How to Win in The Art and Science of Wine Depletions
The old cliché goes something like “wine is the only art you can drink,” but there should be a saying for those working inside the industry “selling wine is an art you can perfect with science.”
For anyone in operations, finance, or sales in the three-tier wine industry, you know just how much of a village it takes to build a brand, price perfectly, create demand and ultimately deplete your wine. There are very few simple steps in this journey and selling the amount of wine you need in the places you want it to go is a unique mix of art, science, and, well—some luck.
You can minimize needing to rely on luck if you approach wine depletions with the right mix of methodology and craftiness.
The Endgame: What Do We Mean By Wine Depletions?
Let’s take a quick step back. What are we talking about when we say “depletion?” Simply put, we mean “selling your wine units at retail.” It’s important to distinguish this at the high level because a lot comes to mind when ‘depletions’ get referenced—distributors, promotions, trade allowances, etc. We’ll get to that shortly, but the overall end goal here is to move bottles or cases of wine to a consumer through an on or off-premise retailer.
In an uncomplicated world, you want to increase wine depletions and scale your distribution to move as much product as possible. But as we know, in the complex world of wine where a grape doesn’t always yield limitless bottles of juice, the goal of wine depletions may vary by product, brand, or time of year. You may want to concentrate unit sales (depletions) in a particular area, to a specific retailer, sell through an old vintage, or test out depletions at a new price point. Or sure, you may just want to move as much wine as you can.
Let’s look at the art and science behind perfecting it all.
Three Sides of the Same Coin: How to Approach Depletions to Meet Your Goals
The art and science of wine depletions is like a three-sided coin because it must be addressed from these angles to yield results: internally, through distributors, and at the retailer level. Let’s break down practical actions and practices you should begin to enforce throughout this chain, in reverse:
So many three-tier wine suppliers make the mistake of having their sales teams focus solely on distributors for depletions. This practice is arguably where you are left scratching your head over not reaching sell-through goals.
- Get Out There: That’s right, get out from behind your desk, visit, and talk to retailers that sell your wine. Don’t just leave this up to your distributors. Aside from personally disclosing your appreciation for them stocking your product (they love this, by the way), you can get first-hand experience and feedback. Is your wine moving? Does the retailer have insight? Is your wine readily displayed the way you expect?
- Use reporting to your advantage: Make a consistent check-in cadence to report on the performance of your brand at individual and regional retailers. Is it going up the way you expect? Is it moving in the places you are focusing? Really analyze your depletion reports at the retail level. Concentrate on under-performing outlets and pick up the phone to talk to the retailer and ask what about the product or brand isn’t working for them and what you can do to help push more through. With your best-performing retailers, maximize the success by adding displays and promotions (up next) to increase the depletions there even more.
- Focus on point-of-sale displays: So many wine suppliers view displays as overhead, but the truth is these types of brand collateral assets work two ways for you—catching the eyes of the consumer and making it easier for retailers to spot your product and brand in storage for restocking. Seriously consider investing in all or a combination of floor displays and decals, shelf talkers, case cards, secondary displays such as the end cap or refrigerator for white wines, and in-store tastings.
- Incentivize with urgency: Don’t just focus your incentives on distributors; incentivize your sales reps and retailers too with rewards for moving a particular amount of wine within a specified time period. For example, if you grow your wine in California, you can directly sell to and incentivize an in-state retailer.
Ah, the beauty of the three-tier alcohol system in the United States—the wholesale distributor. This is where your sales team is going to point the lion’s share of its lasers, with good reason. How you work with distributors will determine a lot about your wine depletions outcome.
- Be long-sighted with your distributor relationships: Suppliers can make the mistake of viewing the sales process with distributors as a one-time thing—you sold the deal when you get the first purchase order. Yes, the distributor wants to sell the product too, but they have a lot to choose from. Selling never truly stops. Engage with your distributors often and make them brand ambassadors. You often only have one chance to get your product on a retailer shelf or menu, and you want to make sure your distributors are doing all they can to get you there. Aim for the 10th purchase order.
- Tap into trade promotions and rewards: The top 5 wine sales promotions three-tier wineries can leverage through distributors include by-the-glass (BTG), samples, quantity discounts, closeouts, and incentives. The latter three arguably garner the most motivation from a distributor to move your wine and are typically paid through depletion allowances and billbacks so you can track the costs and success of these programs.
- Make the most of your QBRs: Vital to the distributor long-game, if you properly utilize and leverage your quarterly business reviews to discuss pricing strategies, promotional opportunities, and new products instead of finances and invoices, you can cultivate a prosperous relationship that focuses on the depletions you’re aiming for.
- Reporting two-ways: With the appropriate business intelligence, trade spending, and pricing management solution, you should have a complete and accurate grasp on your unit sales, but ask your distributor for a depletion report too. Discuss non-performing retailers and ask for their input and ideas for how to move more there. Getting their buy-in for action makes it twice as likely to happen.
Successful, strategic, bankrolling, confetti-popping wine depletions simply won’t happen (or even worse, won’t be profitable) if you don’t address your internal processes, tools, and teams.
- Create the culture: As renowned distribution authority Sid Patel once said about properly scaling your wine depletions, “80% of success is the mindset and the culture you set for your company.” Build and instill a culture of cooperating teams that work together towards the same goals, and don’t let complacency leak in. We hear “Oh, it’s only so many dollars in billbacks just run it through” more times than we can count—and that is the foundation of a culture that doesn’t care about depletions, scale, or profits.
- Use the right tools: Here is where the science supports the art. The only way to get 100% coverage and visibility into your depletions and which distributor and retailer promotions are working for sell-through is by leveraging software that brings the full cycle of trade, pricing, and promotions management together.
Manual Excel spreadsheets are all too error-prone and common. Third-party depletion data only covers about 70% of what you need to see and doesn’t rely on actual distributor agreements or complete, true numbers. Not only do you want to know how to best deplete your wine by dialing up what’s working and dialing back what isn’t, but you also want to do it with healthy margins. Promotions management software helps bring sales, finance, IT, and operations teams together instead of constantly pointing the finger at one another to keep things moving.
- Business intelligence: With the right trade management tool in place, you can now leverage business intelligence and analytics to properly assess and take action where and when it is needed to increase depletions—instead of guessing. Start to see depletion rates (quantity over days), depletion unit breakdowns by cases, bottles, 9L equivalents, and how much was actually sold from the retailer to the customer. See which SKUs are performing, which aren’t, depletions by account, by representatives, by sales rep. Frankly, the breakdowns are endless, but start with the above and expand the data where you need. How will you know what to look for? You’ll start to ask the same questions.
At Tradeparency, we are in the science of helping you sell the art—the right way.
We are a team of wine industry experts, data artisans, and service enthusiasts who work with dozens of top three-tier wineries and importers on their depletion, pricing, and brand victories by centralizing and automating the full cycle of trade promotion management.
Download our brochure for a complete overview of the Tradeparency product and features, then let’s talk about how we can help you reach your depletion goals!