Franchise States Part Deux: Breaking up is REALLY Hard to Do

In the last couple of weeks, I have had a number of conversations with friends in the industry about dissolving relationships with distributors in franchise states. As I have written about before, franchise laws can be extremely tricky. I have gone through a few instances of making changes in those states so here are a few quick tips I have to offer:

1. Although there are laws in many franchise states that allow wineries some recourse, and those laws may seem cut and dried to you, the state heavily favors the side of the distributor and nearly all lawsuits show this as precedence. Do you see provisions that state that if a distributor is a late or slow/no pay, they don’t adequately market wine, or they don’t buy wine at all, then that qualifies as “just cause” for a release? Sorry. It’s hard to win on this one.

2.  If you can prove you have “just cause,” and your existing distributor agrees to a release, it’s common practice in many franchise states that in order to obtain a letter of release, you must buy out your franchise agreement. This means that the winery pays its old, under-performing distributor a year+ of gross or net profits. Even if the distributor still owes thousands of dollars!

3. How about waiting periods? In many franchise states, once a release letter is obtained, they still have 30, 60, 90+ days to sell their remaining product and the newly appointed distributor must sit on their hands and wait to sell your wines until that waiting period is up. Of course, the old distributor will offer a fire sale, which means that for months afterward, who will want to purchase them at regular wholesale prices? This can cause slow shipments, depletions and months of pain for a winery that has finally obtained a release, not to mention a frustrated and dejected newly appointed distributor sales force.

4. Have you considered lawsuits? Many distributors (particularly the big ones) in franchise states retain franchise attorneys to specifically go after wineries that have dropped them. Although you may eventually win the suit and be granted a release, consider that you may end up spending tens of thousands of dollars, and while the suit drags on, you will have months without your product being sold in that particular market. Also consider that your emails are NOT your personal property, so during a lawsuit, anything you have ever written to anyone in that franchise state becomes public record if it is included in the suit.

My biggest piece of advice: leaving distributors in franchise states is rarely easy and commonly very expensive. Do not consult other distributors in a franchise state for recommendations on what to do. Call up a qualified franchise attorney, spend the $2-5k it will likely cost to evaluate your position and possibly obtain a release letter, and do things the RIGHT WAY.

Breaking Up is Hard to Do

I can remember the first time I ever had to “fire” a distributor—I was given the directive by my boss, and for a week, I sat and stewed about how I would do it. I finally wrote myself a little script, and with some resolve got my nerve to pick up the phone to call—my stomach was in my throat, my heart was beating rapidly and my mouth was dry. As the phone rang, I silently recited what I would say. The person on the end of the line answered so good-naturedly—I felt awful for what I was about to do. We exchanged some pleasantries and I awkwardly blurted out, “The reason I called is because I have some bad news. Unfortunately, we have decided we’d like to take the winery in another direction and we have decided to move to another distributor.” Of course, this is when the conversation veered off script. The person on the other end of the line started throwing out numbers and percentages about how our business had grown, and how this was a complete and total shock. As they talked, I realized that they were probably right—that they HAD done what they thought was, at the very least, a decent job, and that the winery had never approached them about the fact that we were unhappy with their performance and given a chance to try to change it.

I mostly just included this picture because it came up when I did a google image search for “awkward phone conversation.”

Even though I’m not working right now, I see my friends at wineries around the country wrapping up their fall travels, and begin looking towards the New Year, while taking stock of the progress and challenges of the previous one. This is a time where people start forecasting for their year-end meetings, and in some cases, start making plans to change distributors. The worst conversation you can possibly have in the wine business is the one where you tell a distributor you are planning to leave, and they have no idea that you were unhappy. I had a friend tell me once that when she left a distributor, it felt like a breakup—they weren’t even on speaking terms anymore.

So before you decide to make a move, please learn from my mistakes and consider the following:

Have you told them exactly what you expect?

  • No one can read minds—and even if it might be obvious to you, remember that distributors have hundreds or thousands of wines they represent so being pointedly honest and well prepared about what exactly it is that you expect is extremely important.

Have you asked them if they think your expectations are reasonable?

