Chances are high you have Inventory Bloat Disease
Chances are high you have Inventory Bloat Disease.
Q: Who is having trouble “controlling” their inventory balance?
A: Everyone of a certain size.
For nearly every restaurant, retailer or importer/distributor that isn’t small, inventory will always be the noisy player within the tension trio of buying+inventory+sales. The pattern of the sales, the inventory you carry and the need to buy more are in a state of constant tension.
Distressed inventory in the wine and spirits business is a symptom and not a cause.
Below are the symptoms of Inventory Bloat Disease. If you are failing with two of these, I don’t need to look at your inventory, sales, or committed allocations that you haven’t taken this year – you have IBD big time.
I have simplified as much as possible below, but as always, nuances abound.
If you want a quick refresher on some important info for Importer/Distributors – read a previous post: The Closeout Recipe.
Belief System
Do you really believe in what you are buying, or is it just a commodified category? Polaner had to close out the first release in the market of López de Heredia. THEY CLOSED IT OUT. Let that sink in for a moment. Chapeau to them, they believed it was top-tier and the market would catch up so they brought it back in and didn’t think twice. Now it is the banner bearer of the Rioja appellation.
If you buy with belief, it will strongly impact how you sell. And also, you can always get lucky. Something can fly out and it has little to do with your buying genius.
Belief matters just as much as dollars, likely more.
The top importer/distributors/restaurants/retailers in NYC can articulate what they believe in and this translates to inventory movement. They don’t flip out after some random turn time – they believe. And in concert, they also know when to make moves when something isn’t right.
Launching
How you launch (sell) a new wine or spirit within the company and into the market is so vital it can literally hide a producer. A great producer with lots of promise can just sit there in the dark, unlit corner of your inventory.
Either you have a plan to launch or you don’t. “Let’s just try” is only good enough 1 out of every 10 launches, and is the long-term tactic of the fool.
How you launch can kill the release of a producer or elevate them immediately.
Timing
There are seasonal buys just like there are seasonal restaurants. If you can think about when you are bringing something in and acknowledge at the outset that it is seasonal you can avoid some ghastly errors.
Are you bringing in a bunch of Rosé on September 15th? It better be hot as hades and this NYC Market must be showing more commitment than I currently observe with Rosé.
Timing matters. Even when you have to jump to grab a producer…
The Market Decides
This may seem obvious, but you must pay attention to the Market. That portfolio of “small, natural growers” will sound the same as the portfolio that everyone else is offering. That group of tiny producers from Swaartland that you represent that is ‘exceptional’ may be dead on arrival.
Ultimately, the market will decide if you have the goods. And you must be out there in the game – not just an #InstagramPeepingTom. Really out there. Faking market knowledge is obvious to the real observers.
Knowing the market takes real work, but it will save you from the inventory blues. You have to be a savvy observer.
“ Polaner closed out the first release in the market of López de Heredia. THEY CLOSED IT OUT. Let that sink in for a moment.
Internal distrust
If there is internal distrust (normally within upper management) about the quality of product bought or the direction of a portfolio or the list or the section in a store, you will have problems selling internally to the sales staff and by extension externally to the market. Especially with new products.
Deal with it. Not articulating what the company believes in and talking badly of your buying team is a sure-fire way to create a non-trusting environment and create dead inventory.
There are always at least two markets: the internal one of the Company and the external of the Market. Trust is built by actions and not words.
Pricing Purgatory
While pricing will never solely decide the fate of any product (and actually is the first question of the narrow-minded), you MUST be aware of the perception of quality and pricing of the category you are selling within.
If you price off of a formula, you could kill a wine or spirit that has real potential. Even further, it could take multiple releases or vintages to get it launched again properly if you don’t know the reason you have chosen pricing.
EX: I was once asked why a Cru Beaujolais was not selling as fast as it should be. I then communicated what the wholesale cost of the current release of Lapierre Morgon was and the person asking didn’t know. Lapierre was 4 dollars less per bottle wholesale than the Beaujolais we were selling. This is a top producer at a fair price with a serious following.
Pricing doesn’t ultimately decide the fate of a producer, but you have to know the landscape to position a wine or spirit or you will watch it sit there and have to change directions to get it going.