{"id":2066,"date":"2017-06-24T22:17:18","date_gmt":"2017-06-24T22:17:18","guid":{"rendered":"https:\/\/www.winex.com\/stockreport\/?p=2066"},"modified":"2017-06-25T23:54:09","modified_gmt":"2017-06-25T23:54:09","slug":"more-random-dribblings","status":"publish","type":"post","link":"https:\/\/www.winex.com\/stockreport\/2017\/06\/24\/more-random-dribblings\/","title":{"rendered":"More Random Dribblings"},"content":{"rendered":"

ALLOCATION-THE \u2018A\u2019 WORD<\/h3>\n

“I recall trying to explain the \u2018allocation\u2019 model to my late father-in-law who owned pharmacies.\u00a0 Usually he couldn\u2019t get past the part where you just couldn\u2019t buy what you wanted.”<\/strong><\/span><\/p><\/blockquote>\n

This was one of the most powerful words in the wine business at one time.\u00a0 For some parts of the industry it still has significant meaning.\u00a0 Back in the day when there weren\u2019t thousands of wines and unlimited information, certain wines achieved a popularity that outran the supply.\u00a0 For those certain labels, the solution to trying to keep as many people happy as possible was to come up with a reasonable way to apportion what there was among the various accounts\/people that wanted it.\u00a0 Sounds simple on the surface, and one could make the assumption that it is a somewhat fair and legitimate process with regards to its execution.\u00a0 That assumption, of course, is based on an understanding of the criteria and we can tell you wineries do not likely have the same agenda in mind as you might.<\/p>\n

I recall trying to explain the \u2018allocation\u2019 model to my late father-in-law who owned pharmacies.\u00a0 Usually he couldn\u2019t get past the part where you just couldn\u2019t buy what you wanted.\u00a0 Unless there is some crisis, the idea of \u2018rationing\u2019 (that\u2019s what it is, really) does not come up in virtually any other business.\u00a0 The object of most businesses is to sell as much as you can.\u00a0 But the wine business is unlike others in that you have finite amounts of goods that cannot be reproduced or exactly replaced.\u00a0 Given this unique situation, the wine industry not only sort of invented the idea of apportioning sales via \u2018allocation\u2019, but has also figured out a number of ways to use it to their advantage, as well as a few ways to muck it up and abuse it.<\/p>\n

The original program was to first decide how much to give to restaurants and retailers, and then divvy it up between the various accounts within those categories that are deemed worthy.\u00a0 Why go to so much trouble to sell what you are going to sell anyway?\u00a0 The concept is to try and keep as many people involved with the label as possible so the wine\/winery can maintain the largest possible audience for the future.\u00a0 If production increases over time, there presumably will be a waiting clientele.\u00a0 The allocation \u2018lock-down\u2019 allows the winery to micro-manage the distribution and prevents evil merchants (yes, like us) from taking down huge chunks.<\/p>\n

It certainly helps the allocation process to have wines that people want to buy.\u00a0 But not everybody likes the same things so an allocation for someone who doesn\u2019t care about the wine seems a pointless exercise.\u00a0 But it happens all the time.\u00a0 There was a \u2018brand manager\u2019 for a wholesaler not long ago who somewhere along the line decided that restaurants were the key to his \u2018brand building\u2019 plan.\u00a0 In this case, the importer\u2019s book was centered on value-driven Spanish and French wines which routinely got great reviews and were enormously popular at forward-thinking retail establishments.\u00a0\u00a0 There was a built-in audience for these wines and the wholesaler had to do some \u2018allocating\u2019 to keep as many high performing accounts as possible as happy customers.<\/p>\n

This \u2018guru\u2019 decided that it was important to establish these wines in restaurants even though they were selling well already on a retail level, and weren’t obvious plays in most restaurant programs.\u00a0 To that end, this individual \u2018allocated\u2019 the wines to \u2018restaurants only\u2019 who proceeded to not care a lick.\u00a0 Very salable wines sat at the wholesalers for months while this individual was out trying to sell them to eateries.\u00a0 In one particular instance the wholesaler was sitting on 100 cases of a highly reviewed Spanish wine that was \u2018allocated for restaurants\u2019.\u00a0 After four months, there were still 96 cases left to serve the Southern California market.\u00a0 The wholesaler finally called \u2018nonsense\u2019, the stock was released (it sold out immediately) and the \u2018brand manager\u2019 was relieved of duty.<\/p>\n

In most businesses people are happy to sell things.\u00a0 In the wine biz, people feel the need to have input on where<\/em> their wine goes.\u00a0 Whether you think that is a reasonable premise or not, many times the restaurants (or whatever) on the receiving end of an allocation don\u2019t necessarily want it.\u00a0 In most cases they simply can\u2019t use the wines.\u00a0 Most restaurants don\u2019t necessarily need another<\/em> $200 Cabernet that would sit on their list at $600.\u00a0 They don\u2019t necessarily care about a high scoring Spanish wine at a French eatery.\u00a0 So allocations, intended to simultaneously give an air of exclusivity to the wine and make the recipient feel special about being included in the \u2018club\u2019, are often an exercise in futility at that level.<\/p>\n

Finally, you have the case of the winery\/distributor\/importer, who may have been allocating you a singular particular wine for quite some time, suddenly create\/import a new wine\u2026or, worse yet, have some leftover stock of something else.\u00a0 They might include some of those \u2018not-quite-so-scarce-or-in-demand\u2019 items \u2018bundled\u2019 in your<\/em> \u2018allocation\u2019, with the tacit understanding that you are expected to take your whole<\/em> allocation or potentially lose the wines you really want down the road.<\/p>\n

Yeah, we\u2019re not huge fans of the A-word.\u00a0 If we were, there\u2019s a good chance you wouldn’t have that special bottle of wine in your cellar that you\u2019ll be enjoying this weekend.\u00a0 Make it a great one\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

ALLOCATION-THE \u2018A\u2019 WORD “I recall trying to explain the \u2018allocation\u2019 model to my late father-in-law who owned pharmacies.\u00a0 Usually he couldn\u2019t get past the part where you just couldn\u2019t buy what you wanted.” This was one of the most powerful words in the wine business at one time.\u00a0 For some parts of the industry it … Continue reading “More Random Dribblings”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":2067,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[39],"tags":[104,76,13],"_links":{"self":[{"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/posts\/2066"}],"collection":[{"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/comments?post=2066"}],"version-history":[{"count":5,"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/posts\/2066\/revisions"}],"predecessor-version":[{"id":2073,"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/posts\/2066\/revisions\/2073"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/media\/2067"}],"wp:attachment":[{"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/media?parent=2066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/categories?post=2066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.winex.com\/stockreport\/wp-json\/wp\/v2\/tags?post=2066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}