Carlos Serrano
commercial director, Montes, Chile
Market: Midwest
Montes has been active in the Midwest for over 25 years. Since that time, there has been much retailer and distributor consolidation, although overall the market is growing. However, that growth has been less than we expected and the Midwest lacks the dynamism of other markets like California and Florida, which respond better to our promotional/marketing activities. Furthermore, our success continues to hinge on the retail sector, rather than the on-trade, and the ongoing consolidation remains a threat to brands as shelf space becomes more limited. You must remember that this isn’t San Francisco or NYC – consumers are generally more conservative in the Midwest, and it requires a greater effort to push them outside of their comfort zone.
Yet the Midwest has its advantages, most notably that the market is more stable than other parts of the country and less subject to fluctuating demands – slow and steady wins the race, as they say. But, ultimately, it all depends on the location. Chicago, for example, is as dynamic as any market in the US, and many smaller- or medium-sized urban areas in the state of Illinois are showing much promise. In the end, though, it all comes down to the people you work with. Building a relationship with a good distributor is essential, although the best distributor in the Midwest is not necessarily the biggest, but the most suitable for the size and market expectation of the producer. This is a market that takes time, so brands should be prepared to jump in the deep end and visit as much as they can.
João Roquette
export director, Quinta do Vallado, Portugal
Market: Midwest
Quinta do Vallado started exporting to the Midwest nine years ago, when we formed a partnership with Quintessential Wines as a part of their strategic focus in the region, namely in Illinois, Wisconsin, and Michigan. Overall, I’m pleased with our progress in the Midwest. Sales are rising and we have observed a clear consumer evolution from California wines to new and different wines and varieties. Many of the restaurants and private stores that pioneered listing Portuguese wines five years ago are still listing them today, and in some cases even expanding their selection. The most obvious sign of change for us is to observe how the selection at major retailers – Binny’s, for example – has grown.
Today, Illinois and the Chicago area remain the most dynamic markets in the Midwest, and should be on the radar of any brand attempting to gain traction in this part of the US. In addition, we are experiencing healthy growth in Milwaukee and Minneapolis. Of course, there are challenges like any market. At first, it was difficult to get across the complexities of Portuguese grape varieties and the styles of wines we produce. But we persevered, and the key to success, as always, is to be patient and take the time to visit the market and educate consumers, again and again.
I’m quite positive about our future in the Midwest. The level of consumer knowledge is rising at a great pace and wine consumption is clearly above average (in urban centres) versus the rest of the country. A culture of drinking wine on a regular basis has emerged, and this will hopefully continue to grow. But this is no El Dorado – brands need to be aware of the scale of the market, and strategic geographical division is key to avoid wasting time and resources in the Midwest.
Bartholomew Broadbent
CEO, Broadbent Selections
Market: Southern states
After I founded Broadbent Selections in 1996, I travelled to Mississippi three times to explore the market. In the first 10 years of my business, it was in our top three states. Today, as our business has grown, it isn’t so big compared to other states but we still sell a lot of wine there. It is a classic example of a big fish in a small pond. If you pay attention to small states where others are not paying attention you can outperform the market. We currently sell in every US state except North Dakota.
Today, the fine wine market is becoming more important in the southern states. Historically, this is where our growth has been centred. Most of the southern states are up between 30% and 100% in 2017 YTD. This follows very strong growth over the past five years. However, in the same period I have seen more competitors enter the southern states. There are more brands competing for shelf space. In addition, Georgia continues to stagnate and Mississippi is slowing down as the market becomes saturated. But in line with other markets in the US, we are seeing a greater interest in unusual wines. Buyers are tired of big brands and big varietals. The wines from South Africa, for example, are experiencing good growth. There is a thirst for knowledge and experiences in the South. There is also, unfortunately, a strong conservative base of buyers who’ll never change their ways, but they are a dying breed. People are more polite and generally more conservative. You have to learn to keep your mouth shut when it comes to politics.
In addition, brands shouldn’t just focus their efforts on the largest urban areas. When you look at the map of imported wine sales, you might see New York at 7%, Florida at 14%, and California at 12%. This leaves 67% to other states. Wineries tend to want to sell into the big urban markets because there is a lot of business to be done. However, it is much easier to sell into a smaller market where the trade is happy to see you and not jaded by too many sales pitches.
Of course, there are challenges. The key is to get the distributors to pay attention to your brands. The importance of having a good national importer cannot be over emphasised. If your importer has good strategic relationships with the local distributors there is no stopping success. We overcame all our difficulties by hiring good people and offering good wines. The consumer is waiting with open arms. Indeed, I believe that wine consumption might be greater in the South. There isn’t a whole lot to do in some places, so drinking is part of the culture. It is a matter of persuading them to drink your wine, not someone else’s.
Timothy Schoener
North America business manager/SVP marketing, KWV, South Africa
Market: Midwest
KWV has been in the Midwest on and off for several years; however, we have only focused on the region, with Chicago as the centre, for the past 18 months. Overall, the market appears to be doing well, although as in the rest of the country, there has been a consolidation of major retail through acquisitions, and large urban areas drive the majority of demand. The region is indicative of what you will find in most non-coastal US cities. You have major metro areas surrounded by more rural, less-populated areas, as opposed to coastal areas that show denser population over larger areas.
While the market is growing as expected, the South African category seems to be a bit behind the curve. For KWV, retail continues to be the key sales channel, dominated by Chicago and, more recently, Michigan and Wisconsin. It’s a curious market – a real mix, with the more rural areas leaning toward conservatism and the metro areas showing more ‘out-of-the-box’ thinking when purchasing wine. The main challenge is that with volumes/revenue driven mostly by major retail, getting to the gatekeepers is extremely hard for non-national brands. They are, for the most part, happy following trends and not focused on trailblazing. So the retail market is still very much a work in progress, but by building the brand in smaller (non-national) retail, producers can provide proof of concept to the larger chains.
Nonetheless, an emerging culture of drinking wine on a regular basis is gaining ground in the larger cities, although this is still a beer-centric region, so in the rural areas you will still see things trending towards the special-occasion purchasing. Therefore, my advice to any brand considering entering the Midwest is that if volume is a main consideration, secure major retail support prior to market entry or be prepared for a longer building process.
