Issue link: http://winesandvines.uberflip.com/i/867389
52 WINES&VINES September 2017 DISTRIBUTOR MARKET 2017 T ransformative technology has been bringing old-world industries into the digital age with ever-increasing fervor, and several web-based technology of- ferings are making an attempt to update the wine industry and help with—or even upend— the historic three-tier system. This is certainly not the first time internet technology has attempted to recreate the realities of wine sales. Debuting in 1994, Virtual Vineyards (now Wine.com) was one of the world's first e- commerce websites. More recently, an over-ripe harvest of off-price flash websites such as Invino and Wines Til Sold Out have popped up and garnered venture capital to move excess wine inventory directly to consumers. But this new crop of digital players is fo- cused on wine wholesale, the channel connect- ing wine brands to distributors and even directly to restaurants, bars and retailers. In internet-speak, these technology services are known as "platforms" or "marketplaces," web- sites that connect buyers and sellers in a two- sided exchange to facilitate or execute transactions. In common parlance they are connection companies. In an era of ever-consolidating distribution power across larger players, and an ever-in- creasing number of competitive wine brands vying for attention, these connection compa- nies offer discovery and distribution alterna- tives for both buyers and sellers that are willing to try their new models. They focus not on circumventing the traditional channels but on augmenting them—or better, enabling them through technology meant to eliminate fric- tion, increase discoverability and generally ease the work required to transact in the wholesale wine space. Marketplace models in other industries vary online, so it's no surprise that the generally new connection companies reviewed here have found different approaches to solve the same problem. One, LibDib, is a licensed distributor in its own right, allowing wine brands to list their products for sale directly to restaurants, bars and retailers in New York and California. Two others, Beverage Media and SevenFifty, act as portals for price discovery to enable retailers and restaurants to search across mul- tiple distributors to find products within their specifications and then place orders routed to those distributors. We talked to all three play- ers, and here's what we learned. Beverage Media New York, N.Y. CEO: Jason Glasser VP e-commerce: Ian Griffith Marketplace offers 70,000 SKUs Beverage Media has been around since Pro- hibition, primarily as a publisher of trade jour- nals in the price-posting market in the northeast United States. While it's the only company re- viewed here that isn't a startup, the digital mar- ketplace portion of the business is relatively new. The company has "had an e-commerce website for about 20 years," says Ian Griffith, vice presi- dent of e-commerce, which has "been upgraded over time." The marketplace has seen "increased adoption in the past five years." Griffith says during the past year, $350 million worth of orders went through the platform in New York, New Jersey and Connecticut. Beverage Media lists multiple distributors' products and adds content around listings so buyers can make better purchase decisions. "Search is a key piece," says Griffith, "so when people search and can't spell, they find what they want anyway." The focus is large distribu- tors; in New York, the firm works with 70 dis- tributors, including No. 1 Southern Glazer's, and offers 70,000 SKUs. Visitors can also place orders across mul- tiple distributors in one master order form. The orders are then passed to the various distribu- tors, properly formatted so they can go straight into their order system, and trigger an order confirmation with delivery timing. The company's central marketplace is avail- able in six states with multiple distributors' products, while in some other markets Beverage Media provides its technology for individual distributors to post on their own digital sites. Distributors pay a fee, while wineries supply content to enhance their listings, including set- ting up APIs or emails to provide regular feeds of product content to keep their listings up to date. "Hundreds of distributors are using our content to support their efforts online," says Griffith, "on the marketplace, on their own ef- forts, and through hundreds of retailers as well." SevenFifty New York, N.Y. Co-Founder and CEO: Aaron Sherman Claims 50,000 buyers on the platform Aaron Sherman, co-founder and CEO of Sev- enFifty, says: "The easiest way to think about us is a two-sided marketplace between alcohol retailers and distributors in the U.S." New Digital Platforms Connect the Tiers Connection companies build web-based marketplaces to aid in wholesale transactions By Ben Narasin