entering the us wine market for export wine brands
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Entering the U.S. Wine Market for Export Brands
Navigating Entry Into the U.S. Wine MarketPresented by Steve Raye
Managing Partner
Brand Action Team
What is Brand Action Team?
Marketing consulting company with
specialization in wine marketing in the U.S.
Three areas of concentration:
• Trade Marketing
• Working with country and region trade
promotion
associations
• Brand development and launch
Why this information is important.Hope is Nota Strategy
Agenda
• History of Beverage Alcohol in the
U.S.:
3-Tier System
• What it means to you today: brand
entry process, implications, price
structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources
History of Beverage Alcohol in U.S.
Temperance Movement Prohibition
Prohibition Repeal in 1933: New Laws
Federal Regulations Enacted
• Protect Federal Tax Revenues
• Federal Regulations (BATF-Now TTB)
– Licensing qualified importers, manufacturers,
wholesalers, warehouses)
– Bans “tied-house”
– Ensures quality with standards of identity, labels
and formula approval
– Bans false advertising and consumer deception
– Bans unfair inducements to retailers
Tier 1: Producer(Wineries, Brewers, Distilleries, Importers)
Tier 2: Wholesaler (Distributor)
Tier 3: Retailer
Consumer
U.S. Three Tier System Created
Michigan
Virginia
No. Carolina
Alabama
Arkansas
Iowa
Colorado
Wyoming
MontanaVermont and New
HampshireMaine
OhioPennsylvania
W. Va.
IdahoOregon
18 “Control” States, 32 “Open” States
Washington
Agenda
• History of Beverage Alcohol in the
U.S.:
3-Tier System
• What it means to you today: brand
entry process, implications, price
structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources
What theThree-Tier System Means to You Today
Michigan
Virginia
No. Carolina
Alabama
Arkansas
Iowa
Colorado
Wyoming
MontanaVermont and New
HampshireMaine
OhioPennsylvania
W. Va.
IdahoOregon
18 “Control” States, 32 “Open” StatesPlus Montgomery County makes 51 Different Markets
Washington
Montgomery County, MD
51 Different Markets: Implications
Where wine, spirits and beer can be sold
• California:
– Wine, beer and spirits in supermarkets
– Chain and independent stores
• New York:
– Wine, spirits in “package” stores only beer in
supermarkets/bodegas
– Single store ownership, no chains
• Texas:
– Four tiers…HoReCa must buy from Class B
licensed retail store
51 Different Markets: Implications
How it Can Be Promoted
• Tastings
– Off-premise tastings:
– Allowed in New York, but not in New Jersey
– On-premise “wet” tastings:
– Allowed in FL, but not in Wisconsin
• Coupons
– Instant Redeemed Coupons only (IRC) in Ohio
– Mail-in rebates only in New Hampshire
51 Different Markets: ImplicationsTaxes vary by State
• Alaska: $5.94/9L cs., Louisiana:
$0.26
• Wholesale tax in Kentucky and South
Dakota Franchise Laws
Protect Distributors
• Massachusetts,
Connecticut,
New Jersey, Georgia,
Nevada, Arkansas,
New Mexico,
Tennessee, Missouri
Imported Wine Brand Price Structure750ML / 12 Bottle Case Imported - $9.99 Retail Bottle Price
Element Per 750ml Bottle
Supplier FOB $2.41
Ocean Freight, Fed Tax, Insurance, other +$0.76
Importer's Margin (40% mark-up/28% margin) +$1.01
Price to Distributor $4.18
State Tax, Inland Freight +$0.26
Distributor Margin ( 50% mark-up/33% margin)
+$2.19
Distributor price to retail $6.63
Retailer Margin (50% mark-up/33% margin) +$3.33
Retail Bottle Price $9.99
• Federal certificate of label approval (COLA)
• State registration and approval
- Most states require the out-of-state entity (shipper) to maintain state licenses and/or permits in order to sell products to wholesalers
– Most states require the Federal COLA as a requirement for brand approval
– Many states require paperwork submissions with fees and return a formal approval prior to shipping
– Some states require you to have a signed contract with a distributor in that state to get registration
Navigating Brand Entry & Distribution:Brand Entry – The Approval Process
Agenda
• History of Beverage Alcohol in the
U.S.:
3-Tier System
• What it means to you today: brand
entry process, implications, price
structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources
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)
RegionalMulti-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)
ChainRetailer
Exclusive Brand
(Total Wine)
DirectImport
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
Distributors: Who Are They?
Distributor Markets
Sales Revenu
e2013E
(Millions)
2014P
Percent Change
Market2013E
Share2014P
1
Southern Wine &
Spirits of America
Alabama, Alaska, Arizona, California, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois,
Indiana, Kentucky, Maine, Mississippi, Montana, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio,
Oregon, Pennsylvania, South Carolina, Utah, Vermont, Virginia, Washington, West Virginia,
Wyoming
$ 10,930 $ 11,400 4.3% 21.7% 22.2%
2
Republic National
Distributing Co.
