The U.S. is the largest wine market in the world, and also one of the most difficult to penetrate. This presentation gives you a solid foundation and understanding of the issues you need to know about to be successful in entering America.

1. Entering the U.S. Wine
Market for Export
Brands

2. Navigating Entry
Into the U.S.
Wine Market
Presented by Steve Raye
President
Bevology, Inc.
Steve@bevologyinc.com
+1-860-833-6272

3. What is Bevology?
Marketing consulting company with specialization
in wine marketing in the U.S.
Three areas of concentration:
• Trade Marketing
• Working with country and region trade promotion
associations
• Brand development and launch

4. Why this information is important.
Hope is Not
a Strategy

5. Agenda
• History of Beverage Alcohol in the U.S.:
3-Tier System
• What it means to you today: brand entry
process, implications, price structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources

6. History of Beverage
Alcohol in U.S.

7. Temperance Movement
Prohibition

8. Prohibition Repeal in 1933:
New Laws

9. Federal Regulations Enacted
• Protect Federal Tax Revenues
• Federal Regulations (BATF-Now TTB)
– Licensing qualified importers, manufacturers,
wholesalers, warehouses)
– Bans “tied-house”
– Ensures quality with standards of identity, labels and
formula approval
– Bans false advertising and consumer deception
– Bans unfair inducements to retailers

10. Tier 1: Producer
(Wineries, Brewers, Distilleries, Importers)
Tier 2: Wholesaler (Distributor)
Tier 3: Retailer
Consumer
U.S. Three Tier System
Created

11. Michigan
Virginia
No. Carolina
Alabama
Arkansas
Iowa
Colorado
Wyoming
Montana
Vermont and New
Hampshire
Maine
Ohio
Pennsylvania
W. Va.
Idaho
Oregon
18 (now 17) “Control” States, 33 “Open”
States
Washington

12. Agenda
• History of Beverage Alcohol in the U.S.:
3-Tier System
• What it means to you today: brand entry
process, implications, price structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources

13. What the
Three-Tier System
Means to You Today

14. Michigan
Virginia
No. Carolina
Alabama
Arkansas
Iowa
Colorado
Wyoming
Montana
Vermont and New
Hampshire
Maine
Ohio
Pennsylvania
W. Va.
Idaho
Oregon
17 “Control” States, 33 “Open” States
Plus DC and Montgomery County makes
52 Different Markets
Washington
Montgomery County, MD

15. 52 Different Markets: Implications
Where wine, spirits and beer can be sold
•California:
–Wine, beer and spirits in supermarkets
–Chain and independent stores
•New York:
–Wine, spirits in “package” stores only beer in
supermarkets/bodegas
–Single store ownership, no chains
•Texas:
–Four tiers…HoReCa must buy from Class B licensed
retail store

16. 52 Different Markets: Implications
How it Can Be Promoted
• Tastings
–Off-premise tastings:
–Allowed in New York, but not in New Jersey
–On-premise “wet” tastings:
–Allowed in FL, but not in Wisconsin
• Coupons
–Instant Redeemed Coupons only (IRC) in Ohio
–Mail-in rebates only in New Hampshire

17. 52 Different Markets: Implications
Taxes vary by State
•Alaska: $5.94/9L cs., Louisiana: $0.26
•Wholesale tax in Kentucky and South Dakota
Franchise Laws Protect
Distributors
•Massachusetts,
Connecticut,
New Jersey, Georgia,
Nevada, Arkansas, New
Mexico, Tennessee,
Missouri

18. 18

19. Imported Wine Brand Price Structure
750ML / 12 Bottle Case Imported - $9.99 Retail Bottle Price
Element Per 750ml Bottle
Supplier FOB $2.41
Ocean Freight, Fed Tax, Insurance, other +$0.76
Importer's Margin (40% mark-up/28% margin) +$1.01
Price to Distributor $4.18
State Tax, Inland Freight +$0.26
Distributor Margin ( 50% mark-up/33% margin) +$2.19
Distributor price to retail $6.63
Retailer Margin (50% mark-up/33% margin) +$3.33
Retail Bottle Price $9.99

