Important Key Factors to Keep in Mind When Getting Involved in the Bulk Wine Market.
The international bulk wine market is filled with both challenges and opportunities. To help winemakers make sense of this competitive landscape, Michael Brughelli, Director of Supply at the Thornhill Companies, highlighted the key factors to keep in mind when getting involved in the bulk wine market. He also offered a brief list of common pitfalls to watch out for when first getting started with bulk wine.
In terms of bulk wine market challenges, says Brughelli, one of the most important factors to keep in mind is the enormous amount of competition in the marketplace today. There are a lot of wine producers making high-quality wines, says Brughelli, and you really need a way to set yourself apart. What are you offering that nobody else is offering? And why should people buy from you rather than somebody else?
Another important challenge, says Brughelli, is the lack of loyalty in the marketplace. Buyers like to see a lot of selection, and one major reason why they are in the bulk market in the first place is the flexibility in sourcing. Thus, they do not have the same incentives as consumers to show their brand loyalty. Instead of buying brands, they are simply buying grapes. At the right price, a Cabernet Sauvignon grape from Chile is the same as a Cabernet Sauvignon grape from California.
And one other challenge to keep in mind advises Brughelli, is the rapidly shifting dynamics of supply and demand in the marketplace. Everyone starts out hoping to buy low and sell high, but that’s actually harder than you might think. You need to be very informed about what the market is doing so that you can make the most intelligent decisions about supply/demand dynamics.
The good news, says Brughelli, is that there are plenty of bulk wine market opportunities. First of all, advises Brughelli, you need to “know who you are,” in terms of your core competencies. And you also need to make wine with intention. If you are compromising on your winemaking technique in order to sell into the bulk market, then you are taking the wrong approach.
It’s important to know the overall market. One easy way to do this, says Brughelli, is simply “having conversations with educated people.” A lot of information about what is happening is never formally communicated to the broader market, so you really need to have your ear to the ground. And, on the same theme, you also need to price your product right. This requires an in-depth knowledge of both supply and demand, as well as current market conditions.
To be successful in the end, says Brughelli, you need to lead the market rather than follow the market. You don’t want to be caught holding a lot of wine in your tanks when the new harvest comes, so you have to be smart about ways to “get wine out of the tanks.” If you keep holding out for the right price, then you might end up waiting too long.
Finally, Brughelli highlights the most common pitfalls that can prevent you from achieving full success in the bulk wine marketplace. One of the most common pitfalls, says Brughelli, is “trying to be everyone to everybody.” Are you trying to create wine for the $4.99 wine buyer, or wine for the $15+ wine buyer? What grape varieties are you going to have a real competitive advantage in offering to the marketplace?
Along the way, says Brughelli, you will need to look out for possible quality issues. “Be careful about wines going out the door,” advises Brughelli. “There is no excuse for anything less than stellar quality,” says Brughelli, given all of the options available to winemakers today.
One final piece of advice from Brughelli is to avoid being long on prior vintage wines. The “lack of willingness to right size inventories” is an issue that comes up again and again, warns Brughelli. While there are some notable exceptions – such as Napa Valley Cabernet – it’s best to draw down inventories throughout the year so that you are not caught with too much inventory.
By putting these best practices into effect, says Brughelli, you can optimize the conditions for your success in the bulk wine market. There are plenty of bulk wine challenges, but also a lot more opportunities. The big takeaway lesson from the presentation is that the more information you have about the overall market, and the clearer you are on your own goals and strategy, the more success you will have in the future in the bulk wine market.