Robust on-trade data is hard to come by, but Wine Business Solutions believes it has found its niche in the sector by analysing just how different wine distributors stack up when it comes to getting their wines on the key drinks lists of restaurants and bars across the country, explains its principal Peter McAtamney.
Having sold wine in 45 countries working as a brand principal and global marketing director for brands such as Freixenet (Spain), Yellow Tail (Australia) and what is now the Foley Wine Group in New Zealand, I hope I’ve got a fair idea of what a brand principal should be looking for in a distribution partner business. Much of that experience I have to credit to export management at Freixenet who, in the day, was recognised as amongst the best in the world at what they did.
Peter McAtamney is using his experience working for major wine brands to assess how good different distributors are
That is what our on-trade research is primarily designed to do. We don’t stop at countries, regions and product categories and wines styles’ share of listings and average prices etc. This is now our 12th annual survey giving us nearly quarter of a million listings, in total, as a database able to be used for longer term analysis for clients.
In our 2021 On-Premise UK survey alone there were just under 6,000 ‘brands’. This is 9% up on last year, reflecting, even in these toughest of times, the ever-growing sophistication, complexity and overcrowding of this ‘Great British Wine Market’, the true ‘litmus’ for wine brands globally.
We evaluate the Top 30 distributors and their competitive strategies.
We do this in six out of seven of the biggest wine importing countries as well as Australia and New Zealand. Somewhat unexpectedly, the main customers for the reports are the leading distributors, importers and brand houses. We designed the report for suppliers and yet, somewhat perversely, the people that need a tactical advantage in negotiations between suppliers and resellers least are the ones that buy it. (Sort of like how our best consulting clients are the ones who need least help).
The other advantage we have, in terms of helping the distributor buyers of the report, is that most distributors have little visibility of what importers and distributors do in other markets. In copying their immediate competitors, they may not necessarily be using the best available strategy.
We have always been big fans of Berkmann, for example, who performed strongly again in our 2021 report, who look and behave like the leading brand houses that form the majority of market leading businesses in most other markets. They are almost on their own, in terms of their business operating model, in the UK.
What are we looking for?
To be a good on-trade distributor, I believe, you need to have all these steps covered:
1 Strong Portfolio
First you need to have a strong enough portfolio to be able to command attention. Most fail because they simply don’t put enough work into understanding what that means.
2 Listings per brand
The real acid test, however, is listings per brand. From the brand owner’s point of view, there is absolutely no point in being part of a giant portfolio if the distributor doesn’t achieve wide-ranging distribution for you.
3 Wine by-the-glass listings
Having a good range of wines you can offer restaurants to serve by the glass is now a must for wine distributors says Peter McAtamney
The other key task of the distributor is to get restaurants’ customers trialling products and to move volume through attaining wine by-the-glass listings.
4 Alternative formats
The distributor should also be able to up-sell and cross-sell alternative formats such as half bottles, magnums and multiple pouring sizes and vintages to optimise list coverage. Brand visibility and recognition creates brand strength.
5 Fast moving
A good distributor must, of course, also be able to adapt to what is a very fast changing market in order to have the right portfolio to keep their trade customers happy. This then needs to be done without losing brand focus.
The biggest mistake we see UK businesses making is going for rapid, one off, portfolio build ups to cover perceived missed opportunities that initially capture everyone’s attention. That attention then fades quickly and the core brands suffer for lack of focus. Ultimately everyone loses.
6 Managing cash flow
They must also be able to manage cashflow in one of the more difficult sectors in which to do so.
7 Getting results for their suppliers/producers
Above all, a great distributor needs to be able to produce results for quality suppliers. Without them and the brands their joint customers believe in, there is no sustainable business, only commodity trading.
The number one distributor: Mentzendorff
Andrew Hawes, managing director of Mentzendorff, has steered the business to be the number one UK wine distributor according to Wine Business Solutions’ analysis
Out of the Top 30 businesses (based on total listings in our survey), Mentzendorff’s listings per brand – our key metric – were 43% higher than the next bu
Our report shows that being the biggest does not necessarily mean being the best. The key differentiator is listings per brand on wine lists. The more some bigger distributors expand their ranges the chance of their producers or suppliers being listed diminishes. We have seen one major player who had nearly one in five of all listings at one point reduce its share of listings by half in just the last three years.
We assess one one distributor against another by how smart they have been in choosing their partner principals (which we have extensive knowledge of thanks to our global research). How does their whole portfolio then fit together competitively? How does it then translate into total listings and listings per brand in our UK market survey?
Our On Premise report is designed to lay bare the strategies of each primary distributor, brand supplier, country and region – in so far as they can be interpreted from their results in our survey.
It will be interesting to see how their business strategies and models cope with Brexit, but there are too many moving parts at the moment to anticipate, in a neat nutshell, where this will all land.
Challenges ahead
I think the biggest challenge that all distributors have is retaining focus on brands, keeping your offer manageable and staying relevant. We see literally hundreds of businesses with extensive product lists with virtually no distribution relative to the Top 50 or so suppliers.
The next thing that I would advise is working on the SEO of their supplier base, as many brands can be bought from multiple suppliers. This is generally done fairly well in the UK.
Also, from a brand principal’s point of view, you don’t want to dig down three menu layers on your website just to work out what brands you represent. There is one major supplier in our Top 30 who doesn’t even have a functioning website.
How to stand out?
If a distributor really wants to stand out then it is all about brand focus, having a brand building approach and a focus on listings per brand. Listings have proven to be the best lead indicator of where markets are heading not just in the on-trade, but in the off-trade too.
A good example is Indigo Wines which has been supporting the emerging natural, biodynamic, and what you might call ‘new’ winemakers. Unlike their larger competitor, they do not have 450 ‘brands’ in their book and are actually starting to turn the best of their suppliers into proper brands.
- If you would like to buy the report (A$495) you can click here. To see an extract from the report click here.
- Methodology of Wine Business Solution’s Wine On-Premise UK 2021 survey:
- “The report covers the full range of possible wine consumption occasions including regular suburban restaurants, fine dining, hotels, pubs and upmarket bar venues. We select outlets and individual listings on wine lists completely at random but using consistent methodology. We stratify the sample in proportion to the population, excepting that we increase the weighting of Northern Ireland and Scotland slightly to improve accuracy when reviewing these markets in isolation. The split used is as follows: Our aim is to construct a truly random, statistically significant sample so as to be 99% confident that the mean of our sample answers, involving the whole database, are within +/- 5.5% of the mean of the total market. The aim is to accurately reflect what the average consumer sees when presented with a wine list anywhere in the UK.”