  • The sales you want to achieve might seem like a no-brainer to you, but distributors know their business and their market better than you do. They are your partners and so it’s important to remember that you need to listen to their side of the story and take into account their honest assessment of what can reasonably be done.

Have you visited the market regularly or supported them in any way?

  • If you haven’t been to their market, how can you even conceive of how much business they can do for you? San Francisco and Indianapolis have roughly the same population, but the markets are drastically different. Evaluating what one market might against one of a comparable size is like apples to oranges.

Do you have relationships with their Reps?

  • They can often offer valuable feedback about how your wines are received, or if they take them out regularly, if at all.

Have you gone over pricing? Have you offered any programs? Samples?

  • No one can sell your wine if no one knows what it tastes like.

Have you been consistent in your follow up?

  • People have a lot on their plates these days. Gentle reminders (maybe once every month, not daily as I have heard from some brand managers) can be effective—spreadsheets with information on depletions and shipments against expectations have proved helpful for me.

If ultimately you decide you need to make a change, I offer the following suggestions for a smooth transition:

  1. Make sure you are not breaking any franchise laws.
  2. Make sure that before you tell them you are moving, you have paid them for all bill-backs and that they do not have any outstanding invoices.
  3. You have a plan and the money to pay them for their existing inventory—will your new distributor buy it? Will you buy it back?
  4. Make sure IT IS NOT A SURPRISE. One of the people I admire greatly is a guy who has left any number of distributors over the years, but he has been able to do it with class, grace and a sense of dignity—each of the companies he has left has not been surprised—they’ve been a part of the conversation, have been given ample chance to correct or improve business, and ultimately both parties came to the table mutually agreeing that while it was sad, the winery was not a fit for them any more. In all cases, they have remained friendly years down the road. I think that’s something we should all aspire to. 

My Weirdest Ride-With. Ever.

I got a lot of positive feedback on my last post, and a few non-industry friends asked me to share their favorite story about a funny experience I had on a ride-with. The wine industry is full of tons of interesting, intelligent and wonderful people; I am lucky enough to call some of them my friends. The flipside is that it is also full of some really strange characters, and I had the (mis)fortune of working with one on what is (legendary among my friends), my weirdest ride-with of all time. Suffice it to say that I will never disclose who this was with, and I will never, ever write about anyone I work with presently (or even the fairly distant past). But this was many years ago, and I am not sure if this person is still even in the wine business. Without giving too much away, it was in a secondary market–there were one or two really big “A” accounts in this particular town, but I’d never been before because it was kind of a trek to get there. After a lot of pressuring from my distributor, and a desire on my part to establish a relationship with one big account in particular, I made the commitment to work with the rep who called on that particular area and booked my tickets.

When I landed, I had about 15 frantic text messages, voicemails and emails from the rep asking where I was. My flight was perfectly on time, and I had a sinking feeling in my stomach that the day was not going to turn out as well as I had hoped. Up until this point, we’d only communicated via email, and had arranged that he would pick me up at the airport and get me to the city with that big account (which was an hour or two away). I called him immediately and let him know that I was waiting outside. I explained what I looked like and what I was wearing (this is one of the weirdest conversations to have with reps you don’t know yet–it feels like a creepy blind date), and while I was talking, I became distracted by the unmuffled sound of a taped up, teal beater groaning its way around the airport pickup lane.

A pretty close approximation to the car I rode in...

My stomach sank even lower when I realized that the beater car was to be my chariot for the rest of the day. I couldn’t actually open my door–it had to be opened from the inside by the driver, but when the door finally swung towards me, I was enveloped by a cloud of yellow labrador hair. The seats were pretty much upholstered with dog hair (instantly making me regret my all black sweater/pants combo). I shook the rep’s clammy hand and flinchingly got into the passenger seat, where I was greeted with slobber and panting by his dog (that he unironically called his “girlfriend”–he even teared up about it–but I decided not to press that one any further). I tried to make chit chat as we started our drive, but all conversation points led to a dead end, so instead we just listened to AM sports radio and I leaned hard against the door and stared out the window, half fearing for my life (the dashboard was lit up like a christmas tree) and half out of sheer frustration because I now had a huge pool of slime/hot condensed breath and dog hair coating my neck (don’t get me wrong–I love dogs and now have two, but this was unbearable).

