The retail landscape is rapidly evolving as more consumers seek new and convenient ways to make purchases. On the other hand, how most retailers buy wholesale wine hasn't changed since 1933...until recently.
2017 was all about Direct-to-Consumer sales, but 2018 is about Direct-to-Trade (DTT). Unlike DTC, Direct-to-Trade sales still operate within the highly regulated Three-tier System. But DTT isn't your everyday approach to wholesale; it gives Buyers and Sellers much more freedom. So, what exactly is 'Direct-to-Trade'?
Take a moment to think about the ballpark prices of alcohol. Do you know how much a bottle of Meiomi Pinot Noir should cost? A handle of Ketel One Vodka? A 12 pack of Coors Light? Were your answers around $20, $40, and $10?
Now, how much should a bottle of Ideology Chardonnay cost? You probably have no idea. You've probably never heard of it. Or better yet, your customers have never heard of it. This 2014 Chardonnay from Napa Valley, with beautiful packaging, is available in your store only. Your customers can't go compare the price of this wine at Costco, or Target, or Walmart. So you add a 50% margin, retail it for $20 a bottle, and sell out in two weeks.
Ladies and gentlemen, welcome to blind price wines.
If you've followed the alcohol industry for any length of time, you know that large distributors are continuing to consolidate every year. In the past, consolidations led to small producers getting dropped, independent retailers having less diversity to choose from, and consumers becoming frustrated by the lack of options. Now, for the first time in history, the little guys have reason to be hopeful.
Here's a mind-blowing statistic: the average supermarket carries 5 products per category, except in the wine category, where supermarkets carry roughly 900 different products. Let that sink in for a moment; a consumer who wants to purchase eggs has five options, but a consumer wanting to purchase wine must choose from nearly one thousand different options.
"...Research now shows that there can be too much choice; when there is, consumers are less likely to buy anything at all, and if they do buy, they are less satisfied with their selection."
- Barry Schwartz, Harvard Business Review
Since delighting customers should be the number one goal of every retailer, it may be time to re-evaluate your wine section. Here are the 10 things retailers should keep in mind when buying wholesale wine.