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Entering the us wine market for export wine brands as posted in slide share may 2015

The U.S. is the largest wine market in the world, and also one of the most difficult to penetrate. This presentation gives you a solid foundation and understanding of the issues you need to know about to be successful in entering America.

Entering the us wine market for export wine brands as posted in slide share may 2015

  1. 1. Entering the U.S. Wine Market for Export Brands
  2. 2. Navigating Entry Into the U.S. Wine Market Presented by Steve Raye President Bevology, Inc. Steve@bevologyinc.com +1-860-833-6272
  3. 3. What is Bevology? Marketing consulting company with specialization in wine marketing in the U.S. Three areas of concentration: • Trade Marketing • Working with country and region trade promotion associations • Brand development and launch
  4. 4. Why this information is important. Hope is Not a Strategy
  5. 5. Agenda • History of Beverage Alcohol in the U.S.: 3-Tier System • What it means to you today: brand entry process, implications, price structure • Importer and distributor landscape • A snapshot of the American market • Resources
  6. 6. History of Beverage Alcohol in U.S.
  7. 7. Temperance Movement Prohibition
  8. 8. Prohibition Repeal in 1933: New Laws
  9. 9. Federal Regulations Enacted • Protect Federal Tax Revenues • Federal Regulations (BATF-Now TTB) – Licensing qualified importers, manufacturers, wholesalers, warehouses) – Bans “tied-house” – Ensures quality with standards of identity, labels and formula approval – Bans false advertising and consumer deception – Bans unfair inducements to retailers
  10. 10. Tier 1: Producer (Wineries, Brewers, Distilleries, Importers) Tier 2: Wholesaler (Distributor) Tier 3: Retailer Consumer U.S. Three Tier System Created
  11. 11. Michigan Virginia No. Carolina Alabama Arkansas Iowa Colorado Wyoming Montana Vermont and New Hampshire Maine Ohio Pennsylvania W. Va. Idaho Oregon 18 (now 17) “Control” States, 33 “Open” States Washington
  12. 12. Agenda • History of Beverage Alcohol in the U.S.: 3-Tier System • What it means to you today: brand entry process, implications, price structure • Importer and distributor landscape • A snapshot of the American market • Resources
  13. 13. What the Three-Tier System Means to You Today
  14. 14. Michigan Virginia No. Carolina Alabama Arkansas Iowa Colorado Wyoming Montana Vermont and New Hampshire Maine Ohio Pennsylvania W. Va. Idaho Oregon 17 “Control” States, 33 “Open” States Plus DC and Montgomery County makes 52 Different Markets Washington Montgomery County, MD
  15. 15. 52 Different Markets: Implications Where wine, spirits and beer can be sold •California: –Wine, beer and spirits in supermarkets –Chain and independent stores •New York: –Wine, spirits in “package” stores only beer in supermarkets/bodegas –Single store ownership, no chains •Texas: –Four tiers…HoReCa must buy from Class B licensed retail store
  16. 16. 52 Different Markets: Implications How it Can Be Promoted • Tastings –Off-premise tastings: –Allowed in New York, but not in New Jersey –On-premise “wet” tastings: –Allowed in FL, but not in Wisconsin • Coupons –Instant Redeemed Coupons only (IRC) in Ohio –Mail-in rebates only in New Hampshire
  17. 17. 52 Different Markets: Implications Taxes vary by State •Alaska: $5.94/9L cs., Louisiana: $0.26 •Wholesale tax in Kentucky and South Dakota Franchise Laws Protect Distributors •Massachusetts, Connecticut, New Jersey, Georgia, Nevada, Arkansas, New Mexico, Tennessee, Missouri
  18. 18. 18