After about 45 minutes, we were out in the middle of nowhere and I was happy because I thought we’d be close to our destination. Just as I started to breathe a sigh of relief, I saw that we were slowing down and turning onto a gravel road. My heart jumped into my throat (was he going to take me into the woods and kill me?!) and I squeaked, “Wait, is this where we are supposed to be going?!”

The rep gave me an exasperated sigh and told me that in fact, we were going to drop his dog/girlfriend off with his family because he didn’t feel safe having her in the car with him–highway driving and vehicles were patently unsafe, if anything were to happen to her he’d never forgive himself (What. The. F*&!? At this point, I started to lose it). I told him I’d wait in the car (and regain my composure by calling my loved ones and thanking them for all the good times), but he sighed again and told me that no, I couldn’t wait in the car because we were about to have breakfast with his family.

I was horrified–I mean, what was happening? Was this for real? But what could I do? I got out of the car and finally made it into the house after being accosted by about 8 dogs and 19 cats. As I passed through walls covered with 1970s, wood-framed family photographs and a decor scheme that looked as if a country craft fair had thrown up all over the house, I walked into the kitchen and was confronted with his entire family, in their pajamas, eating breakfast around their dining room table. I kept waiting for Ashton to jump out and be like, “You just got PUNK’D!”

This seriously would have been a welcome sight...

His (really quite kind and affable) father asked me how I liked my eggs, and if I wanted coffee, and then I was shuffled to a seat next to his grandmother, who proceeded to keep touching my pants and sweater (but eventually stopped after someone told her, “no, no, granny, don’t touch the nice lady!”). The rest of the meal was a nightmarish blur filled with questions seemingly related to my relationship status (I’m not altogether convinced that the family knew I was a colleague and not a girlfriend), but somehow I managed to choke down my meal and stood up as soon as I’d finished, quite anxious to leave.

This decor, times a million bajillon

As we headed out, his mom kindly gave us a lunchbox generously filled with roast beef and tuna sandwiches, and a huge pile of ironed shirts (he proudly told me she still did his laundry and ironing), and we hit the road. I learned in the car that we would in fact be staying over night in the satellite market (at a Motel 6) and I nearly had a panic attack thinking about the drive back and the fact that I had nearly 24 hours more before my nightmare was over. We finally made it to our destination, where we saw a couple of accounts, sold zero point zero wine, and eventually ended up at the one good restaurant in town; the rep ended up pissing off the buyer and got his company kicked out of the account for good. The ride back was in silence (except for the AM talk radio) while the rep silently seethed about the buyer for expelling him from sales to his restaurant.

I am not sure how I could have prevented this series of events, other than insisting I get my own car, but thankfully, nothing even close has happened in the years since that very strange 24 hours. And luckily, these days, if anything gets weird, I have millions of emails, phonecalls and if all else fails, the internet and Facebook to keep me distracted. And of course, it makes a great story on how sometimes, the wine business can be anything but glamorous (although it provides endless hours of entertainment, even if only in hindsight).

Why Independent Winery Salespeople Should Be on Facebook

An acquaintance of mine who works for a medium-sized family winery recently told me he was quitting Facebook altogether because he felt that it was an insincere way to communicate with people, and if someone really wanted to talk to him, they could pick up the phone and call him, or write him an email or letter, or send some smoke signals.

All kidding aside, as a winery sales rep, that might be the dumbest move he could possibly make. Like it or not, social media, and Facebook in particular, has become an invaluable tool in wine sales. Why on earth would you want to make it harder for customers and sales reps to communicate with you? 

There have been a ton of articles recently on social media and the wine industry (Vinography and 1WineDude have a couple particularly interesting pieces published in the last couple of weeks), and I echo Alder’s sentiment that many salespeople at small, independent wineries approach Facebook with an attitude that is “some combination of fear, scorn, exhaustion, or ‘can’t-be-bothered.’” The same reluctance or unwillingness to reach out to retail consumers is carried over into connecting with buyers, distributor sales reps and somms–the kind of gatekeepers who have the ability to build brands and make sales happen (which translates into dollars in your pocket); they also have their fingers on the pulse of their home markets and can provide you with valuable feedback. Not to mention that many of these people are wonderful human beings with whom you might develop great friendships.

