What are US importers looking for?

Thursday, 14. March 2019 - 13:00

Bibi Graetz has tousled hair and a smile as wide as the nearby river Arno. Since his first vintage in 2000, people have loved his Tuscan wines, and such descriptors as “cult,” “talented” and “untrained genius” follow him around. He also speaks good English. Surely foreign suitors must flock to the cellar door of his mediaeval Castello di Vincigliata?  Except they don’t.  

“It’s really difficult finding a good partner in the US,” says Graetz, “unless you’re a Tuscan winery with a long and successful history. I had been trying to create a relationship with the right people in the US since 2000 but it’s really hard.” Each time he thought something might work, he came away disappointed. What do American wine importers want,anyway?

Visit a trade fair
There are matchmakers in the business who try to broker relationships between producers and importers, yet most US importers and buyers go to large trade conventions looking for possible new people to represent, even when their portfolios are full.

“For us, it’s a balance between finding someone you’re interested in and someone contacting us,” says Diego Avanzato, vice-president of portfolio management and marketing for Taub Family Selections. “We go to the trade shows, perhaps looking for someone from a particular region, but we also get approached almost weekly. We are grateful for this, and we don’t take anyone for granted. We don’t want to burn bridges.”

Other than looking to mend a hole in Taub’s catalogue, Avanzato and most other portfolio managers start their searches looking for four basic qualifications. Quality is a must, as is filling a gap in the portfolio or widening its reach. Additionally, the core business values of the producer should be similar to those of the importer, and, for many importers, it’s mandatory that the wine production be owned and operated by one family. The preference mainly rules out regional cooperatives. “We are looking for authenticity in our wines, and we are more likely to find that with a quality-driven family winery,” says Scott Diaz, vice-president of marketing and brand management for Wilson Daniels, which tends to represent high-value, high-price producers. “It also helps if the winery has a history and a fascinating story to tell.”

Paolo Battegazzore, CEO and partner at Folio Fine Wine Partners, says that company founder Michael Mondavi “wants to look at long-term relationships, and we’re more likely to have that with family wineries.”

Being able to fill a void in a portfolio is especially important. Many producers without an American importer understandably want to gravitate to those who already import the kind of wine they make, perhaps even ones who represent their neighbours. In most cases, this is the worst approach, as these importers stand to gain little by having competing brands in their marketplace.

Many importers also attend ProWein with specific needs in mind. “We’re still trying to fill out our Italian portfolio,” says Vineyard Brands president and CEO Greg Doody. So is Wilson Daniels, says Diaz, because the company is expanding and also recently set up its own distribution system. “We were still building when Rocco” – president Rocco Lombardo – “came on board and found holes in our Italian portfolio,” he says.

“We only want one producer in each appellation, and they should be a healthy appellation,” says Folio’s Battegazzore. “For example, I would love to do something with a large, quality producer of Provence rosé.”

Beyond the core qualifications – quality, being able to fill a gap, family-owned and having compatible cultures – individual importers are searching for a variety of other qualities. “It’s nice when a grower is stylistically ecumenical, that is, not dogmatically rigid about residual sugar,” says Terry Theise, whose portfolio of wines from Germany, Austria and Champagne is now managed by Michael Skurnik Wines & Spirits. “I want all wines to be balanced and tasty, whether dry, barely sweet or frankly sweet.” Theise adds that having “a presentable young producer who speaks English, [and has] a certain personal charisma, is a bigger plus.”

Battegazzore would like the winery to have “scalability” – that is, to be able to produce more wine if needed or to expand its offerings, especially if Folio can dramatically increase market demand.

