WSD ROUNDTABLE: WHAT GETS YOUR BLOOD BOILING
As some of you may remember, WSD conducted a survey not too long ago that gave readers a chance to blow off some steam and let us know anonymously what’s bugging you about the industry and/or what’s going great. We had a huge turnout, especially to the question we are covering today: ‘What’s the most important issue you face in your business today?’ The answers range from the war in Iraq to global warming to retailer relationships, so let’s take a closer look at what you had to say.
We got a lot of “distributor consolidation,” “supplier consolidation” and “retailer consolidation.” So are we to believe that consolidation is bad in general? Once one tier starts to get bigger, the other tiers must follow suit in order to keep up – or at least that’s the conventional thinking. However, the age old conundrum between small and large brands and companies rattles on.
Our readers told us that when it comes to distributor consolidation, these are the things that concern them most:
1. “The price of rising costs to consumers from the mergers.”
2. “There are now two big spirits distributors in NY. They have little reason to talk to small suppliers, which leaves few options for the little guy other than to lobby for the end of the three-tier system.”
3. “New brands are never given a chance to ‘make it to market.’ Thus, distributors are negatively impacting consumer choice.”
Readers voiced similar concerns over supplier and retailer consolidation as well. Here are a few quotes:
1. “Competing with the large suppliers who dominate the attention of the few distributors remaining.”
2. “Fragmentation of brands and consolidation of retailers mean there is no way small/new brands can find a place. Fewer buyers should limit their appointments to the big guys.”
3. “Keeping the wines out of the big box retailers.”
4. “Constant consolidations of the wine/spirit/beer industry among both suppliers and distributors. I think it's time for all to choose sides.”
Of course, there are other problems among the tiers and the three-tier system itself that has little to do with consolidation. The term ‘can’t we all just get along’ comes to mind, but of course it’s not always easy to see eye to eye. For instance:
1. “The distributor salesman is just a body taking orders for the big brands, and therefore suppliers become specialist. Suppliers in the past would do meetings and educate the sales teams so they would understand the market strategy. This not to be critical of salespeople, they just have far too much to maintain. This is what the big suppliers want. If it does not change soon the salespeople will be replaced by computers and telemarketing. The service to the retails today by salespeople and large distributors is at an all time low.”
2. “Sales prevention by retailers is a problem. Customers are constantly doing what they can to share their business with all wholesalers and limiting themselves (their retail space and wine list space) to a certain amount of items per section, disregarding the quality of the products they sample over a period of time...Lately, there are numerous fantastic wines made from Syrah (not Shiraz) yet only a few are being placed in the market. Too bad.”
3. “Educated buyer, having one versus not having one.”
4. “Loyalty from supplier to distributor and distributor to supplier.”
Here are some other issues the industry is facing that we saw popping up more than once:
Cost of goods, managing costs in line with global competitors, freight costs, global warming, sampling laws, government controls and state issues, lead times, collecting money, regulatory path for wine distribution, underage drinking, franchise laws, consumer acceptance to innovation, constant proliferation of new brands and human resource issues.
“The ultra-premium tequilas outside of Patron just don't move. I see 1800, Sauza, the Herradura's moving, but the other high-enders are slow to enter the party.”
“Too much protection for the employee even in an ‘at will’ state.”
“This stupid war and the global unrest is making the consumer hesitant.”
“Micromanagement of programs taking time away from getting our jobs done.”
“Out of stock. No, I'm kidding, probably Class B licensing in Texas.”
We got a lot of “distributor consolidation,” “supplier consolidation” and “retailer consolidation.” So are we to believe that consolidation is bad in general? Once one tier starts to get bigger, the other tiers must follow suit in order to keep up – or at least that’s the conventional thinking. However, the age old conundrum between small and large brands and companies rattles on.
Our readers told us that when it comes to distributor consolidation, these are the things that concern them most:
1. “The price of rising costs to consumers from the mergers.”
2. “There are now two big spirits distributors in NY. They have little reason to talk to small suppliers, which leaves few options for the little guy other than to lobby for the end of the three-tier system.”
3. “New brands are never given a chance to ‘make it to market.’ Thus, distributors are negatively impacting consumer choice.”
Readers voiced similar concerns over supplier and retailer consolidation as well. Here are a few quotes:
1. “Competing with the large suppliers who dominate the attention of the few distributors remaining.”
2. “Fragmentation of brands and consolidation of retailers mean there is no way small/new brands can find a place. Fewer buyers should limit their appointments to the big guys.”
3. “Keeping the wines out of the big box retailers.”
4. “Constant consolidations of the wine/spirit/beer industry among both suppliers and distributors. I think it's time for all to choose sides.”
Of course, there are other problems among the tiers and the three-tier system itself that has little to do with consolidation. The term ‘can’t we all just get along’ comes to mind, but of course it’s not always easy to see eye to eye. For instance:
1. “The distributor salesman is just a body taking orders for the big brands, and therefore suppliers become specialist. Suppliers in the past would do meetings and educate the sales teams so they would understand the market strategy. This not to be critical of salespeople, they just have far too much to maintain. This is what the big suppliers want. If it does not change soon the salespeople will be replaced by computers and telemarketing. The service to the retails today by salespeople and large distributors is at an all time low.”
2. “Sales prevention by retailers is a problem. Customers are constantly doing what they can to share their business with all wholesalers and limiting themselves (their retail space and wine list space) to a certain amount of items per section, disregarding the quality of the products they sample over a period of time...Lately, there are numerous fantastic wines made from Syrah (not Shiraz) yet only a few are being placed in the market. Too bad.”
3. “Educated buyer, having one versus not having one.”
4. “Loyalty from supplier to distributor and distributor to supplier.”
Here are some other issues the industry is facing that we saw popping up more than once:
Cost of goods, managing costs in line with global competitors, freight costs, global warming, sampling laws, government controls and state issues, lead times, collecting money, regulatory path for wine distribution, underage drinking, franchise laws, consumer acceptance to innovation, constant proliferation of new brands and human resource issues.
“The ultra-premium tequilas outside of Patron just don't move. I see 1800, Sauza, the Herradura's moving, but the other high-enders are slow to enter the party.”
“Too much protection for the employee even in an ‘at will’ state.”
“This stupid war and the global unrest is making the consumer hesitant.”
“Micromanagement of programs taking time away from getting our jobs done.”
“Out of stock. No, I'm kidding, probably Class B licensing in Texas.”
posted at 2:01 PM
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