This document provides an overview of options for wine and spirits suppliers to enter the American market. It discusses 10 potential options including working with large national importers, specialist importers, setting up your own import company, licensing agreements, distributors that import, retailer exclusive brands, direct importing in control states, and online channels like wine clubs. Each option is summarized with its pros and cons in terms of distribution reach, marketing support, control over the brand, and ability to build long-term business in the US market.

2. U.S. Drinks Market:
Options for Suppliers to
Enter the American Wine
and Spirits Market

4. Suppliers
Distributo
rs
Consumer
s
From To
Courtesy of Nora Favelukes, QW Wine Experts

5.  The right “CHEMISTRY”
 Fills an identified void in portfolio
 Brands with existing US volume they can grow
 New brands they feel their expertise can develop and grow
 Brands that have a unique positioning
 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.

6.  Company description/history
 Product description – varietals, style, ranges, proposed US
retail price by line/sku, and price structures
 Brand point of difference/value proposition for consumer; why
THIS importer should be interested in you.
 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
 Samples

7. Federal Label
(COLA) Approval
• 1 to 8 weeks
depending on
product and
complexity
State Registration
& Approval
• 1 to 8 weeks
including price
posting where
required
Product Ships To
Wholesaler
Caution-
New TTB
Turnaround

8. Supplier FOB (Varies-Packaging etc.) $
29.00Ocean Freight 4.50
Fed Tax/Duty (80 Proof) 3.30
PPU/BF/INS 1.40
Importers Margin (24% Margin) $
12.14
Price to Distributor $50.34
State Tax .71
Freight 2.50
Distributor Margin (50% Mark Up/33% Margin) 26.37
Distrib. Price To Retail $79.9
2Retailer Margin (50% Mark Up/33%Margin) 39.96
Retail Case Price $119.88
750ML / 12 Bottle Case Imported $ 9.99 Retail Bottle Price
Bottle Price $9.99

10. 0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0 2 4 6 8 1012141618202224262830323436384042444648505254565860626466687072747678808284
MillionsPeople
Age
About 4
million
people
more than
the cohort
ahead of
them.
Source: US Census CPS, 2014.
New Adults
Two Thirds ( 2 out of 3)
of these people drink
alcohol according to
Gallup Poll!

11. $0
$2
$4
$6
$8
$10
$12
$14
$16
$18
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Billionsof$’s
Beer Value Wine Value Spirits Value

12. $3 $3 $4 $4 $4 $5 $6 $6 $7 $7 $8 $8 $8 $9 $11 $11 $10 $9 $10 $10 $10 $10$4 $3 $4 $4
$5
$6
$6
$7 $7 $7
$8
$10 $10
$11
$12 $14 $13
$11
$12 $14 $14 $14
$6 $6 $6 $6
$7
$7
$8
$9
$9 $10
$10
$11 $12
$13
$15
$16
$16
$14
$16
$18
$18 $19
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Beer Value Wine Value Spirits Value

13. Source: Nielsen Scantrack; All measured off-premised channels (AOC+Conv+Military+Liquor Plus)
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
2012 2013 2014
Beer/Cider Wine Spirits
$Millions
+3.4
%
+3.2
%
+5.0
%
+3.1
%
+4.2
% +6.6
%
Sprits up 5% in dollar volume, followed by Beer 3.4%, and Wine
3.2%

14. National Association of Beverage Importers
March 2015

15. • Collecting data from 15K locations daily today
• Aggressively ramping with 10K+ more coming in ‘15
• Total number of transactions 1.3B+ today
• Total Dollar Sales captured = 41B+ today
• Capturing all transaction level data:
• Entire basket including food items, flavors
• Every item time stamped, during of occasion captured
• Table, server, tender, tip, party size
• Strategic alliance formed with IRI in April ’14 – data science/projections
• Coming in ’15: Tying credit card data to transactions for consumer insights
• On-boarding National accounts

16. 2.0%
-0.8%
2.8%
-2%
-1%
0%
1%
2%
3%
4%
Sales Traffic Price / Mix
On-Premise: Year-over-Year Growth (2014)

17. 0.3%
-0.6%
-1.6%
-2.1%
-3%
-2%
-1%
0%
1%
2%
Lodging Casual Dining Fine Dining Bar / Club
Year-over-Year Traffic Growth by Channel (2014)

18. -2.4%
-1.4%
-0.8%
-3%
-2%
-1%
0%
2012 2013 2014
On-Premise: Year-over-Year Traffic Growth
Note: Sample size increasing over time