Alabama, Colorado, Florida, Indiana, Kentucky, Louisiana, Maryland, Michigan, Mississippi,
Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota,
Texas , Virginia, Washington, DC, West Virginia
$ 5,460 $ 5,825 6.7% 10.8% 11.4%
3Charmer Sunbelt Group
Alabama, Arizona, Colorado, Connecticut, Delaware, Florida, Maryland, Mississippi, New Jersey, New York, Pennsylvania, South Carolina, Virginia, Washington DC
$ 5,165 $ 5,355 3.7% 10.3% 10.4%
4Glazer’s Family of
Companies
Arizona, Arkansas, Indiana, Illinois, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, Oklahoma, Tennessee, Texas
$ 3,245 $ 3,585 10.5% 6.45.7% 7.0%
5Young’s
Market CoAlaska, Arizona, California, Hawaii, Idaho, Montana, Oregon, Utah, Washington, Wyoming $ 2,745 $ 2,960 7.8% 5.5% 5.8%
Source: Impact 4/1&15/14
Top U.S. Wine/Spirits Wholesalers
Distributor MarketsSales
Revenue2009E
(Millions)
2010P
Percent Change
Market
2009E
Share2010P
6Wirtz
Beverage Group
Illinois, Iowa, Minnesota, Missouri, Nevada, Wisconsin $ 1,740 $1,765 6.4% 3.5% 3.4%
7Johnson Brothers
Alabama, Arizona, California, Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Minnesota, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Rhode Island, South Dakota, Washington, Wisconsin
$1,560 $1,660 6.4% 3.1% 3.2%
8Martignetti Companies
Massachusetts, Maine, New Hampshire, Rhode Island, Vermont $ 1,200 $ 1,200 0.0% 2.4% 2.3%
9Allied
Beverage Group
New Jersey$ 735 $ 755 2.7% 1.5% 1.5%
10Fedway
AssociatesNew Jersey
$ 680 $ 700 2.9 % 1.4% 1.4%
Total Top 10 $ 33,460 $35,205 5.2% 66.5% 68.7%
Other Wholesalers $ 16,875 $ 16,075 -4.7% 33.5% 31.3%
Total U.S. Market $ 50,335 $ 51,280 1.9% 100% 100 %
Source: Impact 4/1&15/14
Top U.S. Wine/Spirits Wholesalers
Distributors: What Distributors Want
• Money
• Margin
• Manpower
• Marketing
• Media
• Commitment
The chicken is involved, but the pig is committed.
Involved vs. Committed
• Focus, focus, focus…like a laser
- Getting it in is the easy part, getting it out is hard
- The only metric that matters: repeat orders at retail
• Be so successful in a limited number of accounts that
you can support, that you create trade word-of-mouth
buzz as a hot brand
Distributors:Strategy to Get a Distributor
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
Snapshot of the American Market
Agenda
• History of Beverage Alcohol in the
U.S.:
3-Tier System
• What it means to you today: brand
entry process, implications, price
structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources
Total Table Wine Consumption(Millions of Cases)
Top 10 Wine Consumption States
Source: Beverage Information Group Handbook Advance 2014
Imported Wine Purchases in Past 3 Months
Resources
Agenda
• History of Beverage Alcohol in the
U.S.:
3-Tier System
• What it means to you today: brand
entry process, implications, price
structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources
Resources• Key trade publications:
– Beverage Media:
www.Bevmedia.com
– Santé: www.isantemagazine.com
– Tasting Panel:
www.tastingpanelmag.com
– Impact (print only)
– Somm Journal:
www.sommelierjournal.com
– Market Watch (print only)
• Key industry newsletters:
Industry News Update
Wine and Spirits Daily: www.winespiritsdaily.com
Shanken News Daily: www.shankennewsdaily.com
Wine Industry Insight: wineindustryinsight.com
WineBusiness.com: www.winebusiness.com
Wines and Vines: www.winesandvines.com
Resources• Organizations
– WSWA: www.wswa.org
– Natl. Assn. of Beverage Importers: www.nabi.org
• Competitions/Awards/Events
– BTI/Beverage Testing Institute: www.tastings.com
– San Francisco International Wine Competition: www.sfwinecomp.com
– Ultimate Wine Challenge: www.ultimate-beverage.com
– New York International Wine Comp.: http://www.nyiwinecompetition.com/
• Trade Shows
– WSWA (www.WSWA.org)
– Wholesaler/holiday shows
– Importer portfolio shows
Resources
• Alcohol Tax and Trade Bureau: www.ttb.gov/wine/wine-labeling.shtml
• “How to Import Wine”, Deborah Gray
Thank You!
Steve RayeBrand Action Teamsraye@TheBrandActionTeam.com+1-860-676-7900
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