U.s. wine market. strategic opportunities for exporters

Steve Raye, Pres., Bevology Inc., [email protected]

© 2015 Steve Raye

U.S. Wine Market:

Strategic Opportunities for Exporters

Steve Raye

Marketing Consulting Company:

Helping wine brands break into

and grow in the U.S. Market

Brand Development: new-to-the-

U.S., new-to-the-world

Trade Marketing

Digital, Social and non-traditional

media

Steve Raye

President

Bevology Inc.

[email protected]

+1 860-833-6272

Think Differently, Competitive Advantage

Zig

© 2015 Steve Raye

Think Differently

Zig Zag

© 2015 Steve Raye

Marketing Manifesto

Measure what matters: Traditional media metrics such as reach and impressions have value,

but they don’t necessarily correlate with or drive volume. Here’s what really matters:

• Sales on- and off-premise—cases, value, velocity

• Depletions vs. shipments/exports

• Distribution on- and off-premise

• Reorder rates, wine lists and BTG programs

Don’t market to empty shelves: Distribution

is critical, make sure consumers are able to

buy what you’re selling, even if it’s not in

stock in-store.

Get it in, get it out: Getting distribution

on- and off-premise is only the first step.

Drive consumer purchase.

Help the importer and distributor do

their jobs: Drive consumer demand at

retail is job 1. Then ensure the trade is aware of

the demand and pull you’ve built.

Target audience: You can’t be all things to all people.

Determine your target and focus on it rigorously.

Defining who’s not your audience is as important as

who is.

Identify, then leverage your brand’s unique

strengths:

Have a POD that MAD:

point of difference that makes a

difference.

© 2015 Steve Raye

Guiding Principle

Align programs with account needs…help them

build their business: WIIFM

“What’s in it for ME?”

•Increase sales (volume and profitability)

•Increase customer frequency

•Increase new traffic

© 2015 Steve Raye

Trends in the U.S Market

Total Table Wine Consumption Growing

Top Ten Wine States = 61% Total Vol.

Top 10 Wine States (000 9-Liter Cases)

State Cases Share Growth

California 60,318 18.3% 3.0%

Florida 26,818 8.3% 1.2%

New York 26,152 8.0% 2.2%

New Jersey 14,848 4.5% 2.3%

Texas 14,730 4.5% 2.3%

Illinois 14,665 4.5% 2.2%

Massachusetts 12,595 3.9% 2.3%

Washington 10,040 3.1% 2.9%

Virginia 9,901 3.0% 3.5%

Ohio 9,254 2.8% 2.9%

Top 10 Total 199,319 60.8% 0.0%

U.S. Total 327,600 100.0% 0.0%

• Important at the macro level for

nationally distributed products.

• If your goal is only 5,000 cases, you

might find a market like Boston to be a

smarter target.

Industry Trends (continued)

• # of wine selling channels continues to grow

• Wine/liquor stores represent the largest number of off-premise outlets (wine sales

in supermarkets is allowed in only 35 states and notably NOT permitted in NY and

effectively in NJ.)

• Wine/liquor stores account for disproportionately higher percentage of $12-$20

wines vs. supermarkets

• People shop at retail stores more frequently for wine

Source: Sonoma State Univ., American Wine Consumer Survey 2014

Retail Channels Fragmenting, Multiplying

Growth Above $9.00

Consumers drinking a little more, but a lot better

Growth Above $9.00 (cont’d)

Trend: Apps

Online access to news, recommendations, where-to-buy

have displaced traditional print, especially for Millennials.

They now seek information on Wine-Searcher, Delectable,

Vivino, Wine4me, Snooth, Hello Vino et al. Reach and

Targeting:

• Wine-Searcher gets 3 million unique visitors per month

• Delectable: 2.1 million downloads per month

By comparison print mag. circulations stand at:

Wine Spectator: 400,000

Wine Enthusiast: 180,000

Wine Advocate: 48,000

Smartphone Reach

Source: Sonoma State Univ., American Wine Consumer Survey 2014

E-Commerce Growth: skews imports

E-commerce and new/non-traditional distribution channels

are rapidly growing: Notably Wine.com does 53% of its business with

imported wines vs. 27% for traditional retail.

Getting to the Point

“I know half my

advertising doesn’t

work…I just don’t

know which half”

Pure online

marketing/

Ecommerce:

Measureable

ROI

Delivery-Within-An-Hour

Drizly, Minibar Delivery, Drync, Thirstie, Saucey

Laser-Targeted to Millennials: immediate, no

shipping upcharge

Geographically targetable down to metro market

and even neighborhood

Tool to drive retail distribution, support

wholesaler/importer

E-commerce solution

© 2015 Steve Raye

E-Commerce

Allows you to sell in multiple states, nearly

nationally, when you may only have

distribution in one

Strong penetration with Baby Boomers,

average purchase is 3X typical physical store

purchase

E-comm recognized as having a better

selection of hard-to-find wines

New models: Amazon, Flash sale sites

Varietal Popularity Differs by

Channel 20

Where to Buy Functionality: Mandatory

Importers

• Importer

– Licensed to import a wine brand from a supplier

outside the U.S. into the U.S.

– May or may not have distributor licenses or

operations in individual states

• Distributor/Wholesaler (synonyms)

– Licensed to buy wine from an importer and sell to

an on- or off-premise retailer

Definitions:

Importer vs. Distributor (Wholesaler)

Suppliers

Importers

Distributors

Consumers

From To

The Model Has Changed

Large

National

Importer

(Diageo)

You Have Options!

