The winery’s objectives must drive a brokerage strategy. Before we at Third Leaf Trading ever start sketching out a brokerage strategy, we must first understand:
- What are the time constraints? Some wineries have their back against the wall with demanding creditors or a bank threatening foreclosure and need cash in 30 or 60 days. Other clients know they are going to miss a vintage transition in three or six months, while some have the luxury of more time.
The time allowed for the process will determine how quickly we have to act. Some customers pay well, but are slow to make purchasing decisions. Other customers offer perfect price opacity, but often have much longer lead times. Knowing the winery’s time constrains permits us to develop an optimal sequence of customer presentations.
- How important is price opacity vs. cash recovery? Again, some wineries just need cash to pay off creditors, so cash recovery is paramount. For others, the business is sound, but they need to catch up on inventory, so opacity (ie, not having discounted prices online or on wine-searcher widely visible to the rest of the industry) is more significant. Understanding this, we can then fashion a strategy targeting customers that will maximize cash flow or brand-preserving opacity for the winery.
- Where does a winery currently sell its wine? A good broker should find customers that will not unduly cannibalize a winery’s current sales and/or antagonize existing distributors. We try to work with, not around, a winery’s distributors and target customers in markets in which a winery doesn’t already have a large number of customers, so that the brokerage effort is as additive as possible for the winery.
Why are we sharing the details of our process? Knowing the theory is easy, but properly and thoughtfully executing each time is the real challenge. Also, the breadth and depth of our customer network underpins the development of each unique brokerage strategy.