2024 is shaping up to be one of the most challenging years yet for wine and spirits brands, especially in the US Not just because of the unprecedented level of competition but also because of the changing landscape in which new sales revenue can be generated.
This article will describe the four most significant challenges wine and spirits brands will face in the upcoming year and, more importantly, what to DO about them.
1. Navigating the “modern” 3-tier landscape
Let’s cut right to the chase: the theme for 2024 is “Help your distributors help you!”
The days of distributors (small, medium, or large) being able to do all the things you’d like them to do are long gone, and the reason is simple. There are way too many brands to satisfy!
Smart wine and spirits producers recognize that the burden of building new sales & distribution has shifted from the distributor to the supplier. This, in turn, has dramatically changed the dynamics of supplier-distributor relationships.
No amount of training, education, or “motivation” will help because it is not a lack of knowledge or desire that plagues the modern distributors – it’s capacity.
Here are some practical tips for flourishing in the new landscape:
- Accept the reality that the days of “managing distributors” are over and will never return to the good old days. Brands must adjust accordingly, which amounts to taking more control of their own outcomes. If something is important to you, you’ll have to do it yourself.
- Staff accordingly! You need fewer “managing distributors” and more people selling to key accounts and chains. You need three people out selling for every person you have managing inventory, pricing, and trade promotions!
- Provide “self-serve” sales support and tools. Ensure everything your distributors need to succeed with your brands is available 24/7 online. The trade section of your website must be well-organized, easy to navigate, and packed with useful, downloadable content.
- Show respect for your distributors’ time! One of the best ways to help your distributors help you is to respect their situation. Don’t contribute to the cacophony of “noise” they face by flooding them with long emails cc’d to everyone in the building. Don’t ask them questions you should already know the answer to. Provide content they want and need (not what you think they need).
- Do your part. The best that modern distributors can do for their suppliers is to match their efforts in the marketplace. If you have no efforts, you have no right to expect their help. Too many suppliers still treat their distributors like an extension of their sales team. Once again, those days are gone!
- Learn to collaborate digitally using modern platforms such as CRM systems, trade promotion management systems, pricing systems, and space management systems.
2. Growing sales despite soft demand
Every day, trade news outlets publish articles about how demand is softening across many adult beverage categories.
But you can grow your market share regardless IF you know how to do it.
It comes down to several factors:
- Knowing who your ideal customer is and what they want. Generating demand is within the grasp of every producer/supplier nowadays.
- Narrow your focus to only the most attractive (volume and prestige) and responsive (access) accounts. The 80/20 rule is not only real but leverageable! Your key account lists must be well-researched and tight as a drum. The data will tell you how to fish where the fish are!
- Prioritize customer needs over product features and benefits. The world needs another vodka like a hole in the head, but YOU can sell all the vodka you want if you help your customers grow their business! This is the #1 way to grow your market share!
3. Putting the right salespeople in the right roles
A major shift is taking place in both the types of sales roles needed to succeed in the current environment and the skills required to be effective in a sales role.
January is an opportune time to analyze your sales team’s roles and responsibilities thoroughly.
Two questions every supplier must answer:
- Do we have the right sales team structure?
- Do we have the right people in each role?
Let’s face it: the skills required to sell more products are not what they were ten years ago.
“New” skills required include:
- Adept use of salesforce automation (CRM)
- Ability to communicate concisely and tailor communication to smaller groups of people (as opposed to a shotgun approach to communication so common among many suppliers).
- Business acumen trumps product knowledge every day of the week! To that end, this article is a MUST READ!
- Practicing a less-is-more approach to sales. Modern sales reps must know how to leverage data to fish where the fish are.
- Placing a high value on post-promotion analysis and knowing how to avoid costly trade promotion management mistakes.
- Efficient use of time! Avoid these top 3 killers of sales productivity like the plague!
Having strong relationships with the right people at the distributor is no longer enough.
4. Leveraging technology to accelerate sales
A great separation is about to take place. Those brands that understand how to leverage technology versus those that don’t.
There are six critical areas of competency that wine and spirits brands must master:
- Data and analytics
- Digital collaboration with distributor partners
- Automating repetitive, manual tasks
- Pricing and promotional effectiveness
- Trade promotion management
There is no way around it. Training will be required! And when we say “training,” we are not talking about product knowledge training. We’re specifically talking about how to leverage modern technology tools in your organization.
But there are ways to shorten the learning curve as quickly as possible. It is all about being committed to a culture of continuous improvement.
What got you here won’t keep you here. The six items above have moved from the list of nice-to-haves to things every company MUST have!
Survive and thrive through adaptation!
The environment for selling has changed.
The capabilities of distributors have changed.
The availability of data and technology solutions holds the key to adapting accordingly.
At Andavi Solutions, we want to partner in this process as you move into the 2024 selling year.
We invite you to take advantage of the timing (the launch of a brand new year) to seek our guidance and advice.
We have never been (and never will be) a “hard sell” type of organization, so don’t be shy about scheduling a free consultation.
Our website includes dozens and dozens of free resources, including articles, case studies, white papers, videos, and webinar recordings to assist you in your digital transformation.
We also offer free demos and training through the Andavi Academy!
New Year, New Challenges!
As 2024 commences, wine and spirits brands are navigating a landscape brimming with challenges and opportunities.
This article has explored the key hurdles—adapting to a modernized 3-tier distribution landscape, generating sales amidst soft demand, optimizing sales team roles and skills, and harnessing technology for accelerated growth.
To triumph in this dynamic environment, brands must embrace a proactive approach, focusing on collaborative digital strategies, customer-centric marketing, skillful team restructuring, and leveraging data and technology.
Success hinges on adapting and evolving, emphasizing continuous improvement and strategic partnerships.
Andavi Solutions stands ready to guide and support you through these transformative times, offering a wealth of resources and expert consultation.
In 2024, the path to thriving in the wine and spirits industry is clear: adapt, innovate, and collaborate.