2021-The future of wine wholesale distribution – Post Covid 19

Photo by Susan Lowry Hare

OK, right off the bat, this is an “inside baseball” post, so no need for the ineluctable comment stating the obvious. There will be no reviews of 2020 rosé wines, no “longing for Italy” posts, no nostalgia of any kind. It’s just what I’ve dreamt up from talking to people in the wine trade, along with observing as a wine consumer, during the last 15 months. Read 'em and weep. Here goes:

• 20-30% of all jobs will be eliminated, in all departments, starting with the ageing out workers.

• Office spaces will all but disappear for most employees, except for the “corner offices” for higher echelon executives (who will only come in for occasional meetings). Larger wholesalers will downsize their administration and sales office space drastically.

• Automation will be further ramped up (have been doing so for a while) and now that the customer can order online, sales positions will be reduced even further than the 20-30% mark.

• Sales divisions will be consolidated, eliminating the fine wine groups and rolling them into the larger divisions. Fine wine specialists will be reduced if not eliminated altogether, as well.  There will be “roving ambassadors” financed by larger suppliers (as there is now) and medium sized distributors might not be as affected by this as the super large ones.

• Low performing, low profit (mainly dollars, not % of profit) brands will be culled out, reducing the need for warehouse space, warehouse workers, salespeople, delivery, etc.

• Sales will become less of a “push” process and more of a “pull” one, bringing in a whole new customer self-service (online ordering) era.

• Group meetings and rallies will be discouraged and phased out, and this will save lots of money in utilities, AC, food, insurance, etc.

• Larger (and the surviving not-so-large) suppliers will be encouraged to do quarterly/yearly meetings via Zoom, Skype, etc. This will reduce spending and impact the entertainment budget, saving millions.

• Along with reduced meetings and in-person get togethers, there will probably be a shrinking of the HR departments, as sexual and racial assaults will notably decrease, due mainly to people in the alcohol industry doing less in-person business socializing.

• There will be an even greater emphasis placed on Diversity and Inclusion programs, which will morph the existing HR departments into a more proactive department, even while being downsized. The bottom line is more BIPOC (and LGBTQ) will be on track for advancement up the (corporate) ranks. Large corporations are in the business of making money and profits and they see it is good business to mirror society and remake their companies in greater balance with the changing demographics, politics aside. Oh, and, the wholesale tier will continue to get younger, as the Millennials and the GenZ’ers persist in taking share of mind (and salaries) from the ageing Boomers and GenX’ers.

• That said, the “old white men at the top” will endure tenaciously until the asteroid slams into the planet. They will make more money and they will be more Republican and Libertarian than Democrat and Independent. It will be an ongoing dichotomy.

• Travel expenses will be cut 50%, at least, saving tons of money.

• Again, that said, all but the top executives will be discouraged from taking needless travel to wineries, vineyards, sales meetings, conventions, junkets, as this will reduce the liability and save money. “Do it all on the screen,” will linger as the working mantra.

• Medium-to-large distributors, having not had suppliers physically “working the market” in the last year or so, will continue to discourage many small-to-medium suppliers from taking time away from their (reduced) sales force to solely concentrate on their product for a day, or a week, or however they had scheduled their time in market prior to Covid 19. The rationale for that will be, “Sales improved without you being in the market, so why try and fix something that isn’t broken?” This will cause many small suppliers to find creative ways to work on their own, as they have, to grow their sales. Medium suppliers will become more inventory managers for their products and special events ambassadors. The larger suppliers already have their teams on the ground, and because they represent so much sales to the distributors, they will probably get whatever they want, including the long dreaded "blitzes." But there will probably be a shrinking of the force, as their sales also increased without the street work everyone thought (Pre-Covid 19) was necessary for success. This will be an interesting area to follow in the next few years and there will be a large transition (shakeout?) in this tier.

• Large national distributors (and national retailers) will transition slowly to a direct to consumer /online sales model. The national retailers will depend upon their captured brands for higher profits. The national distributors will earnestly seek to eliminate the retail tier by getting the laws changed (which will be needed to be done in 50 states, which will be in the level of intricacy like passing an amendment) so that they can sell directly to the public, in brick and mortar, and in the more profitable online model which will be known as Distributor-to-Consumer or, "DTC 2.0."
  

• And finally, there will be an ongoing renaissance in the growth of the small, fine wine niche distributor. It will continue to be the proving ground for upcoming trends, as they were in the past for the natural wine, micro-brew and artisanal spirit movements. We’ll see more investment pour into this area from wealthy, young investors, as the thirst for fine and great wine doesn’t seem to be poised to go away anytime soon.

 

 

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