The Shady World of Wine Distributors

[Rebel Rose]

Reading this thread about chefs and writers expecting comps, made me think about some of my early encounters with wine distributors, who shall in these comments remain unidentified because basically, some wine reps act like sleazeballs.

Dress like them, too. I was at a recent restaurant opening in Costa Mesa, co-hosted by my central coast distributor, HarvestGate, for others in the local restaurant trade. For some reason that I can't fathom, everyone in this sunny, palm-studded, rich coastal town wears vampire black, but even so, a knot of three men stood out. Their coats were limp and shiny, and their hair sort of butch-grease wannabe cool. My broker, a beautiful woman, leaned over and said to me, "Can you believe it? I know they've gotta be (XX) Distributing. And they're crashing our party. I'm going to mess with them." And she was right, and she did.

When I first started working in this industry, as a wine room attendant, (XX) Distributing reps would arrive unannounced and bully the wine staff into giving them armfuls of comps--hats, shirts, jackets, even grappa and wine (which is completely illegal). On theory, they should be using these comps as gifts to the winery's retail clients, but they never did. Butt pinching and breast grazing was not unusual, either.

[jbonne]

so here's my question, RR: how do you think distributors in California -- where nearly anyone can sell wine to anyone else, essentially -- differ from reps in most other states that don't have quite as liberal laws on the matter?

CA is always held up as proof that distribution can still work -- even without laws that functionally guarantee an oligopoly -- because wineries don't have the time or resources to drop their goods off like milkmen and will gladly pay someone else to do the work. true, or hooey?

[Daniel Rogov]

There are two separate but related issues here when it comes to relating to the critic's attitude towards such issues - those relating to restaurants (to which I have just posted a response on the third page of the thread at http://forums.egullet.org/index.php?showtopic=75936 ) and those relating to wines to which I will relate here.

My own policy as a critic with regard to receiving wines from wineries or distributors is quite simple:

(1) I will gladly receive one bottle of any wine from any vintage that any winery or distributor chooses to send me for review purposes. Note please that I said "one". Not two, not three, not more.

(2) Because I taste such a huge quantity of wines annually, it is impossible for me to write about all of those - neither in my newspapers or on my internet site. Despite that, every wine is tasted (blind, if necessary to say) and formal tasting notes are written for each. Those that cannot appear in print (editors the world over are willing to give writers just so many inches a week) go into my data base and serve as background data for future tastings, evaluating of drinking windows, and as references for wines of that winery/distributor that will later be reviewed.

(3) No winery and no distributor is under any obligation to send me (or any other critic) even a single bottle of wine! That is why wine critics have budgets for purchases, why they visit professional level and even popular international and local wine fairs, why they periodically visit wineries and why we spend many of our Fridays (at least in Europe and Israel) running from store to store to attend the various tastings that are held there.

(4) As to feeling beholding to any winery - no way! That is why tastings are done blind - simply stated, when tasting blind you don't know if the wine you are sampling came directly from the winery or from your budget.

(5) Any writer or critic who demands wines from a winery is, simply stated, a whore and if his/her editor gets wind of this, that writer/critic should be given a rather limp handshake and a rapid goodbye!

To end on a sad but light note - there is a joke circulating these days in Bordeaux to the effect that there are "boutiquistes, garagistes, and baggagists". The boutiquist of course is the small winery, the garagiste is the artisanal winery and the baggagist is the critic who drives up to the winery, opens the trunk (baggage) of his/her car, waits until that has been filled with wine, drives off and then writes a positive review of the winery. As I say......not all whores walk the streets selling their bodies!

[Rebel Rose]

To respond to Daniel's comments first, I had to laugh at the last paragraph! How sad, but funny.

I have only had good experiences with reputable wine critics. I don't mind sending two bottles of each wine. However, I am very selective about submissions, and I expect requests to be submitted in writing, by email, or by a qualified print source.

Jon, to answer your question, yes, it's very true that distributors fulfill a worthwhile role. Even as a tiny winery, we are happy to be in the portfolios of reputable distributors in several states. There are many, many wine distributors who focus exclusively on domestic and imported fine wines. Their personnel are educated and passionate about wine, and these firms are generally popular with fine wine stores and restaurants. It's the larger wine and spirits distributors with huge portfolios of inexpensive plonk and hard liquor that tend to be pretty sleazy.

And some internet wine sites are questionable, too. Wine.com presented us with a carefully prepared portfolio including warehousing specs and other details. I was very impressed by their presentation even though we decided not to go that route. Another firm sent reps to see us with no written proposal, just a verbal sales pitch along the lines of, "You send us a few pallets of wine, we keep it, and we own it on paper, maybe sell some, and send you a drop ship invoice when and if we do." When I questioned their practices and presentation they said, "We're the future of wine sales, and you'll be sorry if you don't do business with us." They are now out of business.

For a winery, there are three levels of sales: retail/direct, brokered, and distributed. Each level offers important advantages. Direct retail, wine club, and mail order sales offer immediate cash flow, but the trade off includes a high percentage of samples poured, human resources, physical infrastructure (tasting room, storage, shipping supplies, driveways, signs, etc. etc. etc.), training, daily sales paperwork and reporting.

Brokers act as independent wholesale reps for the winery. For instance, we have a broker in the San Francisco area who calls on all our accounts and fills orders. We store wine in a warehouse in San Francisco, and he processes all the delivery orders, handling everything except invoicing. Brokers will have other wines in their individual portfolios as well, and can present several winery selections to each account, but still--the amount of time brokers spend on the road and just looking for parking is staggering. Not to mention cooling your heels in line waiting for a restaurateur to meet with you on "wine tasting Wednesday." The purchase orders are sent to me, and I am responsible for all billing, follow up, storage and delivery fees, and commissions back to the broker.

Distributors pick the wine up at the warehouse, and accept ownership and total responsibitlity for it from that point on. At the FOB (freight on board) price, you might think that we're receiving less money per case than we would selling through a broker. But after you add in the additional inventory costs and commissions to a broker, the end price to us is about the same--without any more hassle. The only trade off is that traditionally a broker would work closely with the winery as far as preferred placement. Distributors, who now own the wine, would just place it wherever the easiest selling point was, and artisanal wines would, more often than not, end up upright on a lower shelf of a warm supermarket. Now, however, there is a growing segment of small distributorships committed to representing small wineries, unique and limited productions, and fine wines.

Here are some highly regarded wine distributors:

Adventures in Wine

HarvestGate

J & L Wines

Kysela Pere et Fils

I suppose (XX) Distributors will always be with us. I hope the increasing number of small, quality distributors will now provide significant competition. Straighten your ties, gentlemen.

Edited for spelling, address, grammar, and logic.

[Craig Camp]

Let's face it, considering the working conditions offered by most wine distributors, their sales positions are not likely to attract the most professional people. Also, many larger distributors are not actually in the wine business, although they sell a lot of wine, they are in the beverage business. Selling Kendall Jackson, Rutherford Hill, Turning Leaf and other mass brands does not require wine professionals, but street hustlers that can move boxes (as they so lovingly refer to wine).

Most wine sales personnel are underpaid and under-valued by their management, who considers them interchangeable parts. Also, the bullying most sales reps get from their sales management is sure to drive the most talented people out of the business.

The truth is that most large distributorships are driven by spirits not wine. You can make a hell of a lot more money selling Absolut than any wine brand and its a lot easier.

Edited October 18, 2005 by Craig Camp (log)