“Having some brand recognition in the US is definitely a plus,” says Diaz, which means that some producers Wilson Daniels has signed up, or will sign up, may already be in some markets in the US. This brings up a sometimes sensitive area: producers who have two or more American importers, each representing a limited geographic region. For example, one importer might bring in a producer’s wine for the New York area, while a different one represents the producer on the West Coast. For many small, regional importers, these limited representations are their bread-and-butter, but their fear is that they will agree to import an unrepresented producer, spend a half-dozen years helping grow their brands and then lose them to a national importer. Even where a contract exists, most importers in this situation simply let the producer leave rather than try to market their wines in an acrimonious atmosphere. The situation also has downsides from the point of view of a producer capable of growth. Even though they get early access to a market rather than waiting for a better fit to come along, they often get frustrated having to deal with multiple importers and possibly ones with limited marketing capabilities. National importers such as Wilson Daniels, Taub, Portfolio and Vineyard Brands all insist that they want 100% of the US market. “We want exclusivity for all 50 states,” Doody says, although he does note one exception. “I think there are four of us representing Petrus.”

Establishing the relationship
There is no one method by which a prospective importer wants to get to know a potential partner. Avanzato, for example, says Taub expects “a full presentation” while Doody tells prospective partners to “first get my attention, then we can talk”. Diaz wants to “develop a degree of trust, so I may make several visits to see them. More often, we at Wilson Daniels are the ones making the presentation.”

Once a tentative agreement has been reached between producer and importer, there is still much to be done before a contract is signed – if, indeed, there is a contract (Doody says Vineyard Brands doesn’t use them). What will be the price of the wine when it leaves the winery, how many wines will be represented by the importer, and will the producer have a financial commitment, and perhaps a personal role, in marketing and selling?

Generally, an importer takes into account the quality of the wine, the reputation and back-story of the winery and where it will fit into the portfolio to determine the standard retail price (SRP), the consumer will pay. This will determine the price the importer offers the producer.

“We try to limit the number of SKUs [stock keeping units] when we can,” says Folio’s Battegazzore, “starting small and then growing” as the winery becomes better known. “But if we are working with a new client who has an existing business in the US, we try to take what they’ve already been selling.” As he points out, distributors have a say in this, limiting the number of different wines they stock for each brand. However, Vineyard Brands’ Doody notes his company “wants to introduce every SKU we plan to sell at the same time.”

Finally, there is the matter of sales support; a rule of thumb is that the greater the retail sales, the more support will be asked. “About 80% of our wineries contribute to marketing,” says Wilson Daniels’ Diaz. “It’s their brand, and they are the ones who have the equity in them. We propose how, but we get them involved with our marketing plans.”

Examples include a producer contributing a percentage of marketing expenses or providing free samples to publications that rate wines as well as to leading writers, bloggers and selected sommeliers. Additionally, sales reps often open bottles when visiting retailers. Producers are generally expected to personally represent the brand; many importers have annual portfolio tastings in New York and other major cities, and a winery representative is expected to be there. Advertising is less common.

Happy ending
American importers are looking for quality wines at reasonable prices that are unlike what they already have in their portfolios. It’s also a plus if the importer believes he has found a hassle-free business relationship. As a result, the producer who takes time to study the market is the one most likely to enter into a business marriage that – if not made in heaven – is at least one consummated at ProWein or Vinexpo. As for Graetz, he finally found his importer after discussing his situation with an American brand manager one night at a wine bar in New York City. Although the manager’s importer was already in a long-term relationship with the oldest family winery in Tuscany, the two men traded business cards.

The importer was Michael Mondavi, head of Folio Fine Wine Partners, and the wine family was the Frescobaldis, who had worked with the Mondavi family since the 1990s. But at the end of 2017, Frescobaldi and Folio went their separate ways, leaving a hole in Folio’s Italian  portfolio. Thus, lightning struck, and Folio and Graetz made time to catch up again.

“I was lucky that Folio had a window opening in its portfolio at just the right time,” Graetz says. The two first got together in August 2017, signed an agreement the following month, and the first wines were shipped in January 2018. While most business partnerships between European producers and American importers do not come about as a result of such serendipity, the story illustrates that it helps if a winegrower is fully prepared when opportunity comes knocking at the cellar door.  
Roger Morris

This article first appeared in Issue 1, 2019 of Meininger's Wine Business International magazine.