THE VALUE OF WINE BROKERS: People that are new to wine distribution are sometimes very dogmatic about approaching wineries directly. They don’t feel keen to establish relationships with brokers, because “I trust my own palate”. The inexperienced buyer views the broker as some kind of “concealed distributor” that aims to take a bite of his margins. I would challenge that way of thinking; and argue that wine brokers, as opposed to taking from someones margin, is making the pie bigger for everyone. Canadian psychologist Steven Pinker explains my thought process in his bestseller from 2018 – `Enlightenment Now´:
Among the brainchildren of the Enlightenment is the realisation that wealth is created. It is created primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor.
With high quality matching, the wine broker can arrange a network of people that never would have met without introduction from the broker. Instead of dividing some imaginary existing pie, a good wine broker is instrumental in creating a bigger one. One of the `biggest pies´ in the wine industry is arguably Champagne, where the profession of `courtier´ (a type of wine broker) is mentioned as early as 1357. For chateaux that use the negotiant system in Bordeaux all transactions still go through a courtier, and similar structures exist in other major wine making regions across the globe. In an open market and capitalist economy, wine brokers couldn’t have been in business for all these years if they didn’t provide any value.
To clear out some of the common misapprehensions I’ve outlined the key benefits of working with wine brokers. I’m a broker myself and therefore biased to believe that I provide some value. But I hope you can look at the arguments and judge them fairly according to their inherent logic.
Avoid inappropriate matches
Wine buyers want to visit as many appropriate vineyards as posable. Inappropriate matches between producers and importers is a waste of money, time and resources. Although prospecting for new producers has always been a time consuming endeavour, the situation today is more challenging than ever. Navigating the sea of wineries without a `captain´ is a daunting task. Importers that are looking to add wines from Spain should know that there are more than 4000 wineries to select from. With an independent wine broker you can avoid inappropriate matches.
Keeps organisation slim
The internet has increased the adoption-speed of wine trends. Not just product trends, but the way we prospect for new clients and get influenced to make purchasing decisions. We don’t know exactly how the wine world will look like in 2030, but we do know that some businesses will have failed. And the reason they will have failed is going to be that of a combination of high fixed costs and an inability to adopt new thinking. Wine importers and distributors used to hire a full team of buyers, but just as media companies are slimming their organisations for agility, so should wine importers. With the help of independent brokers, many companies can thrive with just one head buyer. With wine brokers you can outsource part of the intellectual work associated with the wine buying team, such as prospecting the market for new wines and requesting price quotes.
The unbiased conversation
Wine producers and their employees will always tell you that they have the best wines. One of the more experienced wine brokers in Burgundy once explained for me that “asking an export manager for advice is like going to a catholic priest to ask about what religion he recommends.” Don’t engage too much in these conversations or you will eventually be persuaded to make a less than optimal choice. It will seem like you have an open ended conversation, but it always ends up in a recommendation to buy one of the wines the winery needs to sell. If you are going to talk with someone about a topic of critical importance to your business, let it be a broker. The broker has no storage of wines that need to be sold, he is free to cherry-pick exact what wines to endorse, and he often draws from a pool of hundreds of producers. The motivation is always to find the wine that will make the importer successful.
Access a “buyers market”
There might be as much as 10,000 wineries across the United States – a popular approximate is that the top 70 of these companies sell 90% of the total wine production. As a wine buyer prospecting for new wineries you are likely to encounter the some of these “top” wineries first, these are the companies that have the necessary marketing resources to become global brands. Demand for the wines of these companies are generally so high that you are ill advised to pressure them for better conditions. A `buyers market´ is a term often used in economic theory, it describes an economic situation in which goods are plentiful and buyers can keep prices down. As a wine buyer it’s your responsibility to place yourself in a good position for negotiations. How about searching in the pool of the 9930 wineries that sell the remaining 10% of the wine? A wine broker will help you navigate the vast sea of wineries that don’t show up on search engines.
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Interested in knowing more? This is a preview of a full text article that will be published (for paying subscribers) of The Bulk Wine Club, the biggest online platform for the international bulk wine trade.