A DRY RUN THROUGH All numbers, no samples. The distributors were listening
Peter Click Click Wine Group
Peter click did not look as if he was about to sell wine, standing with a grim expression in a Manhattan conference room and asking a techie to adjust a PowerPoint screen. In fact, Click had not even brought wine to the sales meeting. He had decided to go against industry norms, and rather than discussing his brands or his labels or the taste of his wine, he was going to talk numbers. Plain numbers. Numbers that might seem sleep-inducing. But the point was that he, a supplier, was seeing things as his distributors did. That made it a very exciting presentation for a distributor like Charles Merinoff, who had seen a preview and was so taken with it that he'd brought Click back to pitch Merinoff's lieutenants.
Click is the CEO of Seattle-based Click Wine Group, which mostly sells $9 to $15 wines under labels including Fat Bastard and Clean Slate to distributors like Merinoff's Charmer Sunbelt Group. Click Wine made the Inc. 500 list in 2003 and 2004 but sales have hovered around $30 million since then, so Click recently took control of his sales staff, hired a few new people, and changed his approach. He's trying to see things from the distributor's perspective. "We're a little independent guy," says Click. "We've got to be different. If we don't do something different from, 'We've got this wonderful line, and look at my label, and the soil is like this'; if we can't actually demonstrate business reasons why retailers are going to want to carry our product, then we're just like everybody else."
At this December meeting in Manhattan with Charmer Sunbelt, one of the largest distributors in the nation, with about $3 billion in sales, Click greeted the execs and called up his presentation. His 48-slide PowerPoint began by describing the distributor's business challenges, setting himself up as someone who really understands their needs. At this meeting, he discussed issues such as rising fuel prices, retailers that squeeze their margins, and health insurance costs. He then reviewed the ways Charmer measures performance, with gross profit, case sales volume, revenue per delivery, and so on. The slides were simple, and Click casually chatted through each with just a glance or two at the screen. Next, he turned to his own company, but rather than going into its history or mission, he stuck to numbers. He discussed his single-SKU strategy (with just one SKU for most brands, it's easier for distributors to manage), broke out the millions he's put into marketing, and showed research from ACNielsen and Adams Wine Handbook supporting his price points.
He then detailed why Click is a good partner, explaining his approach to financing and commissions. For example, suppliers like Click are expected to give what's called "marketing spend" to distributors for promotions and discounts. These are usually billed so that distributors don't get the spend until after the wine has sold at retail. But Click now gives those discounts up front, which means distributors won't have to waste time on collections. "The energy that we spend in collecting that money," said Merinoff when he saw this slide. "I mean, it sucks the life out of the organization."
Click used his commission structure as a selling point, too. He explained that he pays his salespeople based on depletion--that's how much actually sells at retail--rather than on what they sell to distributors. That means that for salespeople and distributors alike, the goal is the same: retail sales. Their interests are aligned. "Well, that is a change, a nice change," Merinoff responded.
Interestingly, Click also called attention to his biggest mistake from the previous year, which seemed to engage the Charmer people more than almost anything because, again, he was discussing a situation from their point of view. Click had launched a brand that was a bit of a risk. It had a shrink-wrapped label so you couldn't see the liquid inside, had multiple SKUs under the single brand, and was priced relatively high, at $14.99. He thought it was radical; it didn't sell--a fact the Charmer guys, who had been among the first to raise questions, knew all too well. Now, as Click admitted that his product was a lemon, they all became attentive, leaning in and watching carefully. He outlined how he had reacted--he had lowered the price point and was rethinking the label. When he said he would either revamp it or kill it altogether, they shot approving looks at one another. We're a small, nimble company, Click told them, and we're not tied to brands or vineyards, so we can clean up our own messes rather than making it the distributor's problem.
Finally, Click got into the nitty-gritty of the distributor's numbers. Before the presentation, he'd asked them for financial information like average price per case (when clients refuse, he substitutes regional or national averages). He showed a side-by-side comparison of Click's numbers with the average Charmer numbers in areas such as revenue per case, gross profit, and revenue per truck. He then showed how much money the up-front marketing spend adds, since that reduces the distributor's cost of capital. At slide 42, Click summed it up, projecting how much in marketing spend and gross profit Click would add to Charmer's P&L--and how much Charmer would have to earn to increase its bottom line by that amount without Click Wine.
Heads were nodding. Once Click concluded, Charmer chairman Ray Herrmann weighed in: "I'm impressed you're talking about us rather than about yourself; we all make the mistake of blowing our own horns in these presentations. Everyone here and on the telephone is most impressed with what you've done here. My compliments."