20. • Federal certificate of label approval (COLA)
• State registration and approval
- Most states require the out-of-state entity (shipper) to maintain state
licenses and/or permits in order to sell products to wholesalers
– Most states require the Federal COLA as a requirement for brand
approval
– Many states require paperwork submissions with fees and return a
formal approval prior to shipping
– Some states require you to have a signed contract with a distributor
in that state to get registration
Navigating Brand Entry
& Distribution:
Brand Entry – The Approval Process

21. Agenda
• History of Beverage Alcohol in the U.S.:
3-Tier System
• What it means to you today: brand entry
process, implications, price structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources

22. Importers

23. • Importer
– Licensed to import a wine brand from a supplier
outside the U.S. into the U.S.
– May or may not have distributor licenses or
operations in individual states
• Distributor/Wholesaler (synonyms)
– Licensed to buy wine from an importer and sell to
an on- or off-premise retailer
Definitions:
Importer vs. Distributor (Wholesaler)

24. Suppliers
Importers
Distributors
Consumers
From To
The Model Has Changed

25. Large
National
Importer
(Diageo)
You Have Options!
Specialist
National
Importer
(Winebow)
Regional
Multi-State
Importer
(TGIC)
Specialist, that
also distributes
(Slocum)
Set Up Your
Own Import
Company
National
Licensing
Import and
Services
(MHW)
Large
Distributor
that also
Imports
(Glazer’s)
Chain
Retailer
Exclusive Brand
(Total Wine)
Direct
Import through
Control State
E-Comm/
Wine Club/
Flash Site

26. Importers: What They Want
• Fills an identified void in portfolio
• Brands with existing U.S. volume they can grow
• New brands they feel their expertise can develop and grow
• Brands that have a unique positioning
• The right “CHEMISTRY”
• Enhances image, value and profitability (synergy with importer’s
mission)
• Strengthens importer’s position within the trade
• Supplier understands the U.S. Three-Tier system
• Financially sound, budget to invest and support the brand

27. Presenting Your Brand to Importers
• Brand point of difference/value proposition for consumer; why
THIS importer should be interested in you
• Company description/history
• Product description: varietals, style, ranges, proposed U.S. retail
price by line/SKU
• Marketing materials as background
• A defined target audience
• Production info
• Past history of importers, distribution agreements, list of
distributors/brokers of products and volumes by state
• Price structure for U.S.
• Marketing support budget
• Sample budget

28. Distributors

29. Distributors: Who Are They?

30. Source: Impact 4/1&15/14
Top U.S. Wine/Spirits Wholesalers
Distributor Markets
Sales Revenue (000's
USD) % Chg.
Market S
2013E 2014P 2014E
Southern Wine & Spirits of America
AL, AL, AZ, CA, CO, DE, FL, HI, ID, IL, IN, IA,
KY, ME, MD, MI, MN, MI, MT, NV, NH, NM,
NY, NC, OH, OR, PA, SC, UT, VT, VA, WA,
DC, WV, WY
$ 11,390 $ 11,750 3.2% 22.1%
Republic National Distributing Co.
AL, AZ, CO, FL, GA, IN, KY, LA, MD, MI, MI,
NE, NM, NC, ND, OH, OK, SC, SD, TX, VA,
DC, WV
$ 6,095 $ 6,480 6.3% 11.8%
Charmer Sunbelt Group
AL, AZ, CO, CT, DE, FL, MD, MI, NJ, NY, PA,
SC, VA, DC
$ 5,380 $ 5,575 3.6% 10.4%
Glazer´s Family of Companies
AL, AZ, AR, IN, IL, IA, KS, LA, MS, MO, OH,
OK, TN, TX
$ 3,475 $ 3,655 5.2% 6.7%
Young´s Market Co. AK, AZ, CA, HI, ID, MT, OR, UT, WA, WY $ 2,820 $ 2,925 3.7% 5.5%
Wirtz Beverage Group IL, IA, MN, MO, NV, WI $ 1,775 $ 1,860 4.8% 3.4%
Johnson Brothers Liquor Co.
AL, AZ, CA, CT, FL, HI, IL, IN, IA, KY, MA,
MN, NE, NV, NM, NY, NC, ND, RI, SD, WA,
WI
$ 1,660 $ 1,735 4.5% 3.2%
Martignetti Companies MA, ME, NH, RI, VT $ 1,200 $ 1,200 0.0% 2.3%
Allied Beverage Group NJ $ 750 $ 775 3.3% 1.5%
Fedway Associates NJ $ 735 $ 760 3.4% 1.4%
$35,280 $36,715 4.1% 68.4%
$16,300 $15,975 -2.0% 31.6%
$51,580 $52,690 2.2% 100.0%