I had a conversation with one of my favorite distributors a few days ago (who I also consider a friend and mentor) and I asked him what kind of qualities the best supplier sales reps have. One of the top things he mentioned was that they all had good relationships with a lot of local buyers and somms. Nothing beats meeting with people face-to-face, and I advocate for that as frequently as you can, but when you’re flying around the country and may only get into certain markets from time to time, Facebook is awesome for staying in touch and checking in with people. I think buyers want to have a connection to the wines they’re putting on their lists and shelves, and I think they are also curious about the people who sell wine to them.   I also have to say that many of my colleagues at distributors or in the greater world of buying and selling often reach out to me with questions about the wines I’m selling (they want tech sheets, they need deal pricing, etc.) first on my Facebook email or wall, and many times they don’t even know my work email address.

A recent study showed that 83% of Facebook users logged into the site between 1-10 times a day. 1 in 13 people in the ENTIRE WORLD are on Facebook. 45% of users check it right when they wake up, and about 75% of the U.S. population is on it. Bottom line: Everyone is on it. It’s a free and useful tool to help you build your network. And if that doesn’t sell you, know that many of your competitors are on it, so while you’re sitting there ranting about technology, they’re making valuable connections that you’ve totally missed out on.

Planning Meetings

It’s January, so for a salesperson at a small winery, that means distributor planning meetings. I think for a lot of people on both sides, distributor and winery personnel alike, these meetings are a waste of time; winery reps often come unprepared, and they don’t have a clear picture of what they want to accomplish. I also think it’s hard for many winery reps to clearly express what their expectations are, 1) because they actually don’t know what their expectations are, beyond the vague wish to sell more and/or 2) they have unrealistic goals and no plan of how to accomplish them. Then you have the weird winery/wholesaler dynamic: the wholesaler is both a customer and also your winery representative in that given state—it’s awkward to be like, “Pretty please buy more wine and also your depletions and number of accounts sold are so bad it’s embarrassing.”

I spend a lot of time thinking about how I can be more successful in my job, and the New Year is always a good time to reflect on the past year’s successes and failures. Success in wine sales means not only meeting and exceeding case volume and dollar goals, but also doing it in a way that is sustainable, and can help me build better relationships with my distributor partners and account base. If a distributor has a clear idea of what I expect from them, and we have a plan of how we’re going to get to a mutually agreed upon goal, much of my work is just keeping the ball rolling. Everybody can be happy. My goal is always, always, always to be PROACTIVE vs. Reactive. Obviously it’s not realistic to expect this 100% of the time—sometimes a wine just needs extra help, or you get a good score and the wine sells out, but it’s the ultimate goal.

A crucial piece of information in my proactive plan is the FOB/Availability matrix that I send out to my distributors once a month. I have been working on this format for the past couple of years and this is the newest iteration. It includes a number of key items, which are incredibly useful and make the spreadsheet an awesome reference tool not just for distributors, but for me too. I’m all about transparency so I put LOTS of info on the spreadsheets. I’ve revamped my matrix for 2012 a little bit and I wanted to share this because I’ve gotten a lot of positive feedback and think it could help my other supplier friends.

This essentially includes all information about the wines, both currently available and upcoming releases. If it’s on the matrix, distributors often include the info on their website or price books. Often wineries do not update their tech sheets regularly so it’s good to at least if you have the wine info here. Always include:

 

  • Wine name
  • Varietal breakdown (e.g. 100% Cabernet),
  • AVA and/or vineyard
  • Pertinent farming info (e.g. natural, organic, biodynamic, etc.)
  • Amount produced. I know a lot of small wineries are reluctant to include this number because they either worry that their status as a “boutique” winery will be lost when people find out that they make 12,000 cases of their “reserve” pinot. Additionally, you may have distributors that get angry because they don’t get what they feel is their fair share of the wine. If you don’t contextualize it, sometimes that number either seems way too small, or way too big. Which is why I always include the next item…
  • Availability schedule. This means I have a column for the following things: release date, projected sell-out date or sell-through cycle, and how much I have left.
  • Allocation/goal. I try to update this as much as I can, but sometimes it’s tough with 35-45 distributors to do on a monthly basis. At the very least you can put in projected goals or allocations for your planning meeting and then update them once a quarter.
  • Billback policy. I get hundreds of billbacks every month it seems, and there is always confusion about it. Our policy is a flat 2% off the top of every invoice, but I’m constantly getting invoices for 50/50. I just like to have it in there as a reminder.
  • Finally, I always like to add important technical details like
    • FOB
    • UPC
    • Case Size
    • Alcohol percentage
    • Cases per pallet
    • Suggested Retail Price

Hopefully this will make your year more successful!

