,Distribution seems to be the unknown force in the wine industry, and it would appear as if distributors would like keep it this way. These forces generally have the wine producers by the short and curlies, buying at a discount and then slapping on an average of 30% when selling to the retailer, who then still has to whack on a mark-up.
They move in mysterious way, as U2 sang, justifying their mark-ups with claims of superb connections in the trade and a lot of travel and hard-selling. All good and well, despite one wondering why so many distributors have gone belly-up recently if they were so shit-hot.
Recently, however, I have come across a situation which may just see distributors accused of uncompetitive practices. And once again we turn to the broad church of the internet.
A client briefed in a new website, which a bunch of tekkies in Observatory designed to perfection. We decided to go the whole hog and, following Paul Cluver and Waterford, added a shopping site. You know… customer clicks on wines, adds to shopping basket, pays cellar door prices by credit card and wine gets delivered. Boom. Convenience that we support.
Lo and behold if our distributor doesn’t give us a call to inform us that he will not be distributing his wine if we are going to be flogging it on the website. By taking orders and despatching the wine ourselves, he claims, we are entering the distribution game and taking business away from him.
Funny one this: cellar door prices (as sold on the web) are pretty much the same as retail prices. The distributor is still getting his discounted price. So where could the threat lie?
We still depend on distributors to bash down doors and use their contacts. That is what they are good at, and that is why we are willing to discount. But by trying to prevent wineries from using the web to drive sales themselves, distributors are entering dangerous territory that is not going to make them popular at all. Especially once the authorities are alerted to this, seeing they are so eager to pounce on dodgy practices in the agricultural sector.
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