Covid-19 has disrupted distribution channels worldwide, and that certainly includes the middle tier of the American alcohol industry. However, companies like Mexcor International — a Houston-based alcohol importer and distributor — have tapped into modern technology to face down these challenges.
How do you keep up in the wholesale business when so many products are harder to obtain? Chris Quintanilla, chief sales officer at Mexcor International, points to the company’s technology as a way to navigate through this time of relentless out-of-stocks. We recently spoke with Quintanilla on the subject, and when he thinks the shortages might ease.
Beverage Dynamics: Why is better technology so important in today’s era?
Chris Quintanilla: We’re a medium-sized distributor competing against the big guys with the big brands. One way that we can have a chance against them is through better technology. We use a web-based SAP system called Encompass.
This has lots of advantages. We can interact with the sales people, out on the road, in real time, through their iPhones and iPads. We can see where every order is inventoried and allocated, immediately. That way, if there’s an out-of-stock, we can substitute something, then and there.
We can see where orders are after they ship out of the warehouse, where the drivers are and what the orders are timed for. If the retail customer asks about an order, we can see what’s on the truck, and when it’s going to be there.
Having the right technology makes a huge difference for our retail customers. An order being delayed can make a huge difference on their backend.
ERTs that are web-based are leveling the playing field, and don’t cost tens of millions of dollars. They’re subscription-based. And they offer better services than a lot of the SAPs that are larger.
BD: How much has this helped in the era of Covid-caused product shortages?
CQ: Worldwide, sending items from China, from Mexico, from everywhere, it’s so much more expensive and difficult. So it’s more important than ever to have the right information for out-of-stocks and what the potential substitutions are.
Take tequila, for instance. Mexico has had real bad Covid issues, and was basically shut down all of last year. And even now, Mexico’s main supplier of glass is still from China — while other suppliers for glass, labels and corks are also overseas — and that has a lot of issues right now.
We sell tequila to Mexican restaurants. Tequila is their main source of revenue, especially in Margaritas. It’s extremely important for us to know when a tequila is out of stock and what we can give these restaurants as a substitution.
On our system we run a 15-day report. That lets us know how much product I have left for 15 days. When that pops up and lets me know I only have 15 days worth of product left, I can communicate that immediately to a consumer and come up with substitutions. Working with this technology, we learn about the shortages ahead of time, rather than when the last cases ship. We can get ahead of these issues. Not having a product or a substitution, that’s a great way to lose a customer.
BD: How bad have the shortages become?
CQ: Nowadays, you have to look out for every kind of item, things you wouldn’t have thought as much about in years past. There’s a shortage in triple sec right now, for instance.
That’s why it’s so good to have a customizable system that can put out reports in real time, and have a dashboard that you can watch daily. We hold out-of-stock meetings daily and talk about substitutions. If we don’t do this daily, then we’re going to have a problem.
BD: When do you think the shortages might ease?
CQ: The shortages will continue through the holidays. Freight costs from China are still way up, and it’s still very difficult to find and afford many components for packaging. It’s tough right now for aluminum cans, paper labels, glass and even bottle caps.
The best case scenario is that things will get better in Q1 of next year, no earlier than that. Most likely is Q1 or Q2, next year.
This interview was edited and condensed for publication.