|Advantage: The Small Wholesaler (part 1)|
Peter Sagansky writes...
Every business structure has both advantages and disadvantages. This is the first in a series of articles where I point out the advantages of buying from small quality-focused wine wholesalers. I will write about our company specifically but my comments also apply to some of the other small companies that operate in Massachusetts.
Large wholesalers utilize a quota system designed to satisfy their key suppliers. Charles River Wine Company uses a priority system designed to satisfy our key customers.
A wine buyer for a top local restaurant told me a story that illustrates the effects of the quota system. She had asked a salesperson from one of the large distributing companies to bring her Sauvignon Blancs to taste for a possible by-the-glass pour. She specifically warned him not bring “Big Brand Sauvignon Blanc” to taste. You can already see where this is going.
He showed up for his next sales call with a nicely chilled bottle of “Big Brand Sauvignon Blanc.” When the buyer asked him why he didn’t listen to her request he told her that he had so much pressure to place "Big Brand’s" wines in restaurants that he could not afford to show her his finer “Small Producer Sauvignon Blanc.”
Large wholesalers give their salespeople quotas that they must reach. This forces their salespeople to stay focused on their biggest commercial brands to the detriment of the other brands in their books. It is the big commercial supplier who benefits from this quota system, not the wine merchant with a moderate-sized store or the buyer for a fine dining establishment.
All Massachusetts retail and restaurant wine buyers are begged for placements of wines by salespeople desperate to make their quotas. These requests are not easy to handle for either party. Many of these salespeople have established relationships with the buyers that they call on. It can be hard for the buyers to say no to their regular salespeople, so they buy the wines under pressure and chalk it up to the cost of doing business.
These transactions serve the needs of the mega-producers and take pressure off of the large wholesale distributing companies. The people who are least well served are the professional wine buyers and their customers.
At Charles River Wine Company we do not have quotas but we do have priorities. The details that result in a particular brand becoming a priority for us are quite different than those of the quota brands in the big companies. These include: the quality of the wines, the recognition of the wines in important publications, a strong demand for the wines in the marketplace, and ample availability of supply to satisfy the demand.
An example of a top priority producer in our portfolio is the great Tuscan producer Felsina. The demand for their wines is based on quality and reputation rather than on volume and advertising. Felsina’s wines are usually amongst the highest-rated Tuscan wines in Robert Parker’s Wine Advocate, Stephen Tanzer’s International Wine Cellar, and Gambero Rosso (Felsina was chosen by Gambero Rosso as the “2009 Winery of the Year.”) Felsina wines are considered “must haves” by many of the leading professional wine buyers in Massachusetts. It is our largest selling and most widely distributed imported brand.
While we have our priorities we want our salespeople to sell all of our wines. Our portfolio is a collection of fine wines that all have reasons for being included in our book. Rather than focusing on a few mega-suppliers we succeed by having a lot of relatively limited selections selling to a wide range of customers. The efforts made by our salespeople should reflect how many cases of each wine we have to sell. Priority items naturally get more attention but we pay careful attention to all of our wines.
Having no quotas to worry about allows our salespeople to in essence “work for their customers”. They select their samples with their customers’ needs in mind. They do ask for business but they do not have to beg for help all of the time for the same group of big brands.
Small companies that are quality-driven have different strengths than those of their large competitors. Many small things come together to allow them to compete with much larger businesses. Each item that they sell is important to them. They have alternative business plans that are productive and successful in a highly competitive marketplace. Their ultimate goal is to satisfy their customers.