19. -3%
-2%
-1%
0%
1%
2%
3%
1/26 3/23 5/18 7/13 9/07 11/02 12/28 2/22
On-Premise: Year-over-Year Traffic Growth
(4 weeks ending)

20. 5.5%
6.4%
8.9%
11.5%
67.7%
Share of Total Food & Beverage Sales (2014)
Non-Alc Bev
Wine
Beer
Spirits
Food
27%

21. 7%
24%
2% 7%
4%
6%
15% 10%8%
29%
8% 15%6%
3%
3%
11%
75%
38%
72%
57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Casual
Dining Bar/Club Fine Dining Lodging
Total F&B $ Sales Mix by Account Cat. (2014)
Food
NAB
Spirits
Wine
Beer

22. $20
$26
$73
$90
$135
$0
$20
$40
$60
$80
$100
$120
$140
$160
Alcohol Only Food Only Food + Beer Food + Spirits Food + Wine
Average Check by Type

23. 41% 39%
31% 30%
20% 22% 30%
11%
39% 40% 39%
59%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lunch Happy Hour Dinner Late Night
Alcohol $ Sales Mix by Day Part (2014)
Spirits
Wine
Beer
Traffic Growth: 0.4% 1.5% -1.5% -3.4%

24. -0.9%
2.0%
-0.7%
-1.1%
-2.7%
-5%
-3%
-1%
1%
3%
Total Lodging Bar / Club Casual
Dining
Fine
Dining
WINE -- Y/Y Unit Growth by Channel (2014)

25. 73.8%
26.2%
74.7%
25.3%
74.7%
25.3%
75.2%
24.8%
0%
25%
50%
75%
100%
By-the-Glass By-the-Bottle
WINE -- $ Sales Mix by Container
1H13 2H13 1H14 2H14

26. 23.9%
47.3%
24.5%
46.6%
24.7%
47.2%
24.4%
46.3%
0%
25%
50%
75%
By-the-Glass By-the-Bottle
WINE -- Ultra Premium / Luxury Share of $ Sales
(>$14 per glass, >$70 per bottle)
1H13 2H13 1H14 2H14

27.  Cabernet Sauvignon
 Sauvignon Blanc
 Prosecco
 Malbec
 Red Blend
 Pinot Noir
 Moscato
 Bordeaux Blend
 Merlot
 Champagne
 Riesling
 Zinfandel
 Pinot Gris
 White Zinfandel
 Shiraz
 White Blend
What’s Hot… …What’s Not

28. 3.6%
2.2%
1.5%
0%
1%
2%
3%
4%
Beer Spirits Wine
Y/Y Price / Mix Growth by Alcohol Segment
(2014)

29. 1. Large
National
Importer
4. Specialist
Company that
both Imports
and
Distributes
3. Regional or
Multi-State
Importer
5. Set Up Your
Own Import
Company
8. Chain
Retailer
Exclusive
Brand
9. Direct Import
thru Control
State
7. Large
Distributor that
also Imports
2. Specialist
National
Importer
6. Nat’l
Licensing,
Import and
Services
10. Wine Club/
E-Comm/
Flash Site

30. 1.
Large/National
Importer

31. 1.
Large/National
Importer
Pros Cons
Existing national distribution network Small brands get lost in portfolio.
Clout with distributors, your brand
benefits from their portfolio strength
Agency brand gets lower priority than
owned brands.
Large sales force Importer controls pricing, margins
On staff marketing department, existing
ad and PR agencies
Internal competition for company
resources
Participate in their sponsored events:
portfolio tastings that attract more and
more important trade, press than you
could reach on your own.
Importer determines marketing
strategy, creative, promo, POS…fits
your product into their portfolio
Existing business with chain accounts Set up to work with bigger suppliers,
focus on big volume brands
“National” price

32. 2. Specialist
National
Importer

33. 2. Specialist
National
Importer
Pros Cons
Existing national distribution network Smaller brands less important to
distributors.
Participate in their sponsored events:
portfolio tastings that attract more and
more important trade, press than you
could reach on your own.
Importer controls pricing, margins,
brand priority, creative look and feel,
fits your product into their portfolio
Category expertise Specialization may mean limited
appeal
On staff marketing personnel Limited in house marketing and sales
resources
Existing business with chain accounts Sales management presence in
multiple states limited.