31. Distributors: What Distributors Want
• Money
• Margin
• Manpower
• Marketing
• Media
• Commitment

32. The chicken is involved, but the pig is committed.
Involved vs. Committed

33. • Focus, focus, focus…like a laser
- Getting it in is the easy part, getting it out is hard
- The only metric that matters: repeat orders at retail
• Be so successful in a limited number of accounts that you can
support, that you create trade word-of-mouth buzz as a hot
brand
Distributors:
Strategy to Get a Distributor

34. Distributors:
Okay, I’ve Got One. Now What?
• Recognize you’re not a priority…you and your importer will need do
the heavy lifting yourself
• Recruit/focus on a limited set of salespeople dedicated to your
brand
– Product training programs for accounts
– Sampling on- and off-premise
– Leverage Brand Ambassadors, winemaker/winery owner visits
vs. work-with’s

35. Snapshot of the
American Market

36. Agenda
• History of Beverage Alcohol in the U.S.:
3-Tier System
• What it means to you today: brand entry
process, implications, price structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources

37. Total Table Wine Consumption
(Millions of Cases)

38. Top 10 Wine Consumption States
Source: Beverage Information Group Handbook Advance 2014

39. Imported Wine Purchases in Past 3 Months

45. Resources

46. Agenda
• History of Beverage Alcohol in the U.S.:
3-Tier System
• What it means to you today: brand entry
process, implications, price structure
• Importer and distributor landscape
• A snapshot of the American market
• Resources

47. Resources
• Key trade publications:
– Beverage Media:
www.Bevmedia.com
– Tasting Panel:
www.tastingpanelmag.com
– Santé: www.isantemagazine.com
– Impact (print only)
– Somm Journal:
www.sommelierjournal.com
– Market Watch (print only)
• Key industry newsletters:
- Industry News Update
- Wine and Spirits Daily: www.winespiritsdaily.com
- Shanken News Daily: www.shankennewsdaily.com
- Wine Industry Insight: wineindustryinsight.com
- WineBusiness.com: www.winebusiness.com
- Wines and Vines: www.winesandvines.com

48. Resources
• Organizations
– WSWA: www.wswa.org
– Natl. Assn. of Beverage Importers: www.nabi.org
• Competitions/Awards/Events that will allow entry by currently-non-imported wines
– BTI/Beverage Testing Institute: www.tastings.com
– San Francisco International Wine Competition: www.sfwinecomp.com
– Ultimate Wine Challenge: www.ultimate-beverage.com
– New York International Wine Comp.: http://www.nyiwinecompetition.com/
• Trade Shows
– WSWA (www.WSWA.org)
– Wholesaler/holiday shows
– Importer portfolio shows

49. Resources
• Alcohol Tax and Trade Bureau: www.ttb.gov/wine/wine-labeling.shtml
• “How to Import Wine”, Deborah Gray

50. Thank You!
Steve Raye
President
Bevology Inc.
401 Park Ave. So, 9th Floor
New York, NY 10016
860-833-6272
steve@bevologyinc.com