Being nice to distributors

One of the points that stood out to me from Carol Reber's discussion on Duckhorn was that her sales team always walks into the wine business with a "thank-you." Carol emphasized Duckhorn's deep, rich relationships with distributors and noted that many suppliers failed to act in kind. Instead, she said, most brands focus on why distributors are failing to help them sell through inventory.

Given the bottleneck that distributors pose in the U.S. wine industry's three-tier structure, I was curious what other steps suppliers could take to make distributors' lives easier (and consequently enhance those suppliers' prospects). Below are some findings.

According to the Beverage Trade Network, success for suppliers in new distribution partnerships depends on customer knowledge for three different types of customers:
1. Your retailer's customer
2. Your distributor's customer
3. Your customer

For the retailer's customer, or the end consumer, the key is to build buzz around the product through adroit marketing prior to pitching the distributor. This relates to a point that Martin made in class yesterday about whiskey distillers: you need to tell a story that resonates with the consumer in a new and creative way in order to stand out from all of the competition.

For the distributor's customer, or the retailer, it's important to get close with the most productive accounts in your distributor's portfolio and determine where you utilize in-store activation / promotions to develop under-performing retailers. Before signing up with the distributor, you can also get the top-performing retail stores in your category to ask for your product from the distributor in question.

For the supplier's customer, or the distributor, the idea then becomes to understand and anticipate the distributor's weaknesses. In the consumer goods company where I worked before the GSB, we did a lot of heavy-lifting for the retailers by showing them market data, sending in merchandisers to implement marketing campaigns, and demonstrating which shelf arrangements would yield maximum average weight of purchase. With distributors, one could picture wine suppliers achieving something similar by going that extra mile: knowing when distributors are too busy to add SKUs, understanding the pinch points in their supply chains, and being really familiar with the contents and gaps of their SKU portfolios.

While many of these steps seem like common sense, it turns out that most suppliers don't implement them effectively. It seems much easier to treat the distributor as a glorified delivery service entitled to a slice of the pie by America's convoluted legislative framework.