Every market has its own individual ways of doing business and steps wine producers need to know before trying to get a listing. Arguably the most complicated and difficult of them all is the United States with its unique three tier import and wholesale system whereby each state acts as its own market. Here US writer, Roger Morris, sets out advice on how to crack those three tiers and gain a foothold in the US.
Ask a wine producer if they are exporting to the United States and they normally take a big intake of breath. But there are ways around America’s complicated three tier import and distribution system. You just have to know the right people to ask, says US journalist Roger Morris.
As an American writer who frequently travels to the wine producing-regions of Europe as well as to various locales in the New World, one of the most frequent questions that arises when I am tasting at a winery is whether a selection is imported into the United States.
It’s quite common for someone to find a particularly interesting wine and inquire about what the price is stateside. Often the answer is a hesitant, “I would like to sell it in the US, but my importer doesn’t think we should.”
The relationship between producer and importer can be harmonious or contentious, and which of the producer’s wines are represented in the importer’s portfolio is the most-common source of disagreements – just after whether payments and shipments arrive on time. Unless the producer is well-known and wants a new importer, the importer generally holds the upper hand.
It’s a topic I’ve frequently discussed with both parties, most recently with communications manager Baldo Palermo and export manager Elena Bortoletto of Sicily’s Donnafugata winery, Wine-in-Motion’s marketing and sales director, Blanche Orbe, and Jordan Sager, vice president of US importer, Winesellers, Ltd.
Here are some thoughts on choosing labels for a winery’s import portfolio.
- Let’s start with a half-dozen labels. No matter the criteria used in selecting which of a producer’s many labels to choose, everyone seems comfortable with launch plans for about six wines, although they may be introduced gradually over a period of weeks or months. “Most of the time,” Bortoletto says, “an importer will choose a white a red at entry-level, medium-level and top-range plus the main flagship wine of the producer.”
- Suggested retail price is one of the two most-common selection criteria. That may be an American SRP of under $9 for an entry-level wine, under $20 for a quality, but untested, red wine and under $50 for a rated wine from a new or marginal area. “Currency rates come into this as a major factor,” Sager says, “as most of our overseas suppliers use local currencies and not US dollars.”
- The other one is perceived consumer familiarity with the category. The reason we see so many Chards and Cabs from out-of-the-way regions is because that’s want customers buy. Drinkers sometimes want exotica, but in small doses – Sardinia may be exotic enough for them, without trying to make it an unknown Torbato from Sardinia. “For a brand that is not well known, an importer most of the time prefers to start with well-known grape varieties, both international and native,” Bortoletto explains.
- Ratings count. “Even though Touriga Nacional is not a well-known varietal in the US, we decided to launch one from Julia Kemper because it got a good score from Parker,” Orbe says. Palermo agrees, which is another reason why producers often supply wine raters with labels not currently in their primary market.
- Producers already in the importer’s portfolio get first dibs. “Bringing in something new that directly competes with something we already have is not a winning strategy for anyone and only complicates the strategy,” Sager says.
- How a wine actually tastes is sometimes important. This may sound like a no-brainer, but it’s often a tertiary consideration after other punch list items are checked off. “Oh, and it also tastes good.”
- Small-volume wines can occasionally make the cut. “If an SKU has a good turnover, it’s easier to keep in the importer’s portfolio,” Palermo says.
- It’s hard to say “no” to a visiting sommelier or major retailer. While importers often take key customers on wine junkets to major production regions, they do so at some risk if either falls in love with a wine not currently in the portfolio. Even if adding it means added business, small volumes tend to cause headaches.
- Relationships give the producer more bargaining power. Some importers and producers are so linked together that it would be difficult to image one without the other. Here, business relations take on a more collegial atmosphere with more give and take. Which is the reason that it was a surprise to outsiders when Frescobaldi and Michael Mondavi’s Folio Fine Wine Partners recently terminated a relationship that dated back to Robert Mondavi’s early international adventures. “But even if there is a change in importers, it’s easier to go with the same SKUs,” Palermo notes.
- Trends in the import marketplace are key. “Data and industry trends on new categories or varietals that are on the rise are a big factor,” Sager says.
Wine-In-Motion decided to test the limits of America’s rosé craze –a craze that saw every importer scrambling for pink wines they had previously rejected – by including the 2014 rosé from Julia Kemper. “It’s risky,” Orbe admits, “but we wanted to show what an aged Portuguese rosé could do.” Alternately, some varietals suffer from negative trends, especially Syrah and Rieslings, which Americans seem to be able to take or leave, regardless of ratings.
- Looks count, and they may trigger arguments. “Pricing and packaging tend to be the main areas of disagreements,” Sager says, explaining that the American three-tier system still frustrates producers who see unnecessary markups. Additionally, “Labels and brands often fall in and out of favor,” Sager says, “so convincing wineries that a change may be needed is often a challenge.”
- Sometimes, it’s the producer who wants to exclude a selection. Often, an importer may fall in love with a producer’s wine that sells out in-country or is a popular cellar door selection at the winery with no room for volume increases. “But even then, a producer may allocate a few cases of the limited product for the foreign market, especially for the major ones,” Bortoletto says.
- Portfolio reviews can change the mix. It is often called “refreshing” the portfolio. Slow movers are eliminated and sometimes no new label is substituted, often to the frustration of the producer. A message from a distributor or importer that says, “They quit making it,” or, “We can’t get it anymore,” should be taken with a grain of salt.
- Different SKUs for different importers. Finally, the United States is a big place, and producers often have multiple regional importers – a workable, but less-than-ideal situation. After an article appears that features the producer, one importer may find demands for a wine that another importer stocks, but he doesn’t. Similarly, the producer is frustrated by retailers who want a wine that know is imported, but not in their region.
Of course, there is no perfect system or perfect algorithm for what to bring in and what to leave out. “Many times, we have launched something that we thought was a sure-fire winner, and it flopped in the market,” Sager says. “Other times, we reluctantly agree to work with something due to fear of success and find that it becomes very successful.”
- Roger Morris is an American wine, food and travel writer who regularly contributes to publications such as World of Fine Wine, Wine Enthusiast, Drinks Business and Meininger’s Wine Business international.