Challenges in Bringing New Products to MarketThe Struggle is Real
BC’s wine industry has positively blossomed this last year, breaking ground as a wine region worthy of global consideration, winning international wine awards and expanding upon its own identity (hello new legal geographical indications (GIs) and sub-GIs!).
However, when it comes to importing wines into the province, BC’s reputation as a wine industry—with a difficult bureaucracy and unique distribution system—is unflattering to say the least.
Wine producers from around the world often hesitate to work with the BC wine industry, having been warned it is difficult and not worth the time and effort. There is particular disdain about the suffocating administrative hoops and exorbitant markups and taxes. This frustration is shared among wine agents in BC who strive to bring exciting new wines to market, despite overwhelming barriers that frequently thwart their efforts to foster a rich and diverse wine culture within the province.
If agents can find producers who are willing to work with BC, they then have to navigate the confines of the convoluted, archaic, and seemingly biased systems and regulations of the BC Liquor Distribution Branch (BCLDB). It is a daily uphill battle and has been for many years. Here is a look at some of the many challenges in bringing a new product to market and why, the next time you see a wine agent, you should give him a hug.
Pricing Wine for Sale in BC
The long journey starts with sourcing the wine, an exciting venture when you consider the diverse wine regions of the world. Agents meet with producers on-site or attend international wine expos and trade shows such as ProWein. In both cases, agents are faced with an enormous selection of wildly exciting and reasonably-priced wines that are currently unavailable in BC. Unfortunately, that 3 Euro per bottle price tag only seems reasonable until the agent factors in the necessary taxes and markups to bring that bottle to a shelf in BC—approximately four times that amount, or about $18.99 CAD for wholesale distribution.
Should the agent intend to sell to hospitality customers, they would have to guess the government-determined retail markup. The markup averages 21%, but can vary randomly and is not disclosed until the wine has already landed in BC.
A Convoluted Process
All alcohol imported for sale in BC must go through the wholesale division of the BCLDB, which is the same organization that supplies the BC Liquor Stores (BCLS).
Imported alcohol that makes it to a BCLS shelf (wine, spirits, beer, etc.) is chosen by four category managers. Agents can pitch new wines to the appropriate manager, and the BCLDB posts notices to let agents know when they are looking for a specific new product; however, based on experience it is difficult to get these wines approved.
So most agents import their wines as specialty “spec” products designated exclusively for purchase by private liquor stores and hospitality customers. Agents then work to promote their products directly to these customers, who believe they are getting a rare and exclusive product that will not be available for sale at other locations in BC.
This where the process becomes a little murky. If a “spec” wine starts to look like a ‘hot seller’ to the BCLS, the BCLDB is able to change the coding of this wine to make it available to BCLS – without giving notice to the wine agent. BCLSs can then stock that wine on their shelves, despite the agent having already promised this wine exclusively to a private store, restaurant, or bar.
The BCLDB can change the coding of the wine without notice to the wine agent, and stock that wine on the BCLS shelf.
BCLSs can do this, even though your wine agent has gone through the cumbersome process of finding an interesting wine, assumed all risk of importing the wine, paid for the product and shipment – all while marketing it as a ‘spec’ wine to private stores and restaurants. Then, suddenly, that product appears on the shelves of BCLS. As the retailer or restaurant who just bought the “spec” wine, you feel thoroughly deceived. It is likely your agent had no idea or control over this happening.
Should a retailer want to prevent this from happening, they would seemingly have to purchase the entire stock of the product available in BC – including storing the entire order. However, if the product hasn’t yet arrived in BC, the BCLDB has the ability to block the sale (even if the supplier and shipping company have been paid in full).
Frustrated yet? Hold onto that thought…
Order Fulfillment Issues
Order fulfillment is one of the most common points of contention for a wine agent, and is something that leaves the agent or their reps running around daily on behalf of their clients. The agents have no access to who has ordered their product through the BCLDB or how much has been ordered. They can purchase a report, but this report only contains basic information about who has received the wine, not who has actually ordered it.
There are multiple touchpoints in the logistical process for order fulfillment. Sometimes, to the dismay of the private liquor store or restaurant, wines just don’t show up on delivery day. Another week may pass with no wine, and then the order can just drop from the system.
What does “drop” mean, you ask? Good question. It means the order just disappears. It is not entirely clear how this happens, but the agent will ultimately have to cool down a scorned purchaser, and often bear the grunt of this scorn.
At the end of the day, agents assume the most risk, take on an enormous amount of work to bring these wines to your line of sight, and walk away with the smallest slice of the resale pie.
The agents have no access to who has ordered the wine through the BCLDB
And still, BC’s wine agents endure. They trip and stumble along the bumpy road, but they don’t slow down. Even amidst a complicated government-controlled model that arguably favours big companies and global brands, they keep striving to bring interesting wines to market and to foster wine culture in BC.
There is not much that can be done immediately to alleviate these frustrating obstacles, but being privy to these processes is a start. At the very least, before you inquire about your missing wine, give your agent a big and enthusiastic hug.