34. 3. Specialist,
Regional or
Multi-State
Importer

35. 3. Specialist, Regional or
Multi-State Importer
Pros Cons
Smaller, more focused and nimble Limited geographic reach
Get more attention/not lost in the portfolio Limited capital, credit, payment history may be
a problem.
Specialize in specific area (country of origin,
indigenous varietals, price)
Smaller/limited resources, limited capital
availability, often no marketing staff, small
sales staff, hire out PR on project basis.
The smaller you are, the smaller the importer
should be
Tend to be with smaller, specialty distributors
so don’t get wide off and on premise
distribution.
If you only make 50,000 btls, you don’t need
national distribution, you need strength in a
limited set of markets.
Limited interest in investing in the brand, likely
that the majority of
marketing has to come from brand owner.
If you have multiple importers, will need
multiple labels …implications on inventory,
compliance

36. 4. Specialist
Company that
both Imports
and Distributes

37. 4. Specialist Company
that both Imports and
Distributes
Pros Cons
More motivated to work with you
because they control two levels of
margin
Relatively limited sales force
Focus on major markets/cities, not
outlying areas.
Limited geographic reach
Specialize/known for something:
country of origin, wine style
Different importers in different states
require separate labels…inventory
management issues
Smaller/limited resources, often no
marketing staff, small sales staff, hire
out PR as projects.
May take lower margins at each tier
because keep both.
Not sustainable price structure if move
to traditional importer/distributor
relationship

38. 5. Set Up Your
Own Import
Company

39. Pros Cons
100% of attention to your brand. Bear the complete cost of everything,
can’t amortize anything, need volume
to make it work.
Have complete control of everything:
marketing, sales, pricing, distribution,
margin, focus, message.
Need people with lots of skills:
marketing sales, import logistics,
warehousing, which can take your eye
of what you should be
doing…promoting and selling.
Works better for spirits than wine. Not your expertise
5. Set Up Your
Own Import
Company

40. 6. National
Licensing,
Import and
Related
Services

41. 6. National Licensing,
Import and Related
Services
Pros Cons
Very efficient at what they do Do not do marketing.
Cost savings in logistics, freight
consolidation, etc.
You will need either a rep in country or
you’ll have to hire someone who can
do the things below
Only pay for services you need Need to do everything else yourself:
marketing, sales planning, distributor
management, marketing, inventory,
pricing etc.
“Incubator” distribution services in NY,
NJ, CA
Handle cash flow, invoicing, billbacks
and other price modifications and
distributor deals.
Need to find/set up distribution
network.
Quicker market entry

42. 7. Large
Distributor that
also Imports

43. 7. Large Distributor that
also Imports
Pros Cons
Built-in distribution network, integration Distributor is focused on satisfying
needs of big internationals like Diageo,
Bacardi, Pernod. You will never be a
priority.
Existing sales force Not in the brand building business
Efficiencies and margins of having
combined functions of importer and
distributor
Can’t/don’t work with multi-state chains
on or off premise if have operations
outside their markets.
May get more attention here than with
a large national importer.
Difficult to get distributors in states
where this distributor does not operate.
Dist’s are not interested in helping
competitive distributors make money
Primary business is distribution and
sales
Not their primary business

44. 8. Chain,
Retailer
Exclusive Brand
73 stores, 11 states
Anakena
500 stores, 19 states

45. 8. Chain,
Retailer
Exclusive Brand
Pros Cons
“Shadow” distributor works on very low
margin, so retailer has more room to
price aggressively
Extra margin does not usually accrue
to supplier
Establish distribution in multiple states
quickly
Limited to selling through only that
retailer or retailer group
Minimal marketing costs (Don’t need to
fund distributor incentives, consumer
awareness programs)
Limited opportunity to grow brand
outside dedicated distribution, no on
premise business.
Immediate volume with first order Business limited to the states in which
the retailer operates. In Total Wine
example, no opportunity for sales in NY
or IL.

46. 9. Direct Import
thru Control
State

47. 9. Direct Import thru
Control State
Pros Cons
Getting “traction” in one state can get
the interest, credibility with other import
options.
Only works in one state
An experienced broker with
relationships in that specific state can
facilitate.
Broker generally only knows that one
state.
Not a scalable strategy.

48. 10. Wine
Club/E-comm/
Flash Site
Wine Clubs E-Commerce Sites Flash Sites

49. 10. Wine Club/
Ecomm/
Flash Sites
Pros Cons
An option…to at least get a
beachhead.
Limited reach to only their customer
base
Low support costs for supplier. Retailer
assumes burden of marketing, securing
customers.
No real brand building for the long
term.
Can represent good volume via a
simple sales, shipping, inventory,
labeling process to a single customer.
Every sale involves a DTC shipping
cost to retailer, meaning a lower margin
to supplier.
E-commerce allows you sell in states
even where you don’t have a
distributor.
E-commerce represents limited volume
potential…now.
Off premise solution only

