www.winesandvines.com: Angwin, Calif. — While the industry continues to buzz about direct-to-consumer sales, few wineries seem to be exploiting another powerful channel: direct sales to retailers and restaurants.
Napa Valley vintner Marc Cohen, founder/president of Howell at the Moon Winery howellatthemoonwine.com, has done just that. He`s established his own distribution in New York and New Jersey, one of the nation`s largest wine markets. In the process he dropped his former distributor who, Cohen says, admits he can`t sell the wine.
Howell at the Moon, on Napa County`s prestigious Howell Mountain, makes 650 cases of a $75-retail Cabernet Sauvignon from estate vineyards. “We`re basically unknown and unrated,” he says. In 2006 the winery was the subject of Wines & Vines` six-part series about starting up a winery; this is the logical next step, Cohen says.
“People like me have no chance to sell their wine in New York or New Jersey unless they get 95 points from Parker — and then they don`t need any help,” he says.
Cohen has been self-distributing for only a few months, but he says it`s already working. “I sold twice as much wine since we started in mid-October than the distributor did in a year.”
The states only started allowing this option recently, and Cohen seems to be one of few — if any — wineries taking this route. He`s still working out the system, but he intends to start using his network on behalf of other small wineries in the future.
To get started, Cohen terminated his former distributor and bought back the inventory. He then arranged for a company to handle warehousing and compliance, and hired sales reps.
His logistics partner doesn`t charge a commission — just fees for storage, compliance and delivery. “They`re licensed to wholesale wine, but that`s not what they`re doing for me. We handle the sales.”
Cohen also had to pay $30 to list the wines with the each state`s liquor board. He advertised on Craigslist for part-time reps, interviewed 10 and hired three — although he let one go and is now seeking another. Two cover New Jersey, two New York, but they don`t have exclusive territories. They earn 15% commission, and even after other fees, it`s less than the discount he paid his former distributor. This allows him room to be flexible on pricing, though the wholesale price must be listed with the states and can`t be changed more often than monthly.
Cohen, a former urologist and professor who also has a business degree, also spends a lot of time selling himself. Metropolitan New York is his home turf, and he says he spends about every other week there calling on accounts with the reps. “You have to put your face out there. I`m surprised how many accounts will buy if you just show up and give them a taste of the wine. We`re now in four of the largest wine shops in Manhattan,” he says.
He admits that the sales reps would just as soon not have him along, but it works. “I`m working hard, but I had to do this to survive.”
He feeds some leads to the sales reps, including from his club members. “I bribe them with a bottle of wine for good leads.”
Customers get 30-day invoices, and Cohen hasn`t been doing it long enough to find out if he`s going to have a credit problem.
He says a similar arrangement is possible in many other states, and he`s considering that when he`s had a little more experience. He also intends to help other vintners like himself, but only those who are willing to put time in working the market.
Ironically, Cohen says, the new arrangement isn`t hurting established distributors. Interviewed on his way to the airport, he says, “They tried to keep this from happening, but they weren`t selling this kind of wine anyway.” Now he`s selling his wine directly to retailers himself, a natural extension of his sales to consumers. And it`s working.
Marc Cohen has offered assistance to other vintners. Contact him at firstname.lastname@example.org or phone (415) 310-8628.