Wine distributors snubbed by big players find a market
But in Washington state, his sales remained sluggish.
The problem, he discovered, was his local distributor, a large company focused on selling major national brands that boost its bottom line.
Distributors, or wholesalers, buy wine from wineries and sell them to retailers, making money on each bottle sold. Many large distributors are under pressure to sell major brands that bring in more money, and their salespeople don't have much time to sell smaller-label wines they know little about.
"I couldn't get my voice heard with a wholesaler," said Click, a fine-wine importer since 1987. "It became apparent that we'd have to go back to a smaller distributor or start our own."
With no distributing experience, Click teamed up with Peter Knox and Jim Florio — two veterans with more than 20 years' experience in distribution, sales and restaurant work — to open Click Wholesale Distributing in May 2001.
The Seattle business joins a growing number of small and midsized distributors that have emerged in Washington in the past few years. The number of wine wholesalers hit a high of 42 in 2001 and has since dropped to 33, but retailers say more are popping up every day. Today, the number is 65 percent higher than it was in 1999.
But many new distributors are "station-wagon" wholesalers who have snapped up wine neglected in mergers between large distributors. Consolidation — intended to increase marketing muscle and operational efficiency — has pushed out small-production wineries in favor of big-name national brands that ship tens of thousands of cases and increase a distributor's bottom line.
Many small distributors get into the business with little wine-industry experience and then struggle to survive. Some have introduced other product lines, such as imported food; lowered their prices; or brought in cheaper wines. Some have gone out of business entirely.
"I keep seeing people starting companies who are seduced by the glamour of the wine industry," said Dieter Klippstein, owner of Triage Wines, a Seattle-based wholesaler with nine employees. "There will inevitably be a shakeout of small distributors."
Klippstein's wholesale company, started three years ago with $40,000 in inheritance money, has thrived because he's focused on high-quality wines priced from $12 to $15. Almost 10 years of retail and distributor experience didn't hurt, either.
His annual revenue, supplemented with a handful of South American and European wines he imports, is just under $3 million.
"Over the last decade, there's been a proliferation of small brokers serving the needs of the market," said J. Smoke Wallin, chairman of the Wine and Spirits Wholesalers of America. "Part of it is the response to consolidation, but as the larger companies have consolidated, they have created specialty companies that focus on particular brands."
Behind the growth of smaller wholesalers is the way beer and wine are priced, distributed and sold in Washington. The state's three-tiered system of distributors, retailers and producers — set up after Prohibition — is designed to help the state regulate the sale of alcohol and keep large businesses from having a monopoly. After wine is made, it's sold either by the winery directly to retailers or to a distributor.
Unlike some states, Washington distributors have to post prices publicly, can change prices no more than once a month and can't offer volume discounts or sell alcohol on credit. Those rules have allowed new, smaller distributors, which don't have the cash or clout to offer discounts or credit, to compete against larger wholesalers.
Although there are more distributors, it doesn't necessarily mean more wines make it onto store shelves. The number of wineries operating around the country is sharply up — from 579 in 1975 to 3,182 by 2002, according to the federal Alcohol and Tobacco Tax and Trade Bureau. But the number of local retailers selling wine has remained about the same.
Michael Teer, owner of Pike and Western Wine Shop in Seattle since 1978, sees a few distributors and winery representatives a day. He won't see them without appointments and has limited the number of wines they can bring to six each time. Teer has decided not to meet any new wholesalers.
"We're running into a wall of how many people we can fit in," Teer said. "It's now at the point where it's interfering with my time. I don't want customers to walk in and see a lot of salespeople standing around, see my staff busy with them and feel left out."
Click Wholesale is one of the successful wholesalers — transforming itself from an upstart to a major player by picking up premium beers and wines ignored by the large distributors and hiring sales staff laid off after wholesalers merged. Peter Click says he expects the company's sales to grow about 50 percent next year.
Click and his partners are continuing to hunt for new products, scouting the Northwest for new or overlooked wineries they can represent and build into powerhouses.
"We've started several suppliers together, and we've been asking ourselves how we can all grow together," Florio said. "We want to become more of an option for brands that are unhappy."
Kristina Shevory: 206-464-2039 or kshevory@seattletimes.com