US Wholesale Masterclass w/ Pete Przybylinski, The Duckhorn Portfolio (Part 1)

Having helped grow Duckhorn from $5M to $500M in revenue and the sales team from 1 to >100 people, Pete Przbylinksi, former Chief Sales Officer of The Duckhorn Portfolio for nearly 30 years, has a deep understanding of managing US wholesale markets.  In this two-part episode, Pete dives into every aspect of managing a wholesale sales team, including incentive structures and collaborating with distributors.

Detailed Show Notes: 

Duckhorn went from 50k cases / ~$5M in revenue / 14-15 employees (1995) to ~$500M revenue (2024)

The Duckhorn Portfolio

• Duck themed: Duckhorn Vineyards (1978), Decoy (2nd label originally), Paraduxx (1994), Goldeneye, Migration, Canvasback
• Acquisitions: Calera (2017), Kosta Browne (2018), Sonoma Cutrer (2024)

Keys to Duckhorn’s success

• Brand equity - focused on Merlot, which was hot in 1980s-1990s and catapulted winery
• Key assets - #1 people, #2 brand equity
• The French Paradox (1991) created big demand for red wine
• Table stakes are good scores, showing up in the market, hosting guests

Sales team grew from 1 person to >100 (~85 in the field)

• No perfect way to calculate ROI for sales people
• 1st method: too many cases & distributors to manage, needed more people
• 2nd method: quantified expected incremental sales from more people (data was full of holes)
• Final method: managed to target of 8-10% sales opex / revenue, because a KPI for SLT and Board

Sales team roles

• Regional Managers, over a series of states (50-60% of time working w/ distributors, the rest out in the market or internal analysis and reporting)
• District Managers, geographically concentrated, go into accounts you want to be in
• National Accounts, on and off-premise; a challenge to determine which accounts are national vs regional, ended up doing it case by case and assigning accounts

Distributor consolidation led to wineries needed to do the work they cannot do

• E.g. - identifying underrepresented accounts and coming up with action plan by region

Identifying top salespeople

• Look at overall contribution margin for the region
• Share of business in market (using IRI, distributor reports, account base)
• Gross Profit%, identifies amount of trade spend used
• How responsive they are, their handle on the market, their decision making
• #1 method: do they bring new ideas to the table

Incentivizing salespeople

• Bonuses must be meaningful (25-35% is meaningful), higher for higher levels
• Look at contribution margin relative to budget
• Used a curve (<90% budget - no bonus, above budget - scale increased, which helps end of year motivation)
• District Managers may have market specific goals (e.g. - increasing depletions, PODs for particular products) that are short term (3-6 months)
• Overall, incentives are difficult to manage, data can lag; make it objective
• Recognition is helpful, e.g. - unexpected gifts like a signed 3L from the CEO

Distributor collaboration best practices

• Show them a plan and explain why it makes sense (e.g. - buyers are lined up) and get mutual agreement
• Keep it simple, the info needs to be passed on to others
• Identify what you’re prepared to do in the marketplace (e.g. - market visits, funding BTG programs, incentives, etc…)
• Do monthly check-ins and more formal quarterly reviews to see progress against plan and to adjust tactics and strategies

Optimal size of sales territories

• Depends on # of distributors in region (e.g. - TN had 8 distributors = 8 days/mo of meetings)
• Try to align with target sales opex / revenue ratios (~8-12%)

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