A Two-Way Partnership in the Three-Tier System

Some of the most important business relationships a beverage retailer can cultivate are those that exist with distributors. Unfortunately, not all retailers take advantage of the plethora of data and advice distributors can provide.

In addition to giving retailers detailed information about new products, distributors often have access to insightful market research and can assist retailers with marketing and promotions. Discovering the resources that distributors have to offer and finding out how to partner with product representatives can lead to a positive impact on a retailer’s business.

 

Tapping Into Distributor Resources

Many retailers view distributor representatives simply as vendors. While supplying retailers with needed products is a distributor’s primary function, often they have much more to offer in terms of information and support services.

Jeff Crouch owns Grizzly Wine and Spirits, LLC, in Missoula, Montana, the largest liquor store in the state. Although Montana is a control state, Grizzly operates as a wholesale, private retailer and regularly interacts with many distributors who primarily act as product representatives. Crouch says that his store’s vast selection is what makes Grizzly so distinctive.

When working with distributors, Crouch mainly turns to them for information on new products that might be a good fit for his customers. When a distributor launches a new product, a representative will often visit the store, share label/packaging information, offer a tasting, and give Crouch and his team additional product details. Generally, Crouch says most of his distributors stop in the store at least once per week.

Crouch says the product representatives play a big role in his decision on which new products to introduce to his customers.

“We’re usually open to bringing in a few cases of new product,” he says. “The best reps bring in corporate research to share with us so we can get a general idea of sales trends and use that to determine if the product is a good fit.”

Along with information to help retail operators and their staff become more familiar with various products, many distributors offer additional materials and support to help educate consumers as well. At Oakton Wine Shop in Oakton, Virginia, owner Bryan Gauthier says his distributors have been essential in providing product shelf talkers. Additionally, some of Gauthier’s distributors participate in the store’s events.

“In the state of Virginia, our reps are allowed to pour tastings for our customers,” Gauthier explains. “They can also engage with the customers and tell them more about the product. Our customers love hearing about what’s new, what new wineries are popping up, or when a new vintage is available. It all translates into better sales for our distributors and for us.”

Distributors can be a great resource to retailers when it comes to marketing and merchandising, often providing product displays to be showcased in stores. At Grizzly, Crouch reserves space on the sales floor for all of his main distributors to rotate different displays. In addition to featuring products in a distinctive, eye-catching way, many of the displays promote different contests and giveaways run by the distributors. Crouch says these displays are a win-win for everyone involved.

“The displays get customers excited about the product, which ultimately translates to higher sales,” he says.

 

Balance Is Important

While the information and resources provided by distributors are generally helpful to have on hand, retailers should never let distributors completely dictate their business practices. At Binny’s Beverage Depot, one of the Midwest’s largest beverage alcohol retailers with 31 locations across Illinois, communications director Greg Versch says that although his company maintains strong ties with its distributors, it’s important to remember that the information they provide is only part of the story.

“The product info provided by distributors isn’t unhelpful, and a lot of it is very useful. But it’s not necessarily my job to market the product,” Versch says. “I need to market Binny’s.”

Wary of market information in general, Binny’s chooses to stay out of the Nielsen Beverage Data Network (NBDN) and other beverage retail sales ranking data. Instead, they focus on analyzing their own customer purchase information internally in order to make decisions about which products will best meet the needs of their consumers. With a company slogan of “If you can’t find it at Binny’s, it’s probably not worth drinking,” the company focuses on the importance of marketing its vast product selection to customers.

An example of this strategy can be found in Binny’s consumer e-mail marketing campaigns. Instead of advertising specific product sales in their e-mails, Binny’s tends to push out features such as “The Whiskey Hotline” and “The Beer Buzz,” which direct to robust websites including detailed information on a variety of category trends and brands.

Versch says that Binny’s is known most for its low prices, excellent customer selection and variety of products, and the marketing that is pushed out reinforces those goals. That said, he appreciates the relationships Binny’s has developed with its distributors over the many decades the company has been in business.

“They’re valuable business partners, and we have good relationships with everyone we work with,” Versch says.

 

Providing Unique Services To Retailers

In addition to things like product displays and market research reports, retailers may be able to take advantage of other resources that distributors make available to them. One innovative benefit is offered by Southern Wine & Spirits. In addition to many of the traditional resources that distributors offer to their retail partners, Southern Wine & Spirits is in the process of rolling out a new service intended to help protect retailers from counterfeit wines.

“We’ve seen the amount of counterfeit wines our customers are tricked into buying increase over the years,” says Larry Ruvo, Senior Managing Director. “We’ve hired a wine counterfeit expert to provide an exclusive service to our customers, at great expense to our company.

This counterfeit wine expert, Michael Egan, has a background in fine and rare wine authentication. Egan began working on behalf of Southern Wine & Spirits in November 2014, kicking things off with a free seminar and Q&A session in Las Vegas. He will also be available as a consultant to retailers, offering them tips and suggestions on how to prevent themselves from becoming victims of fraud.

“It’s extremely important that we work with our retailers to help them combat this terrible thing that’s happening in our industry,” Ruvo explains.

Other distributors offer additional services to retailers that go beyond traditional information sharing. Wirtz Beverage Group, a leading North American distributor of top luxury and premium wines, spirits, and beers, has invested many resources into building an interactive database system that is available to retail clients 24/7. At any time, retailers can log into the system and browse the latest market trends, product information, and available data. This resource allows retailers to receive up-to-the-minute information whenever it’s convenient for them.

“It’s important to note that this system doesn’t replace the relationship retailers have with members of our sales team,” says Kevin Roberts, Senior Vice President for National Sales and Marketing. “We spend a lot of time making sure our sales experts are well-trained so they can serve as expert consultants to our buyers. When retailers access our technology information database system up front, they’re prepared to have a more strategic conversation with their sales rep.”

Wirtz also employs beer, wine, and spirit specialists who hold the highest level of certification in their field: Master Cicerone, Master Sommelier, etc. These accredited experts are available to retailers as an additional level of consulting, and can provide more detailed product information, including menu building and food pairing for restaurant/bar operator clients.

“If we can make the retailers more knowledgeable about our products, we will ultimately help them be more successful,” Roberts says.

 

Maximizing Relationships With Distributors

How can retailers best take advantage of their relationships with distributors? Here are some tips from retailers and distributors alike:

Communicate. This goes for both parties. Retailers and distributors need to stay up-to-date with each other to maximize opportunities and avoid misunderstandings. Crouch recalls an instance when a distributor started touting a product to some of Grizzly’s wholesale clients, who then contacted him and were disappointed to learn that the product hadn’t yet arrived in the state. “Distributors selling to our customers before we have the product is our single biggest difficulty,” Crouch says.

Also, be sure to connect with distributors to share information about what’s working for your store and what isn’t. The more specific information a distributor has at their disposal, the more they will be able to offer you resources and products that best fit your needs.

Focus on consumer demographics. Distributors often have useful market research available to share with retailers, but retailers should also share their own information with distributors. This mutual sharing of information will help identify products that are a best fit for each retailer’s customer segment.

Incorporate your own knowledge into your business planning. Distributor market research is helpful to have on hand, but remember that a distributor’s goal is ultimately to sell more of their products. Retailers need to take their own specific business strategies into consideration when determining which products are best for their specific customer demographics.

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