Introduction

When I started working as a sales representative for a small, family-owned winery almost ten years ago, all I had was my college degree and a passion for wine. I had no formal training in sales, and no clue what I was doing. I’m still learning every day! The one thing that I’ve never been able to find is a website or blog that is solely focused on the ins-and-outs of selling wine for an independent, small/medium winery.  So many people love wine and get into the business of selling it, but they have absolutely no idea how to do it. People like to joke that wine sales is not rocket science, but there are a lot of things I wish I had known from the beginning—it would have saved me a LOT of time.

There’s a giant network of people who are on the road hundreds of days a year trying to spread the gospel of small and medium family wineries, but so many times (myself included) I hear about people getting burned out or getting frustrated by roadblocks on a constantly changing world of wine sales.  I get teased a lot for asking too many questions—just yesterday on a ride-with, a rep said, “When you’re done, it’s going to be my turn to ask YOU 20 questions!” But it’s my way of figuring out how to do a better job as a winery sales rep.

I’m by no means and expert, but I want to share some of the tools that have been useful (and not so useful), and the experiences that have been instructive in my job. I think that we need to do more to help out our colleagues in the indie wine scene so that we can all succeed and take back that piece of the pie that the mega-wineries and corporate conglomerates have been trying to wrench from our purple fists.

To start, I’d like to share my personal objectives for being a good wine sales person:

  • Integrity—I have a hard time selling wines I don’t believe in. Sure, I’ve done it. I think most of us have—I mean, we all have to start somewhere. But for the most part, the reason I get out of bed every day is because I have a passion for the wines (and the region) I am selling. Integrity goes beyond just believing in the product I sell. It also means doing what I say I am going to do. Showing up when I make plans, following through on promises, and being responsive in correspondence. I try really hard to return emails or phone calls within a few hours, or 24 hours at most.  Good relationships are built on integrity, and those are the core of my business.
  •  Efficiency—I really believe that working smart is more important than working hard, although I admit do both. What’s with this thing where suppliers like to brag about how little sleep they get and how many hours a day they log in at work? A big red flag and huge alarm bells go off in my mind when I hear people say this.  Managing your time and prioritizing your tasks are crucial to success in wine sales. You can’t be effective if you’re constantly tired. You become less interesting, you don’t think as well analytically, and in general you don’t put your best foot forward. As the face of the winery, working smart is one of the best things you can do for your job and your life.
  •  Transparency—I don’t keep secrets from my distributors. I’m a believer that knowledge is power and if you treat your distributors as partners, you’ll want to make sure they know as much as they can about your winery. They are the face of the winery in your absence and you want them to represent you well. If you’re honest and upfront, they can be your biggest supporter and strongest ally.
  • Proactivity—I’m pretty sure that’s not a real word, but you know what I mean by it. The thing I absolutely LOATHE about sales is the reactive sale. How many times do we hear about the d-bags in ill-fitting suits at the evil empire calling up accounts at the end of the month offering 2-for-1 deals and loading up accounts with garbage wine, stuff they’ll be sitting on for a year and eventually close out because it won’t move, all because they had volume goals from mega-corporate wineries who only care about “moving boxes.” Our job and our hope is that we work with our distributor partners to build brands that have a network of sales wherein sell-through always happens. If we do our homework and are proactive, we’ll never have to load up distributors and accounts with wine they don’t need and can’t sell.  I hate cleaning up messes and prefer to lay the groundwork via the first three objectives so that I never have to be reactive.

I really hope you like what I share, and I hope that I get feedback from you about whether or not these same tools and experiences have worked for you.