  19. 19. Imported Wine Brand Price Structure 750ML / 12 Bottle Case Imported - $9.99 Retail Bottle Price Element Per 750ml Bottle Supplier FOB $2.41 Ocean Freight, Fed Tax, Insurance, other +$0.76 Importer's Margin (40% mark-up/28% margin) +$1.01 Price to Distributor $4.18 State Tax, Inland Freight +$0.26 Distributor Margin ( 50% mark-up/33% margin) +$2.19 Distributor price to retail $6.63 Retailer Margin (50% mark-up/33% margin) +$3.33 Retail Bottle Price $9.99
  20. 20. • Federal certificate of label approval (COLA) • State registration and approval - Most states require the out-of-state entity (shipper) to maintain state licenses and/or permits in order to sell products to wholesalers – Most states require the Federal COLA as a requirement for brand approval – Many states require paperwork submissions with fees and return a formal approval prior to shipping – Some states require you to have a signed contract with a distributor in that state to get registration Navigating Brand Entry & Distribution: Brand Entry – The Approval Process
  21. 21. Agenda • History of Beverage Alcohol in the U.S.: 3-Tier System • What it means to you today: brand entry process, implications, price structure • Importer and distributor landscape • A snapshot of the American market • Resources
  22. 22. Importers
  23. 23. • Importer – Licensed to import a wine brand from a supplier outside the U.S. into the U.S. – May or may not have distributor licenses or operations in individual states • Distributor/Wholesaler (synonyms) – Licensed to buy wine from an importer and sell to an on- or off-premise retailer Definitions: Importer vs. Distributor (Wholesaler)
  24. 24. Suppliers Importers Distributors Consumers From To The Model Has Changed
  25. 25. Large National Importer (Diageo) You Have Options! Specialist National Importer (Winebow) Regional Multi-State Importer (TGIC) Specialist, that also distributes (Slocum) Set Up Your Own Import Company National Licensing Import and Services (MHW) Large Distributor that also Imports (Glazer’s) Chain Retailer Exclusive Brand (Total Wine) Direct Import through Control State E-Comm/ Wine Club/ Flash Site
  26. 26. Importers: What They Want • Fills an identified void in portfolio • Brands with existing U.S. volume they can grow • New brands they feel their expertise can develop and grow • Brands that have a unique positioning • The right “CHEMISTRY” • Enhances image, value and profitability (synergy with importer’s mission) • Strengthens importer’s position within the trade • Supplier understands the U.S. Three-Tier system • Financially sound, budget to invest and support the brand
  27. 27. Presenting Your Brand to Importers • Brand point of difference/value proposition for consumer; why THIS importer should be interested in you • Company description/history • Product description: varietals, style, ranges, proposed U.S. retail price by line/SKU • Marketing materials as background • A defined target audience • Production info • Past history of importers, distribution agreements, list of distributors/brokers of products and volumes by state • Price structure for U.S. • Marketing support budget • Sample budget
  28. 28. Distributors
  29. 29. Distributors: Who Are They?