Specialist

National

Importer

(Winebow)

Regional

Multi-State

Importer

(TGIC)

Specialist, that

also distributes

(Slocum)

Set Up Your

Own Import

Company

National

Licensing

Import and

Services

(MHW)

Large

Distributor

that also

Imports

(Glazer’s)

Chain

Retailer

Exclusive Brand

(Total Wine)

Direct

Import through

Control State

E-Comm/

Wine Club/

Flash Site

Importers: What They Want

• Fills an identified void in portfolio

• Brands with existing U.S. volume they can grow

• New brands they feel their expertise can develop and grow

• Brands that have a unique positioning

• The right “CHEMISTRY”

• Enhances image, value and profitability (synergy with importer’s mission)

• Strengthens importer’s position within the trade

• Supplier understands the U.S. Three-Tier system

• Financially sound, budget to invest and support the brand

Presenting Your Brand to Importers

• Brand point of difference/value proposition for consumer; why

THIS importer should be interested in you

• Company description/history

• Product description: varietals, style, ranges, proposed U.S. retail

price by line/SKU

• Marketing materials as background

• A defined target audience

• Production info

• Past history of importers, distribution agreements, list of

distributors/brokers of products and volumes by state

• Price structure for U.S.

• Marketing support budget

• Sample budget

Distributors

Continued Distributor

Consolidation

2013E 2014P 2014E 2013P

Southern Wine & Spirits of

America

AL, AL, AZ, CA, CO, DE, FL, HI, ID,

IL, IN, IA, KY, ME, MD, MI, MN, MI,

MT, NV, NH, NM, NY, NC, OH, OR,

PA, SC, UT, VT, VA, WA, DC, WV,

WY

$ 11,390 $ 11,750 3.2% 22.1% 22.3%

Republic National

Distributing Co.

AL, AZ, CO, FL, GA, IN, KY, LA, MD,

MI, MI, NE, NM, NC, ND, OH, OK, $ 6,095 $ 6,480 6.3% 11.8% 12.3%

Charmer Sunbelt Group AL, AZ, CO, CT, DE, FL, MD, MI, $ 5,380 $ 5,575 3.6% 10.4% 10.6%

Glazer´s Family of

Companies

AL, AZ, AR, IN, IL, IA, KS, LA, MS,

MO, OH, OK, TN, TX $ 3,475 $ 3,655 5.2% 6.7% 6.9%

Young´s Market Co.AK, AZ, CA, HI, ID, MT, OR, UT,

WA, WY $ 2,820 $ 2,925 3.7% 5.5% 5.6%

Wirtz Beverage Group IL, IA, MN, MO, NV, WI $ 1,775 $ 1,860 4.8% 3.4% 3.5%

Johnson Brothers Liquor Co.AL, AZ, CA, CT, FL, HI, IL, IN, IA,

KY, MA, MN, NE, NV, NM, NY, NC, $ 1,660 $ 1,735 4.5% 3.2% 3.3%

Martignetti Companies MA, ME, NH, RI, VT $ 1,200 $ 1,200 0.0% 2.3% 2.3%

Allied Beverage Group NJ $ 750 $ 775 3.3% 1.5% 1.5%

Fedway Associates NJ $ 735 $ 760 3.4% 1.4% 1.4%

$35,280 $36,715 4.1% 68.4% 69.7%

$16,300 $15,975 -2.0% 31.6% 30.3%

$51,580 $52,690 2.2% 100.0% 100%

Source, Impact, April 1, 2015

Distributor Markets % Chg.Sales Revenue Market Share

What Distributors Want

• Money

• Margin

• Manpower

• Marketing

• Media

• Commitment

The chicken is involved, but the pig is committed.

Involved vs. Committed

Distributors:

Okay, I’ve Got One. Now What?

• Recognize you’re not a priority…you (and

your importer) will need do the heavy lifting

yourself

• Recruit/focus on a limited set of salespeople

dedicated to your brand

– Product training programs for accounts

– Sampling on- and off-premise

– Leverage Brand Ambassadors,

winemaker/winery owner visits vs. work-

with’s

U.S. competitions accepting wines

that are not currently imported

BTI (Beverage Testing Institute)

Deadline: Dates vary by region

http://us6.campaign-

archive2.com/?u=da8603c0af6040dcc7e4d9ed2&id=8fdf91dae4&e=

Ultimate Wine Challenge

Deadline: May 15

http://www.ultimate-beverage.com/ultimate-wine-challenge-UWC/2015-

wine-entry-forms/

San Francisco Wine Competition

Deadline May 22, 2015

http://www.sfwinecomp.com/

New York International Wine Competition

May 17-18, 2015 (Deadline for entries May 12)

https://www.nyiwinecompetition.com/

© 2015 Steve Raye

Resources

Key industry newsletters: - Industry News Update

- Wine and Spirits Daily: www.winespiritsdaily.com

- Shanken News Daily: www.shankennewsdaily.com

- Wine Industry Insight: wineindustryinsight.com

- Wine Industry Network/Advisor: wineindustrynetwork.com

- WineBusiness.com: www.winebusiness.com

- Wines and Vines: www.winesandvines.com

Key trade publications: – Beverage Media: www.Bevmedia.com

– Tasting Panel: www.tastingpanelmag.com

– Somm Journal: www.sommjournal.com

– Wine and Spirits:

http://wineandspiritsmagazine.com/

– Santé: www.Isantemagazine.com

– Beverage Dynamics, Cheers, Stateways

– Beverage Industry News

www.binmag.com

– Market Watch, Impact (print only)

Read the Book

© 2015 Steve Raye

Contact

© 2015 Steve Raye

Steve Raye

President

Bevology Inc.

401 Park Ave. South

9th Floor

New York, NY 10016

+1-860-833-6272 (m)

+1 212-613-2713 (o)

[email protected]

Drinks Industry Marketing Consulting