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