Costco vs. Cowpies

I am delighted that Costco won a victory in the direct sales issues in Washington State. In spite of a recenly filed appeal, I am looking forward to seeing Dover Canyon wines on the shelves of stores in my home town for the first time.

Will direct sales siphon business away from Washington distributors?

Last year, three different Washington distributors requested samples of our wines and considered adding us to their portfolio. I was delighted by each opportunity, as I am a native Washingtonian and a Cougar fan. I travel there at least once a year, more often if I can. But each time the distributors hemmed and hawed and eventually decided not to carry us, in spite of the fact that I could say, "Here is a list of stores and restaurants that want our wines."

I asked one distributor directly why he had declined to carry us. "You’re a California winery," he said. "People up here only want to carry Washington wines."

What utter bull. The Wine Loft, a tiny rustic shop in Olympia, carries wines from around the world in addition to local wines and a fair number of California players (those who have distributors, obviously).  This is just one client in a fat pile of business cards from Washington retailers and restaurants that would be delighted to carry our zinfandel, syrah, and Rhone whites.

I know what the problem really is, because the same attitude is prevalent here in Paso Robles. As one local sales rep explains, "Many retailers and restaurateurs don’t want to think about the wine list. For them, it’s just a necessary evil. They don’t want to waste time exploring new options; they just want one or two favorite reps to come in, write their list or arrange their stacks, take inventory and do the ordering for them. That’s why you see so many places that carry wines from only one or two distributors. They’re lazy."

Another problem is that our wines tend to sell out quickly, and traditional distributors turn up their noses at the opportunity to carry limited releases. They want to be able to sit at their desks, call their clients, and just take re-orders for wines that are readily available.

There are however, a growing number of ‘boutique’ distributors that are passionate about certain regions and eager to hand sell the wines in their portfolio. At the moment, there are not enough small, focused distributors to handle all the family winery business, but I foresee the number of such firms increasing exponentially in the next few years.

Although I am pleased to now be able to approach Washington retail shops directly, I would still prefer that a distributor handle these sales. As a two-person operation, we rely on our distributors to stay in touch with customers, make sure the correct wines get delivered promptly, follow up for reorders, check out the shelves, suggest end stacks, and prepare shelf talkers. Distributors also handle individual account billing and follow up for payment. Distributor reps present our wines during special tastings and festivals.

Will direct sales siphon business away from Washington distributors?

For now, the answer is yes. Distributors who are too lazy to represent a multitude of limited release wineries will compete directly against all of the small California, Oregon, and East Coast wineries that want representation in Washington. And again, the answer is yes. If distributors are too lazy to build a balanced portfolio with a range of affordable wines from a variety of winegrowing regions, then distributors will find themselves competing against large and well-financed wineries who want to establish a toehold in Washington State.

In the end, wineries do not really want distributors, per se. What we do want is professional, gracious representation. And we are willing to pay any firm that offers us—and our end consumers—those professional services. We would prefer, in fact, to pay a distributor who is physically present in the state to represent us to Washington retailers and customers. However, if distributors are too lazy or unwilling to do that, the changes in Washington wine retail laws will allow us to represent ourselves. And more importantly, this change will give out-of-state wineries an opportunity to demonstrate how we want it done.

Any distributorship with a balanced, blueprinted engine will not be caught dead in the water. But those who rely on sleazy giveaway programs, under the counter deals, locked up wine lists, and phone call representation are like boats with a cheap engine; they won’t survive the choppy waters of real competition. The demise of the three-tier system in Washington means the end of slop—poor selection, high prices, and uninteresting wine lists.