The US market is one of the largest global wine markets, it’s also a major wine producer. It has experienced significant growth in recent years and it has great potential for continued growth. The role of distribution is to provide a company with the possibility “to accomplish product delivery at a right time, to the right place, and with the right quantity at a minimum cost” (Bucklin, 1966). Typically, manufacturers, intermediaries (wholesaler, retailer, specialized) and end users are perceived as the key actors of a distribution channel (Coughlan et al., 2006).
National Sales
This is the sales tier where a supplier – winery, importer, or other producer – sells to wholesale distributors either in-state or out-of-state. The pricing terminology for this tier is called “distributor FOB,” the price of the wine by the case to a wholesale distributor ex-supplier’s warehouse. This price sets the subsequent market pricing and, unless the supplier holds a wholesale and/or retail license, the only price the supplier sets directly.This tier may engage a regional broker to facilitate sales and provides marketing support to a group of wholesale distributors. For their services, a regional broker receives a commission on all sales to the distributors that they manage. That commission is traditionally paid by the supplier – not the wholesale distributors.A supplier must be compliant in each state they sell into according to each state’s requirements regarding the sale of wines. The level of compliance varies greatly for each state in terms of cost and requirements. Regional brokers must be licensed according to each state where they conduct business according to that state’s laws.
Wholesale Sales
Wholesale distributors will pick up wines directly from a supplier’s warehouse after purchasing it at the FOB price, truck it to their warehouse, and add a markup to cover freight, operating costs, and profit margins. This price from the wholesale distributor to restaurants and retailers is the “wholesale price.” While the supplier can influence the wholesale price (through FOB pricing, discounting, various promotional programs, and cajoling), the supplier cannot dictate the wholesale price to a third-party wholesale distributor. In some states, wholesale margins are set by the state alcohol regulatory bureau.Traditionally, trade accounts such as restaurants and retailers are referred to as “on-premise” (for restaurants, wine bars, nightclubs, bars, taverns, private clubs, etc.) and “off-premise” (for retailers, wine merchants, supermarkets, etc.). The terminology refers to where the wine will be consumed by the consumer.