Independents Day

Some thoughts on the way forward for Independent Wine Merchants.

Whenever I read the results of a survey about the wine business there are always answers that surprise me, or follow up questions I’d like to ask. The recent reader survey in Wine Merchant, the publication which goes to some 700  independent wine merchants in the UK, proved to be no exception.

How viable is an exclusive range?

The first point that intrigued me was this. Is it really the case that only 34% of respondents thought it ‘very important’ to be certain that suppliers are not selling the same wines to nearby rivals or trespassing on their wholesale business? To be fair a further 40% thought it fairly important, but this still implies that 26% weren’t that bothered. If I was running a regional Wine Merchant my ideal would be to have a range that was unique to myself, excepting perhaps at the super premium end, and only deal with suppliers who didn’t embarrass my retailing or wholesaling activities.

Maybe this is a naive aspiration? When it comes down to it is this ideal compromised by the realities of the marketplace: the lack of suppliers perhaps who can offer exclusivity in addition to other key elements of the business mix? Or does it simply depend more fundamentally on the strength of one’s finances or the absence of time to go direct to some producers? Perhaps there is something else going on here that I don’t understand?

One of the nuances of the wine category is the enormous diversity of wines available and the paucity of individual producer brand names which consumers actively seek out. In theory therefore every retailer, large and small, could have a unique range: a range on which it is possible to stamp one’s personality and which reflects one’s own particular enthusiasms. Very few consumers, however knowledgeable, are entirely comfortable when buying wine even if they are at the level where they regard the process as exciting as opposed to daunting. Even at this level they need guidance. A good retailer or wine merchant to them works like a subtle signpost when they are lost in a maze or a prompt in a particularly time consuming crossword.

This all implies that a well marketed range can, in theory, establish a profitable franchise even if the consumers involved are generally only familiar with the individual wines on a regional or varietal level.

How are wine merchants communicating with key customers?

And this leads me on to my second query. It is far from clear from this survey the proportion of respondents who are actively building, and communicating effectively with, a data base. I can imagine the 60% or so using Facebook or Twitter are doing so, or those 23% using an email newsletter (who may of course be the same people), but I’m intrigued as to the level of sophistication of the communication both amongst those using social media as well as the rest.

When I started advising English Wine producers, many with cellar door facilities, it was surprising to me how many had not been either collecting purchasers’ details and\or following them up. It is apparently nine times more costly to recruit new consumers as it is to develop existing customers. This may, of course, be one of those stats that gets trotted out yet has no basis in fact, but it sounds plausible to me.

 In my ideal Wine Merchant, I would be focussing on selling my unique range to an expanding hard core of loyal and profitable consumers. I would hopefully ensure they remained loyal by a combination of excellent service and a range which represented a blend of existing favourites plus exciting new wines which I calculated were within their comfort zone, but closer to its edge.

The key to me, and what I would hope would separate me from my larger competitors if not some of the rest, would be the creation of a personal profile of each valuable customer so that my follow up emails would be welcomed as relevant and individual and not treated as yet another general wine offer.

I buy wine from various retailers, big and small. Not once have I received an email or phone call asking me whether I liked the case of wine or whether I’d be interested in buying the follow on vintage. Not once, in fact, have I received a personalised, as opposed to a general, communication.

Is this because I’m not a particularly valuable customer, in which case fair enough, or is this simply not general practice?  I remember years ago making this point at an industry conference and being told very firmly that there aren’t enough hours in the day to operate in this way. Is that still the case? Has technological advance made this more feasible or have we still got a way to go?

The competition is only going to get tougher.

We exist in a marketplace in which the competition is intensifying. Technology increasingly allows retailers to target consumers of above average value in terms of wine purchases. One can indeed envisage a world in which such consumers receive a blizzard of such offers, particularly as more and more producers start selling direct.

Surely a key competitive advantage for a regional Wine Merchant in such a situation is the ability to take personalised service to its ultimate level- a level beyond the reach of the majority of the big players. By offering  a combination of “clicks and mortar”, or, to put it another way, a combination of personality, playing the local card, the classic ambiance of a wine shop, backed up by the effective use of technology, wine merchants can steal a march on the competition.

May be this is happening, it would be reassuring to discover that it was. Because the major retailers are developing their own database marketing skills, while their range in store is becoming in some cases local as opposed to national.

The Independent sector, to keep ahead, must play to its strengths and a combination of a near exclusive range and personalised marketing seem to me to be two vital elements in its armoury.

NB. This post appeared as an article in The Wine Merchant on 13 May- http://www.winemerchantmag.com.

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5 thoughts on “Independents Day

  1. Great article and so true!

    I think the problem for a (smallish) independent wine merchant to have an exclusive range of direct imports from small producers is to do with stockholding and cash flow. It’s expensive to ship a pallet at a time from each producer, it can take a while to sell through and in the meantime needs to be stored and ties up cash. It’s also impractical to do this for New World producers. So being able to buy a smaller number of cases at a time from UK stock is far more efficient but the sacrifice is exclusivity and consequently USP.

    Your point about databases is also equally true! I think the problem here is that we have all had to trim our overheads down so much that there is not the money or manpower to invest time in anything that does not have to be done to keep the business going right now. It’s a false economy I know and wise businesses will be investing in their CRM now!

  2. Quite agree, Mike.
    As someone who sells direct myself, I know how hard you have to work to stand out from the crowd. And if we think this is a crowd now, wait until EVERYONE follows your advice and tries to create and maintain a mailing list.
    The secret is to offer a real relationship between the real people in your business and your real customers, making sure that you offer them what you know they are going to like. Even if the information you use to personalise this relationship is delivered by technology (and not by human memory, which is, in my case at least, increasingly unreliable!) it is important that the relationship IS personal.

    • As you say Justin it is going to get very crowded particularly as brand owners like yourself seek to go direct. The advantage you have, as you imply, is that you are a small business so its much easier to keep the relationships personal and therefore ‘real’. Larger companies will have greater resource but inevitably struggle to engage in the same way.
      In addition you have created a brand which I would say works particularly well in this regard…its a serious wine but it also has an engaging personality and a sense of humour!

    • Good point, Justin. But what you and Mike are both saying underlines the fundamental flaw in the wine world: we all expect people to come to us rather than go to them. Understanding what they want and are interested in is critical. But I guess that Justin, your experience at Direct Wines, has given you more understanding of that than most wine professionals.

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