Competitive Business
Wine distribution has become a crowded marketplace With over 7000 brands getting funneled through about 500major and medium-sized distributors( not including many smaller mom-and-pop and specialized distributors ), which is about half as many as a few years back. Understandably there is a bottleneck — 7000 brands worth $30 billion in retail sales have to squeeze through 650 distributors in 50 states on their way to 76 million wine consumers. Any blockage in the distributor tier chokes up the whole industry.
And the problem gets worse because the distributors are obviously getting squeezed themselves by the recenteconomy — falling sales, trading down, shrinking margins, credit limits and counter-party risk. distributors are expected to consolidate in some cases and pull back to reduce cost and risk in others.
The net effect is clear — distributors are reducing their SKUs (stock keeping units and focusing on a smaller number of reliably profitable products lines. This means that it is harder and harder for new and niche wineries to get on the warehouse pallet.