  30. 30. Source: Impact 4/1&15/14 Top U.S. Wine/Spirits Wholesalers Distributor Markets Sales Revenue (000's USD) % Chg. Market S 2013E 2014P 2014E Southern Wine & Spirits of America AL, AL, AZ, CA, CO, DE, FL, HI, ID, IL, IN, IA, KY, ME, MD, MI, MN, MI, MT, NV, NH, NM, NY, NC, OH, OR, PA, SC, UT, VT, VA, WA, DC, WV, WY $ 11,390 $ 11,750 3.2% 22.1% Republic National Distributing Co. AL, AZ, CO, FL, GA, IN, KY, LA, MD, MI, MI, NE, NM, NC, ND, OH, OK, SC, SD, TX, VA, DC, WV $ 6,095 $ 6,480 6.3% 11.8% Charmer Sunbelt Group AL, AZ, CO, CT, DE, FL, MD, MI, NJ, NY, PA, SC, VA, DC $ 5,380 $ 5,575 3.6% 10.4% Glazer´s Family of Companies AL, AZ, AR, IN, IL, IA, KS, LA, MS, MO, OH, OK, TN, TX $ 3,475 $ 3,655 5.2% 6.7% Young´s Market Co. AK, AZ, CA, HI, ID, MT, OR, UT, WA, WY $ 2,820 $ 2,925 3.7% 5.5% Wirtz Beverage Group IL, IA, MN, MO, NV, WI $ 1,775 $ 1,860 4.8% 3.4% Johnson Brothers Liquor Co. AL, AZ, CA, CT, FL, HI, IL, IN, IA, KY, MA, MN, NE, NV, NM, NY, NC, ND, RI, SD, WA, WI $ 1,660 $ 1,735 4.5% 3.2% Martignetti Companies MA, ME, NH, RI, VT $ 1,200 $ 1,200 0.0% 2.3% Allied Beverage Group NJ $ 750 $ 775 3.3% 1.5% Fedway Associates NJ $ 735 $ 760 3.4% 1.4% $35,280 $36,715 4.1% 68.4% $16,300 $15,975 -2.0% 31.6% $51,580 $52,690 2.2% 100.0%
  31. 31. Distributors: What Distributors Want • Money • Margin • Manpower • Marketing • Media • Commitment
  32. 32. The chicken is involved, but the pig is committed. Involved vs. Committed
  33. 33. • Focus, focus, focus…like a laser - Getting it in is the easy part, getting it out is hard - The only metric that matters: repeat orders at retail • Be so successful in a limited number of accounts that you can support, that you create trade word-of-mouth buzz as a hot brand Distributors: Strategy to Get a Distributor
  34. 34. Distributors: Okay, I’ve Got One. Now What? • Recognize you’re not a priority…you and your importer will need do the heavy lifting yourself • Recruit/focus on a limited set of salespeople dedicated to your brand – Product training programs for accounts – Sampling on- and off-premise – Leverage Brand Ambassadors, winemaker/winery owner visits vs. work-with’s
  35. 35. Snapshot of the American Market
  36. 36. Agenda • History of Beverage Alcohol in the U.S.: 3-Tier System • What it means to you today: brand entry process, implications, price structure • Importer and distributor landscape • A snapshot of the American market • Resources
  37. 37. Total Table Wine Consumption (Millions of Cases)
  38. 38. Top 10 Wine Consumption States Source: Beverage Information Group Handbook Advance 2014
  39. 39. Imported Wine Purchases in Past 3 Months
  40. 40. Resources
  41. 41. Agenda • History of Beverage Alcohol in the U.S.: 3-Tier System • What it means to you today: brand entry process, implications, price structure • Importer and distributor landscape • A snapshot of the American market • Resources
  42. 42. Resources • Key trade publications: – Beverage Media: www.Bevmedia.com – Tasting Panel: www.tastingpanelmag.com – Santé: www.isantemagazine.com – Impact (print only) – Somm Journal: www.sommelierjournal.com – Market Watch (print only) • Key industry newsletters: - Industry News Update - Wine and Spirits Daily: www.winespiritsdaily.com - Shanken News Daily: www.shankennewsdaily.com - Wine Industry Insight: wineindustryinsight.com - WineBusiness.com: www.winebusiness.com - Wines and Vines: www.winesandvines.com
  43. 43. Resources • Organizations – WSWA: www.wswa.org – Natl. Assn. of Beverage Importers: www.nabi.org • Competitions/Awards/Events that will allow entry by currently-non-imported wines – BTI/Beverage Testing Institute: www.tastings.com – San Francisco International Wine Competition: www.sfwinecomp.com – Ultimate Wine Challenge: www.ultimate-beverage.com – New York International Wine Comp.: http://www.nyiwinecompetition.com/ • Trade Shows – WSWA (www.WSWA.org) – Wholesaler/holiday shows – Importer portfolio shows
  44. 44. Resources • Alcohol Tax and Trade Bureau: www.ttb.gov/wine/wine-labeling.shtml • “How to Import Wine”, Deborah Gray
  45. 45. Thank You! Steve Raye President Bevology Inc. 401 Park Ave. So, 9th Floor New York, NY 10016 860-833-6272 steve@bevologyinc.com

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