US Wholesale Masterclass w/ Pete Przybylinski, The Duckhorn Portfolio (Part 2)

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 part two, Pete discusses selling into on- and off-premise chains, pricing, marketing, and more.

Detailed Show Notes: 

Selling on-premise takes more time, need to present the wine, sell 1 case at a time, but more marketing value

ROI skews towards off-premise if you ignore brand equity

Calera / Kosta Browne targeted 65-70% on-premise, but hard to enforce

• Can’t tell distributor where to sell since they own the product
• If retailer asks for it, some states legally require it be offered

Selling off-premise chains

• Rely very little on distributor, need to build relationship on your own
• If brand is small, can use agents/brokers or distributors to get initial discussions
• Takes patience and perseverance, and need a compelling story
• Big retailers don’t care about the winemaking process, they care that customers will buy the wine

In-store displays

• Retail product managers fight with each other for displays
• If displays don’t deliver value, they will lose floor space to others
• Constellation research: most product pulled from shelf, not displays; displays act as powerful billboard for shoppers

Shelf placement

• Cold box similar to displays - limited real estate, hard to get in and get the desirable locations
• Need to communicate to wholesaler merchandising teams where you’d like to be (e.g. - x shelf next to y competitor); need to keep message simple
• Stick w/ message for ~2 years, takes a long time to see impact, needs patience

Large on-premise accounts

• Look at ACV (volume) to identify top targets
• Similar to off-premise with limited real estate (wine list slots) and they need the wine to sell
• Can take fewer wines vs off-premise (2-4 max)
• Longer lead times, programs can be 1-2 years, need to be ready when windows open
• BTG great, but creates some pricing complications
• Need to show up where buyers are, e.g. - major events like Pebble Beach or Aspen Food & Wine

Decoy’s success driven by off-premise

• Safeway in CA launched brand, then went to other regions and retailers and grew from there
• Duckhorn brand equity gave Decoy a springboard to launch, but was able to stand alone and now most Decoy drinkers don’t know the tie to Duckhorn

Price increases

• Get all the data you can (competitor, consumer behavior, demand elasticity)
• The nuances of consumers and differences in brand equity are impactful
• Any decisions take time, may not affect retailers for ~120 days, could take 6-12 months before you see an impact

Discounting

• Key for the grocery channel
• Discounting should be done after all other options exhausted
• The more it happens, customers think that’s the price of the product, erodes brand equity

Impact of marketing on sales

• Duckhorn did very little traditional marketing, mostly sales support (spent ~1.5-2% of revenue)
• LVMH spends ~30% on marketing, CPG average is ~10% of revenue
• Did some testing of advertising in 1 market for 1 year and measured impact to determine if it should be expanded
• Partnerships w/ other products good for grocery channel, can often secure displays

Advice for a tough wine market

• Set up production to align w/ honest and believable sales plan
• Long-term impacts of cutting opex will hurt growing the top-line

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