Issue link: http://winesandvines.uberflip.com/i/591609
110 WINES&VINES November 2015 BUSINESS PRACTICAL WINERY & VINEYARD " There will continue to be some consolida- tion at the distributor level. It is providing an opportunity for new distributors to open up and acquire the brands that the big distribu- tors are putting less emphasis on. It is a major change we are going through, but it is a new opportunity for wonderful, small state distributorships." " I do see that getting product to my end cus- tomers is going to be increasingly more the responsibility of the producers. I do not be- lieve distributors or retailers will build brands like they did years ago. Now they play a role, but the market is changing their responsibilities." " I do not see DtC as a viable option for com- panies that are anything above 100,000 cases. That is not significant enough busi- ness to offset the U.S. trade business. It is all part of a general bifurcation that is oc- curring in the industry, in that a bulk of the industry will settle into large players. Then you will have those traditional, high-end, small producers of 1,800 cases to 15,000 cases, possibly which can survive on DtC either through brand prestige or location." " DtC is not a viable alternative for $10 to $12 and under. For the producers with over $20 (per bottle) retail wine, everyone is doing that. Most people are shooting for 40% to 50% DtC, and (they) are having a hard time getting distributors to work on the $40 to $50 Cabernet that sits on the top shelf of a grocery store." " Some of these consolidated retailers are more interested in promoting private-label brands. The other part of that question as relating to DtC—we are going to see a brand-by-brand migration. There is going to be a division of brands into DtC-type brands that will be more re- tail-friendly. We see many more consum- ers becoming comfortable purchasing wine on the Internet, but we are fortunate to be in a position where our distributors have put our wines on sale day to day. We see an ever-increasing piece of the busi- ness moving to DtC, however." " At some point, if you want to grow to some- thing more than a 4,000- or 5,000-case win- ery, you are going to need the traditional three-tier markets to help grow your brands." " DtC is a viable alternative, especially for new wineries starting up and building their networks. We also focus on DtC at the win- ery level—especially for our more luxury and limited wines." " It is a good thing. For example, with dis- tributors that are multi-market, a supplier can obtain greater attention because the distributors have a larger footprint and can take care of them. The larger the chain is, it ends up helping with total distribution. Meanwhile, great independents are neces- sary to nurture brands, and they are stron- ger than before because they are trying to do the very best on a personal basis for their customers." Q What is the impact of the arrival of large, acquisition-minded institu- tions (pension funds, university en- dowments, family wealth groups) on the wine business? " I see the effects, especially on the Central Coast between some of those big guys buying things. We have actually done deals in the past with some big institutional inves- tors like that, or they can buy a vineyard and you can lease it back." " My biggest concern is sustainability: How long do they plan to stay in the busi- ness? Obviously the terms in buying vine- yards in particular, prices are up particularly in Napa. Is that sustainable? http://www.angelfire.com/ca5/RandDGlass Put Your Money Precision Frost Protection, Target Those Frost Pockets! READ MORE ABOUT IT AT www.shurfarms.com Where Your Frost Is! SHuR FARMS Frost Protection Colton, CA (909) 825-2035 info@shurfarms.com