Solid data on the trade is difficult to come by, but Wine Business Solutions believes it has found its niche in the sector by analyzing how different wine distributors stack up when it comes to including their wines on the main drinks menus of restaurants and bars around the world. The country, as its director Peter McTamney explains.
Having sold wine in 45 countries, and worked as a brand manager and global marketing director for brands like Freixenet (Spain), Yellow Tail (Australia), and what is now Foley Wine Group in New Zealand, I hope I get a fair idea of what to look for About him is the brand manager at the partner distribution company. Much of this expertise I have to attribute to Freixenet's export department, which was recognized at the time as among the best in the world at what they did.
Peter McAtamney uses his experience working for major wine brands to evaluate how good different distributors are
This is what our trade research aims to do in the first place. We do not stop at countries, regions, product categories, share of wine styles from lists, average prices, etc. This is now our 12th annual survey which gives us nearly a quarter of a million listings, in total, as a database that can be used for long-term customer analysis.
In our internal UK survey for 2021 alone, there were just under 6,000 “brands”. This represents an increase of 9% on last year, reflecting, even in these challenging times, the sophistication, complexity and ever-increasing crowding of the “Great British Wine Market”, a true “touchlight” for wine brands globally.
We evaluate the top 30 distributors and their competitive strategies.
We do this in six out of the seven largest wine importing countries as well as Australia and New Zealand. Somewhat unexpectedly, the main clients for the reports are major distributors, importers and brand houses. We designed the report for suppliers, yet, somewhat perversely, the people who need a tactical advantage in negotiations between suppliers and vendors are the ones who buy it the least. (A bit like how our best consulting clients are the ones who need the least help.)
The other advantage we have, in terms of helping buyers report distributors, is that most distributors don't have enough insight into what importers and distributors are doing in other markets. In imitating their direct competitors, they may not necessarily use the best strategy available.
We've always been big fans of Berkmann, for example, which performed strongly again in our 2021 report, and which looks and acts like the leading brand houses that make up the majority of market leaders in most other markets. They are almost on their own, in terms of their business operating model, in the UK.
What are we looking for?
To become a good business distributor, I believe you need to cover all the following steps:
1 strong wallet
First, you must have a strong enough portfolio to be able to attract attention. Most of them fail because they simply don't try hard enough to understand what it means.
2 listings for each brand
However, the real test is each brand's listings. From a brand owner's point of view, there's absolutely no point in being part of a giant portfolio if a distributor doesn't achieve widespread distribution for you.
3 wine lists by the glass
Having a good selection of wines that you can offer restaurants to serve by the glass is now a must for wine distributors, says Peter McTamney
Another major task of a distributor is to get restaurant customers to try products and drive volume by sourcing wine lists by the glass.
4 alternative formulas
The distributor should also be able to cross-sell and cross-sell alternative formats such as half bottles, magnums, and multiple pour sizes and vintages to improve menu coverage. Brand visibility and recognition creates brand strength.
5 Fast moving
Naturally, a good dealer must also be able to adapt to a rapidly changing market in order to have the right portfolio to keep his trading clients happy. This must be done without losing focus on the brand.
The biggest mistake we see UK companies making is building their portfolio quickly as a one-off to cover the missed opportunities that initially catch everyone's attention. Then this interest quickly fades and the core brands suffer from a lack of focus. In the end everyone loses.
6 Cash flow management
They must also be able to manage cash flow in one of the more difficult sectors to do so.
7 Obtaining results for its suppliers/producers
Above all, a good distributor must be able to deliver results for quality suppliers. Without them and the brands their mutual customers believe in, there would be no sustainable business, only commodity trading.
Number one distributor: Muntzendorf
Andrew Howes, Mentzendorff's managing director, has guided the company to become the number one wine distributor in the UK according to analysis by Wine Business Solutions.
Among the top 30 companies (based on total listings in our survey), Mentzendorff's listings for each brand — our key metric — were 43% higher than the next company
Our report shows that being the biggest doesn't necessarily mean being the best. The main difference is the listings for each brand in the wine lists. As some of the larger distributors expand their ranges, the opportunity to list their producers or suppliers decreases. We've seen a major player that had nearly one in five of all rosters at one point reduce its share of rosters by half in just the last three years.
We evaluate one distributor against another by how smartly they choose key partners (which we have extensive knowledge of thanks to our global research). How does their entire portfolio fit together competitively? How do these then translate into total listings and listings for each brand in our survey of the UK market?
Our On Premise report is designed to reveal the strategies of each major distributor, brand supplier, country and region – as much as they can be interpreted from their results in our survey.
It will be interesting to see how their business strategies and models will deal with Brexit, but there are too many moving parts at the moment to predict, in short, where it will all end up.
Challenges ahead
I think the biggest challenge all distributors face is maintaining focus on the brands, keeping your offering manageable and staying relevant. We see literally hundreds of companies that have extensive product lists with virtually no distribution compared to the top 50 or so suppliers.
The next thing I would recommend is to work on SEO of their supplier base, as many brands can be purchased from multiple suppliers. This is done fairly well in the UK.
Also, from a brand manager's perspective, you don't want to dig through three menu layers on your website just to determine which brands you represent. There is one major supplier in our top 30 that doesn't even have a functioning website.
How do you stand out?
If a distributor really wants to stand out, it's all about focusing on the brand, taking a brand building approach and focusing on listings for each brand. Listings have proven to be the best leading indicator of the direction the markets are headed not only on-trade, but off-trade as well.
A good example of this is Indigo Wines which has been supporting emerging natural and biodynamic winemakers and what we might call “new” winemakers. Unlike the larger competitor, they do not have 450 “brands” on their book and have already started converting their best suppliers into niche brands.
If you would like to purchase the report ($495 AUD) you can click here. To see an excerpt from the report click here. Methodology for the Wine On-Premise UK 2021 survey conducted by Wine Business Solution: “The report covers the full range of potential wine consumption occasions including casual suburban restaurants, fine dining, hotels, pubs and upscale bar venues. We select individual outlets and listings on our wine lists completely randomly but Using a consistent methodology, we stratify the sample proportionally to the population, except that we slightly increase the weighting of Northern Ireland and Scotland to improve precision when reviewing these markets separately. The stratification used is as follows: The goal is to accurately reflect what the average consumer sees when… Provide a wine list anywhere in the UK.
