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Deals in Dallas

Step off the plane and a wave of intense heat smacks you in the face. Welcome to Dallas. It’s hot, it’s flash, it’s BBQ, and it’s bad fashion. But they do have the Cowboys, they live large, and they love to drink wine. Yes Sir, the Texans have drunk themselves into the top 10 States in the US for consumption. So you gotta love ‘em.

We had a distributor there so one day in about 2001 I went to visit. One of the fascinating things about Dallas is that there are dry communities, where basically you cannot buy an alcoholic drink. So on one side of the street you can have a dry community and on the other side a wet one, where anything goes. This is something quite unique in the world. It’s also an experience for a foreigner to see a store selling firearms right next to the liquor shop. No comment.

Texas has a fair sized wine industry itself. There are quite a few vineyards and a number of major distributors. Plus there are some very fancy restaurants where big spenders slap it down on the prestige names. I was stunned when the Sommelier at a smart restaurant told me that “the Lafite 82 is showing very nicely”. At $6,500 dollars I’d better hope so. How’s that for a gutsy recommendation. Note to self: don’t ever ask again 😉

After the usual meeting with the owner of the import company it was time to go and sell some wine. Basically in the USA the number of distributors is generally shrinking. So the portfolios of the guys who remain can become very large. This means that the sales rep has hundreds of wines to sell. So unless the winery representative gets out with the sales reps then your wines are often forgotten, and sales are much more limited compared to if you go there and sell for them yourself.

For the sales rep the situation is totally understandable. They sell wines they either like, or that are company mandated, or that have deals or incentives on them. They can only propose about 3 or 4 brands in an average sales call before the Buyer calls it quits. So to get some fast action for the winery, there’s nothing like a sweet deal to get the sales reps and Buyers attention.

It goes like this. You saddle up to a retailer, taste your wares out of plastic disposable cups (a travesty), and after a pause, the Buyer spits out his proposal. Gimme one in ten and I’ll take 30 cases. The owners of my company were Bordeaux aristocrats and were abhorred by people even suggesting such a deal for their fine wine. Our wine was art. It was French. For them, the answer was always “non”.

But sometimes I had to make deals, but it was a slippery slope.

I’ve nothing against the method of discounting and incentivizing to sell wine, although sometimes there are much better alternatives. Some types of wine are a commodity, sold in very large volumes at auction where the lowest bidder wins. Large UK supermarkets will do auctions for monstrous suppliers to fulfill their own label wine requirements, like “Australian Shiraz” , which can be for some ridiculous volume like ½ million cases. Basically the wine is bought on price, and taste secondarily. If the Shiraz is actually red, it’s already 50% of the way there.

Certainly in the USA the major wineries send their sales force out equipped with deals, limited time offers, merchandise, and if you can buy a lot of wine, and I mean a lot, then the private jet just might be offered. And some big winery groups will actually lose money in order to get their wines on a major list. They chase volume sales, and the ability to say that they are on certain lists, hoping that this somehow pays off in other ways. But it can be the poison pill to operate this way. Warren Buffet #1 rule of business? Never lose money. Rule #2? See rule #1.

Now not all buying is done like this. Often wines are purchased on their quality merits, especially the better wines of course. For a top estate offering a discount is the kiss of death. It kills the brand prestige. But for lower priced wines it’s almost expected to discount. After a while you can analyze wine lists and figure out which companies own all the brands, and then you can clearly see who is juicing the Buyers. It would typically come down to a dollar amount per case, and the powerhouse wineries usually sliced up most of the serious volume wine lists between them. So next time you’re in a major chain restaurant or hotel the chances are that “the deal” played a big role in getting that wine on the list.

No darling, I’m sorry to say it wasn’t just the pretty label depicting lovers holding hands in the vineyard that got it on the list. But please, don’t burst my bubble. It was surely the label and that lovely “minerality” that persuaded the Buyer…