want to be able to have somebody talk about your wine. And who better to talk about your wine than you? Nope. And twenty years ago, that would have been a video company, and that would have been editing, and that would have been a long production. Now a device such as a telephone with you, your winemaker, the owner, in the vineyard, no more than two minutes. Two minutes would be quite long. One minute, you know, beautiful day here t tasting our newest vintage of, those type things resonate with the US consumer. They like to see the family heritage behind these brands. Okay. Last question. Got about six minutes left. What can producers do right now without spending a ton of money that can have an immediate impact on their brand assuming that the brands are currently so available for sale in the United States? So if your brand is currently available in the United States, and you are trying to drive volume and velocity, the first thing that I would want to know is where is your wine currently being sold? So what type of conversation can I have with my importer? Please tell me what states am I being sold in and in those states, what type of accounts am I being sold in? And then I wanna make sure that I'm addressing all of my conversations all the way down through that value chain to who is currently stocking my wine and how I can be more interesting to them. So right now to try and find new avenues to sell your product in is not quite as easy as driving velocity of where you currently have your products placed. I love that. I would I would, make a point that I see this a lot. Many producers that I work with are afraid to ask for information and data. And I highly recommend that when you begin your relationship with them that you lay out what are the reports that you're going to get, and one of the most important ones is accounts sold. Because then that gives you the, at least the beginning, some some meat you can chew on to help, support what they're doing. When you ask for an account sold report, when you've been in the business for a while, they're gonna hear that and think that you're gonna pull the brand, but the end of the day, you are it is in your right to get that information. And if an importer or distributor is not sharing it, I I'd press on that. There may be another reason. Yeah. And Steve, a lot of these importers they they have felt like they have become a, report writing shop that people simply ask for a lot of information and never seem to do anything with it. So a lot of these importers have pivoted, and they've said all of your information is available on our website that is strictly for the producers that we represent. So the, you know, producer in in the Piedmont You can log in log in and password and see everything relative to your brand, not all of the brands, but the brands that you sell us, you can see depletion volume by month. You can see account sold. So I would to that end, Steve, I would not just ask for what reports can I expect, but how can I take responsibility for that? How can I get to your website and get that information on demand? I think that's that's great great advice. If we can put on the last two slides, what we tried to do is boil this down into some key takeaways. And and maybe we can frickin track this. Start with one because that's kinda been your mantra. Oh, it it is one hundred percent your responsibility. And I I cannot stress enough finding an importer is not the end of the journey. That's the beginning of the journey because all you've done is moved your inventory somewhere else. So you now need to get it from importer through distributor onto retailer and have it enjoyed by consumers in the United States. So, you know, it it's not as arduous as it sounds, and quite frankly, I think you would enjoy traveling to various US markets and and and seeing seeing your commerce, seeing your wine being sold. Number two on that list is to get educated and make sure you're doing the right things in the right order. Oftentimes, we we find people do the right things, but in the wrong order. So, one recommendation, is the book. By the book, it's available at amazon dot I t also at amazon dot com. Listen to the daily Monday podcast. On Italian wine podcast dot com because I'm reading chapters from the book. And if you go to the w w w get US market ready dot com, which is dedicated to the book, there's four free tools that I think would be really useful to you. One is the US market glossary. One is an Excel spreadsheet, that helps you identify which are the right markets to go into. There's an Excel price structure calculation tool. And for those of you who are too cheap to buy the book, there's a free first chapter in the book. And if you only do one thing, read that and go to the next slide. Why don't you take that one? Yeah. So things that you can do right now to to impact the market. If your wines are not being scored, there's a a whole host of, wine competitions here in the United States. If you are getting scores, make sure that you're communicating that. Make sure that you're telling everybody that touches your wine what type of reviews you're getting on, on the wines that you're selling. And then, Steve had talked about optimizing all of the content, that is out there. If you have done a major package redress If you have changed your label and you absolutely love it, you need to make sure and go to wine searcher and Vavino and all of these other tools and audit their site. Make sure that they have the most up to date content for your brands that they have. I would also add, as you can see there, and when you get the, PowerPoint, there's a, a link to them on my blog at Bevology inc dot com. I have links to a list of all of the industry newsletters, as well as all of the competitions and evaluations and scoring things that are relevant in the US market, all of which I think is is pretty important. I that's about all the time we have, Ed. I wanna thank you for your time. I thought you were very clear and cogent and eloquent in your comments, and I hope People who are listening, feel free to add questions here. We'll get back to you. If you have some, and we'll post those slides, along with the rest of the wine to wine slides. Excellent. Thank you, Steve. It's been a pleasure. Thank you all. Listen to the Italian wine podcast wherever you get your pot casts. We're on SoundCloud, Apple Podcasts, HimalIFM, and more. Don't forget to subscribe and rate the show. If you enjoy listening, please consider donating through Italian wine podcast dot com any amount helps cover equipment, production, and publication costs. Until next time.