When an opportunity to engage a distributor pops up, it can be incredibly tempting to just say yes. They'll flatter you and promise you the moon . . . but can they walk the walk?
Here are 7 questions to ask a distributor before committing your brand:
Looking at a distributor's portfolio will tell you at a glance if this is a firm that can represent your brand. If you want to move a lot of product, then you'll want to see some large producers on the list--a sign that the distributorship does well with large allocations. If you're strictly low-production, then you'll want to see some similar brands on the list.
2. Why do you think we are a good fit for you?
Let's be sure they're not approaching you just beccause you got a high score on a single wine. If that's the case, they'll drop you like a hot potato next vintage if the same critic doesn't come through with an identical score or better. And that will leave a lot of frustrated retailers with unfulfilled orders and resentment toward you, the brand owner, for abandoning them. Don't make eager suggestions when talking to your prospective distributor--encourage them to explain where, how and why you are perfect for their portfolio. Listen for points that reflect your focus varietals, pricing, production levels, and background.
3. What similar brands do you carry?
You don't want to be the lone ranger on their list. While it's okay, even desirable, to maybe have the only tempranillo or vermentino in the portfolio, you do want to see that are successfully selling brands from other producers who are the same size, located in your region, and working with the same core varieties.
4. Who is your biggest competitor?
Now this is a trick question. It's an invitation to your prospective distributor to tell you a little more about what makes them unique and competitive. Listen closely to the answer and analyze it. If the answer is a throw-away like, "Oh, Southern Wine & Spirits of course--they have all the big brands and liquor, plus all the trade parties," then you should be wondering why SW&S is tromping them with boxed wine. But if they say, "Wow, HarvestGate is rocking the neighborhood with central coast boutique wineries, but we specialize in low-production zins and syrahs like yours, and we're trying to work with them to coordinate sales efforts," then you know you're talking with someone who is looking at competition as an opportunity and an ally.
5. How many reps are covering your territory?
With notable exceptions, the larger the territory, the more holes in coverage. If you have mid-size to large production, then state-wide or regional firms simplify your life. But if you are low-production, it may not be wise to commit to a distributor who wants a lock on a large territory. For instance, what if a distributor wants San Francisco to San Diego? Geographically that's a lot of rancho to cover. And if a rep gets sick, divorced or pregnant, that rep's territory will lack service--but you can't do anything about it because the relationship is still working for you in other areas. Smaller distributors that specialize in certain cities may be a better bet in the long run--if they fail to perform, you can cancel the relationship and find a new distributor.
6. What key accounts will you get for us?
This is an opportunity for your prospective distributor to brag about their best accounts. You should hear a list of popular retailers and restaurants, plus why and how your sales rep can get you placement there. Ask if the reps can also get you into some of your personal favorites. This is also a good time to discuss how you want to move your brand forward and how your distributor can help you.
7. Who should I call for references?
Let's be real. Even before a bad economy, I was amazed at the number of wineries who were willing to ship out large quantities of product to a firm that had presented no financial credentials. Helloooo? An easy way to get around the awkward request is to ask your distributor to provide references from selected accounts or suggest ones to call. The types of firms providing the references will also give you a clue to your future with this distributor. If all the references are from large production, low-priced wine producers, then it's possible this distributor pays his cash cows at the expense of his smaller, boutique producers--even if all your wine has already been sold! But if they're eager to suggest you call other producers in their portfolio that are similar to you, it's a good indication that they pay everyone fairly and on time.
What about you? Do you have any particular questions you ask a distributor? What would your advice be?