The world of wine is getting an increasingly smaller place and wine businesses are no longer just happy or able to make ends meet by operating in the country they are from. Export is very much now the name of the game. But it’s not as easy as it might sound. Here’s wine consultant, Alistair Morrell, and his checklist for exporters to follow. Or as he also says: Proper Planning Prevents Piss Poor Performance.
Travel to most international wine fairs and there are an increasing number of UK wine suppliers, importers and distributors that now have their own stands as they look to spread their wings to new markets and not have all their eggs in the ever thorny British wine market. Here’s Alistair Morrell’s tips on what steps to take first before even thinking about exporting overseas.
Perhaps the most important aspect of becoming an exporter or breaking into a new export market is preparation. We only need to look back at the last 18 months and the impact that Brexit, Trump, North Korea, and frequent terrorist attacks have had on creating a period of great uncertainty in the world. Not the best environment to be thinking about new business initiatives overseas. But the best antidote to uncertainty is planning and preparation.
Take these recent words from McDonalds’ chief executive, Paul Pomroy. He says the UK currently faces a “perfect storm of challenges” including food and wage inflation, interest rate movement and with the Brexit reality just around the corner, it’s not surprising businesses are becoming more and more cautious.
Yet his response is to keep investing, keep innovation high. Stand still and you risk being taken over by more dynamic rivals. “You have to be bold in your decision making,”’ is his strategy for the way forward.
The wine industry can draw some parallels to this. Wine drunk in a market other than its own has never been higher – 43% according to the OIV in 2015, and is likely to get higher with Chinese wine imports likely to grow until 2020 at least (Vinexpo 2018).
But we are also having to be brave in face of the worst global wine harvest since the early 1960s, that has reduced the available supply of wine considerably. Which has come at a time when global demand for wine is rising above supply levels for the first time. But whilst we live in unprecedented times, in the spirit of Paul Pomroy, the answer is not to draw our horns in and do less, but to take braver decisions and plan better.
So if you think your future lies in building bigger exports then here is a potential plan of attack. But don’t forget: Proper Planning Prevents Piss Poor Performance.
1) Remove the emotion
Emotion plays a big part in the wine industry and it is easy especially at the preparation stages to get over-excited about the new ground that you are about to break. Double check yourself for fact over fiction.
2) Check the data
What data is available to you? What is the background economy saying abot the target market? You might only produce a few thousand cases, but identifying the movement in the market, how big it is and how many players is important. Double checking its validity, possibly with friendly competitors is a good way of improving your confidence.
3) What’s the ‘meme’ of the market?
What categories are doing well? What products outside of the wine sector are doing well and why? Identifying trends can help in identifying where to position your product and find the right partner quicker.
4) What’s your story?
The story of your self, brand and company is critical in securing interest from distribution players in the market. How does it align with the market memes analysed above? What other capabilities do you have which could help improve it.
5) What does the distribution framework look like?
Do you know how the market is structured and who takes what margin? Knowing how the supply chain pans out and where it leads your brand is another important aspect of identifying the right target partners.
6) What do the numbers look like?
Knowing your numbers is a crucial aspect of your proposition. The numbers can tell you a lot – how critical is this initiative to the business, where does it take you if it is successful, and what happens if it is not? Do you know what you want to sell for and what your bottom line is and why? Over what time period is the initiative judged and how?
7) Awards and journalist comments
Have your products won any awards, how relevant are they in the market that you are approaching? Has an international journalist been through your range and made good documented comments that can be repeated? These contribute to your reputation and can make the difference between success and not.
8) Social Media
What connections do you have on social media – twitter and linkedin are especially good channels to identify possible ‘friends’, or people to sound out for advice or connections that might more directly assist.
9) Is your product legal?
One aspect that can often be overlooked is the legality of labelling and bottle size. Laws especially about alcohol acquire some qwerky aspects and differ across many markets. In the UK wine over 15% attracts a different duty tax, so unless you have a category defining point to make then it is important to ensure that it is below that.
10) What is your point of difference?
Once you have understood that you can competently satisfy the basic elements of the market and that the market contributes to your business, then you will need to specifically identify why your brand, production or business is unique and the value that it is going to add to the market.
Exporting is a complex business involving risk and reward in an increasingly competitive global market. The good news is that it is increasingly global and there are more opportunities. Despite the global backdrop of hyper-uncertainty, which it is easy to catastrophise about, it seems that our reality will continue to be that we export more and become a more informed and reliant global community that trades and shares. Perhaps we should remember the old military anacronym – 6Ps – Proper Planning Prevents Piss Poor Performance!
- Alistair Morrell, aka The Wine Inspector, offers strategic marketing and communications for the drinks industry. Having bought and sold millions of bottles of wine on and for the UK Market over 30 years, Morrell now helps others achieve their market objectives. You can find out more here www.thewineinspector.co.uk and follow him on @inspectorwine. He is writing a regular monthly column for The Buyer on different aspects of managing, running and building a business.