How to Apply DTC Sensibilities to the 3-Tier System

Paul Mabray of Emetry shared an article on LinkedIn the other day about how the direct-to-consumer model is infiltrating the alcohol industry and I haven’t been able to stop thinking about it since. In case you’re not familiar with Paul’s work, I consider him the EF Hutton of the wine industry. When he talks, I listen. When he posts and article, I read it.

The take-away from the article that’s induced my insomnia for two nights in a row is this idea of “applying DTC sensibility” to the 3-tier system. My post is all about expanding on this idea.

When the supreme court case, Granholm v. Heald, was decided in 2005, it kicked off an avalanche of investment and innovation the likes of which our industry had never seen. It was our Y2K. Only this time instead of stocking up on freeze dried foods and filling our bathtubs with fresh water, it was all about rushing to install CRM systems, e-commerce platforms, legally compliant order fulfillment and a whole slew of new marketing strategies & tactics. Wineries found themselves face to face with the ability AND the platform of permission to connect directly with consumers in a context other than their own tasting rooms.

It’s also quite interesting to recall that, at the time, the formidable Wine & Spirits Wholesalers of America had a singular focus for the funds in their lobbying coffers which was to stop the DTC train from ever leaving the station. I remember this well because I was heavily involved in helping to recruit new members to the American Beverage Institute which was up to its eyeballs in the battle against the (successful) attempt to lower the BAC level to .08 in all states. Despite strident efforts by some of the most powerful buyers of alcohol in the country, WSWA’s standard response in refusing to support the ABI financially was they needed to keep all their powder dry for the DTC battle. In the end, consumer choice won out as it inevitably does.

But the Granholm decision was 14 years ago. No one can deny most if not all the wineries in the US have been working overtime ever since to capitalize on the opportunities ushered in by the ruling. I’d go even further to say the epic proliferation of US wineries was enabled by this newfound marketplace. It allowed for small wineries to sell their entire production without ever having to darken the paneled hallways of a distributor. We’ve come a long way and learned a great deal about CRM, email marketing, targeting & re-targeting, data sets and a host of other tech and data driven best practices. And yet, from where I sit, I’ve seen very little of this transfer over to selling efforts in the 3-tier system. I certainly have my own theories of why this is. At most wine companies, the DTC team is siloed away from the “regular” sales team that oversees the wholesale network, which is a shame, in my opinion, because many of the same SENSIBILITIES can and should be applied to the trade side.

For example, take email marketing. What is your strategy for acquiring well-qualified email addresses of trade buyers from all over the country? How large is your list now? How is it segmented? How dialed-in is your messaging and your use of email service software such as MailChimp or Constant Contact? Many wineries have their email marketing tool as a plug-in to their e-commerce system, so they’re not used to operating it as stand-alone platform. What a missed opportunity! Especially considering the low cost of this technology.

Next, let’s talk digital advertising. How often do you upload lists of trade buyers to your Facebook Ad Account, save it as a Custom Audience and then create Lookalike Audiences so you can launch highly targeted ads on Facebook aimed at wine buyers both on and off premise? How well are you leveraging Facebook’s Audience Insights tool to research and create trade audiences with titles like Restaurant General Manager, Bartender and people who have an interests like Master Sommelier and WSET. Do I hear crickets?

And don’t even get me started on CRM! News flash: CRM is not just for DTC! Talk about DTC sensibilities circling the drain (instead of being leveraged). As powerful as CRM is and has been for the DTC channel, it’s TEN TIMES more powerful in the 3-tier realm. I’ve been a street-corner evangelist on this topic for more than 5 years. My poor, ragged cardboard sign is in tatters. But don’t cry for me, Argentina. Cry for yourselves. Because while you’ve been doing what you’ve always been doing (believing the distributor is the center of your universe), many of your competitors have been going to night school at places like the University of GreatVines and KARMA College, putting in the time required to learn CRM sensibilities- but this time for the trade. And now, while you’re asleep at the wheel (blissfully unaware just how dramatically this business has changed in the last 14 years) a new breed of wine companies (armed to the teeth with said DTC Sensibilities) are quietly eating your lunch. Nom Nom.

So let’s go back to the DIGIDAY article that launched this rant in the first place. It’s called, “Direct-to-consumer is coming to the alcohol industry” (dated July 9, 2019). Just for fun, let’s Key Word the crap out of it. Here goes: “infiltrate, shift, branding, opportunity, content, growth playbook, hit mainstream, making an impression, brand equity, natural evolution, growing competition, healthy results.” By the way, I don’t meet a lot of wine sales pros who eat, sleep and breathe key words. Case in point.

Since it’s a Friday, I’d like to end on a positive note. It is by no means too late to start applying these DTC Sensibilities to the trade. If fact, if past performance is any indication of future results, you’ve still got a gigantic head start on the rest of the field.