50. 11. Other ideas
 Enter competitions to get U.S.-based ratings and reviews.
Some will work with brands that do not have a current
importer. (Great way to legally import samples)
 Use Wine Enthusiast Importer Connection program.
 US trade shows: click here for updated list
 WSWA/US Drinks Conference/US Beverage Alcohol Forum,
Nightclub and Bar Show, Manhattan Cocktail Classic, NY Bar and
Wine Show, Tales of the Cocktail,
 Data on U.S. market, brands, volumes, share, trends:
Beverage Information Group Handbooks for Wine, Liquor,
Beer, On-premise
 ImporterConnect™: Service to help find U.S. importers

51. Only US domestic wineries may ship direct to
consumers (DTC)
EU wineries have very limited ways to access this
market
Small and medium wine producers are most negatively
impacted - not otherwise commercially viable due to
limited production.
US wine Importers should be recognized as a well
regulated conduit to DTC. Estimated 1200 active US
importers approved by TTB
Only 14 states permit DTC shipping by retailers

52. The US Wine market is experiencing a significant
increase in “Private Label” wine brands. This practice
is disruptive to the three tier system and can be offset
by SME suppliers finding a conduit to consumers
through direct shipping.
The US DTC wine market was opened to
domestic wineries by the 2005 decision of the
supreme court in Granholm v. Heald 544 U.S. 460
(2005)
The US three tier system (Wholesalers) can
present headwinds to this initiative

53. Out-of-State Wine Retailer Shipments Allowed in 14 States and DC: AK,
CA, DC, ID, LA, MO, NE, NV, NH, NM, ND, OR, VA, WV, WY
MT
WY
ID
WA
OR
NV
UT
CA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VAWV
OH
MI
NY
PA
MD
DE
NJ
CT
RI
MA
ME
VT
NH
AK
HI

54.  Size of the winery direct shipment market?
 $2.5 billion value of winery DTC shipments
is 8.6% of total US wine retail off-premise
market value. (+ 7.5% YOY)
 -- (5.6% of total $28B US wine market)
 3.47 million cases is approximately 2% of
total wine retail off-premise wine volume.
(+9.3% YOY) (1% of total US wine volume)

55.  Limited production wineries 0 to 999 cases made
3.8% of shipments (4.9% of value)
 Very small wineries 1,000 to 4,999 cases made
14.7% of shipments (21% of value)
 Small wineries 5,000 to 49,000 cases and under
made 47.8% of shipments (47.3% of value)
 Midsized wineries between 50,000 – 499,000 cases
made 28.5% of shipments (23.2% of value)
 The largest 55 wineries (each over 500,000 cases)
made only 5.2% of shipments (3.7% of value)

56.  Limited production winery 0 to 999 cases -
$48.56 per bottle
 Very small winery 1,000 to 4,999 cases -
$54.05 per bottle
 Small winery 5,000 to 49,999 cases –
$37.33 per bottle
 Medium winery 50,000 to 499,999 cases -
$30.68 per bottle
 Large winery 500,000+ cases -
$27.12 per bottle

57.  DTC allowed DTC prohibited

58.  Varietal Info, Regional Info,
Price Category Info, etc.
 Download from
www.shipcompliant.com

59. Domestic Small Beer and Wine Producer Credits
Lower excise tax rates (not available to imports)
Wine - $ .17 vs $ 1.07 per wine gallon
Beer - $ 7.00 vs $18.00 per 31 gal barrel
Small Wine Producer = >250,000 gal , $.90 on first
100,000 gals
Small Brewer = > 2 million bbls, $7.00 per bbl on first
60,000 bbls

60. No excise tax on the first 7,143 barrels;
$3.50/barrel on barrels 7,144-60,000;
$16/barrel on barrels 60,001-2 million; and
$18/barrel on every barrel above 2 million.
Applies to all brewers both domestic and import
Small brewer defined as under 6M bbls
$3.50 on first 60K bbls
$16/bbl 60,001 to 2M
$18/bbl 2M to 6M bbls
Limited to domestic brewers only
Fair beer Act H.R. 767 would:
Small Brew Act H.R. 232 would:

61. Do not need a US importer to enter Need a US importer to enter
Ultimate Beverage Challenge Beverage Testing Institute
MicroLiquor Awards
NY International Spirit Awards
Indie Spirits Competition
San Francisco International Wine Comp.
Spirits International Prestige Award
(SIP)

62. Steve Raye
Managing Partner
Brand Action Team
1 Darling Dr.
Avon, CT 06001
860-676-7900
sraye@comcast.net
www.TheBrandActionTeam.com
www.BATChat.net (blog)

63. Grazie di cuore per il
vostro tempo e ospitalità