Note: Last week, during the VinItaly trade fair in Verona, I participated on a panel on the subject of the three-tier system of alcohol distribution in the US. This post recaps the discussion. My co-presenters were Alfonso Cevola, Italian wine specialist at
One van. Three friends. Twenty-five states. And 40 cases of wine.
That was Liù Pambuffetti's life for three months last winter, as she and two friends drove through the midwestern US, visiting restaurant after restaurant and retailer after retailer, tasting each one on her family’s wines from the Scacciadiavoli estate, in the Montefalco region of Umbria.
“We can’t understand the American market from Italy,” Liù Pambuffetti said two weeks ago, standing in the courtyard of her family’s winery. “We had to go there. We had to see for ourselves.”
The initiative started because Pambuffetti found herself in the same position as many smaller Italian wine producers who want to export their wines to the US: with a lack of knowledge or experience with the three-tier system of alcohol distribution in this country.
That lack of knowledge is one reason why the three-tier system was the subject of a panel and seminar I participated in last week at the VinItaly International Wine & Spirits Exhibition in Verona, home to more than 4000 exhibitors, most from within Italy and its wine sector that's worth 12 billion Euro annually.
The four panelists, independently of each other, anecdotally polled different Italian producers on what they knew about the three-tier system in the US. The answer – very little – was consistent across the board.
For the record, the three-tier system (which dates back to the repeal of Prohibition in the US) means that alcohol must pass through three sets of hands. The first tier is the producer; the second tier is the distributor, which is sometimes also the importer; and the third tier, finally, are the licensed retailers, who sell to the public.
Each state complies with the three tiers, but each state also has its own regulations. Which means a producer must multiply those three tiers by 51 – for all 50 states plus a county in Maryland – in order to get a sense of the magnitude and complexity of bringing their wine to the US market.
A reasonable knee-jerk reaction would be to protest such a system but, as Steve Raye pointed out during the panel, there's no use spending time debating the faults and merits of the system. Raye is the co-founder and principal at Connecticut-based Brand Action Team, who specializes in innovative digital marketing programs for the alcohol business.[/entity][/entity]
The three-tier system is the reality in the US, as Raye said, and it won't be changing any time soon. But there are ways to work within it and, increasingly, around it, given the always-changing regulations in the US about ecommerce and shipping wine directly to consumers.
Despite how complicated the laws are, and despite how helpful an importer/distributor may be once the wine lands in the US, the responsibility for selling and marketing a wine still lies squarely in the hands of the producer. That realization quickly lead our panel and the audience to a discussion of how producers can find, market to, and sell to their audience.
Which brings us back to Liù Pambuffetti’s three-month “tour” of the midwestern US.
She and her team had planned ahead and scheduled tastings in target markets. In a very savvy move, at each stop they asked the restaurant or retailer which importers or distributors they respect and use to deliver smaller-production Italian wines like theirs.
In the end Pambuffetti identified not only new customers but also four new distributors, giving her family’s wines an exponentially greater presence in the US than they had before. It isn’t just a presence, however: it is a strategically intelligent presence that increases their chances for successful sales.
There are three important takeaways from Pambuffetti’s experience for Italian wine producers who are looking to break into the US market. These points were discussed in details during the VinItaly panel.
- Focus, focus, then focus some more on who the audience is. It sounds obvious, but producers can increase their chances of success by homing in on the people most likely to care about their brand. Otherwise the experience can resemble fishing for sardines in the Pacific Ocean. Maybe the audience for a particular producer is white tablecloth restaurants, in the Italian category, with 50 to 100 seats, and two or more staff dedicated to the wine program. If the producer has dug that far down, in a number of different markets, they’ll already know how their audience wants to be communicated to.
- Seriously consider the off-the-beaten-path markets, that is, outside the major cities on either coast of the country. When everyone else is zigging, you zag.
- The in-person experience is paramount, because that’s the very best way for a producer to deliver their story.
In my opinion, a producer’s story trumps any detail about a wine’s technical profile or even their numerical rating by international publications. A wine’s technical profile – things like the type of wood it was aged in, or its acidity or alcohol levels – are what I've come to think of as tablestakes, to borrow a phrase from Kevin Roberts of Saatchi & Saatchi: they are the stakes any player has to bring to the game to earn a seat at the table. Everyone has them, but they aren’t a point of differentiation.
Which means they don’t help a wine to sell.
What helps a wine sell is its story.
When I interview a winemaker or visit a producer from my perspective as a journalist, the story that interests me doesn't emerge until later, often much later. It definitely doesn’t happen until after the preliminaries – the tablestakes or logistical data, that is – are over with. It's only then that the lightbulb of recognition goes off, that illuminates what it is that makes that particular wine and that particular producer unique and different than all the others.
This more narrative approach doesn’t come easily – not even to producers themselves whose stories are their own – within an industry long influenced by the split-second recognition of numerical ratings of wines. Yet it’s exactly what a major distributor like Glazer’s, based in Dallas, Texas, has its eyes and ears open to.
Alfonso Cevola, Import Wine Director and Italian wine specialist at Glazer’s, estimated during the panel that he receives about 20 emails a week from Italian producers that are strikingly, almost dishearteningly, similar because they all say the same thing and relay the same information (such as the tablestakes of oak aging, acidity, length of time the family’s been making wine, etc), only with a different brand name.
The problem is that none of that information is going to help him, or his sizeable sales staff, sell the wine. What they need to know is what differentiates the brand from all the other producers in the company’s portfolio, which is also sizable.
Convincing producers of the value of their individual story, though it makes valuable sense intuitively, requires an important shift for many producers moving forward. But, as Raye pointed out during the panel, producers are in an advantageous position today because of technology and measurement tools, many of which are openly available for public use.
Producers can experiment not only with the platforms for communicating their story, but also with whether the story resonates with the audience they want to reach. “Try it,” Raye said. “Measure it. If it doesn’t work, then try something else. The tools are at our disposal.”
Follow me on Twitter @cathyhuyghe.
