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Client FAQs – Third in a Series

I’m getting back to my blog after a long absence and that is true of the FAQ series as well. So, let’s get started.

Whether someone schedules one appointment, or a series of appointments with me I ask them to email me a list of issues they hope to cover. For them, it helps to organize their thoughts and focus their time. For me, it allows a preview of their thinking and goals. Often, it highlights early misconceptions that I can address. I receive everything from a paragraph of bullet point questions to a five-page background and proposed business plan. These are more of the most common questions from clients, presented here verbatim and taken from some of those emails. This first one often arises in different forms from others.

Would it be an advantage or a disadvantage for us (two partners in the import business under one Federal Basic Permit) to live in different states?

In this case, there are no real advantages or disadvantages. There are only various ways in which you choose to build your business, based on complying with laws, your personal preferences, and your financial and career goals. That there are two of you means two people to share the liabilities and profits and two people to share responsibilities. You can decide that one takes care of compliance, logistics, forecasting and communicating with distributors and the other can be working accounts in the state and traveling the country. Or you can split up regions of the country and both cover sales, working with appointed distributors in each state.

The Federal Basic Permit is tied to one fixed address. If you move, the Permit must be amended with TTB, but the business cannot occupy two different addresses in two different states.

In some cases, the state in which you are located may be an advantage. If one of you is in Texas and the other in California, e.g., choosing California as your import base allows the opportunity for DtC online sales and, with the right CA ABC “types” allows significant options overall in a state where the economy relies on the wine business.

Is the market oversaturated with importers? In other words, are there still a fair number of good wineries out there looking to partner with new importers?

There are always wineries looking for importers, far greater in number than importers looking for wineries. Apart from one brand, which is a special circumstance, I have not imported anything for ten years and yet I receive at least twenty emails a week from foreign producers looking for US representation. These are not the overlooked producers, the ones that were not good enough to be considered for export. They have awards, pedigrees, history, and exceptional vineyard management. There just happen to be so many appellations that have expanded or started a brand, and other recently “discovered” regions that are ready to export to the US.

The issue for a new importer is to identify the country or region they want to represent. Whether it is old world or new, there will always be available brands.

Wine knowledge.  How much is needed/expected?  Is it necessary to have certifications?

I began my business with rudimentary wine knowledge. I had never been in the wine industry. In fact, the only time I had even worked around alcohol was when I was a bartender in Spain, and I didn’t even drink! I took a basic, but thorough wine course before I started my importing company which gave me a broader understanding of varieties and regions. From there, I tasted through wines to start to identify flavors. I was fortunate to have someone in Australia who could do some sourcing for me, but this still did not guarantee that they would suit American palates, especially since I started at the very early stages of Australian export to the US. It was only with time that I began to understand not only what was good wine, but what could work in the US. This means finding that sweet spot of quality, flavor profile and price. There is plenty of competition and new brands must fight that much harder to be included in the lineup, but it doesn’t mean your new, unknown, untested brands can’t be the breakout stars.

Knowledge and experience are always good attributes, in all areas, but can sometimes mean less flexibility. Although this is an industry founded on rigid regulation, it also thrives on innovation, out of the box thinking and being open to doing things differently from other industries and other times. Although wine knowledge or certification can be a distinct advantage, it can fail without a good business plan.

One last thing I would add: make sure you taste wines with professionals before adding them to your portfolio. Your friends may love the wine, but will they pay $60 a bottle for it? It’s a buyer opinion that matters, because they’re the ones that know whether they have the prized shelf space for this wine and how it compares to others of the same category, or if it fits a restaurant wine list and will elevate the food.

Is it up to me to prepare the labels or is that on the winery?

Unless you are asking the producer for a completely different label that will only be used in the US, or have asked them to provide wine for your private label, the cost of label design, printing and applying to bottles is the expense of the producer.

US compliant changes will still have to be incorporated for approval by TTB, and some graphics and wording that may be prohibited by TTB. Anything objectionable in the descriptive text, which TTB calls the “puffery”, must be removed. There are ways to minimize the costs, especially on the first order when bottles are already labeled, by having the brand owner prepare additional, inexpensive labels with the mandatory information. It’s all a matter of aesthetics, budget and their inclination to provide entirely new, professionally prepared labels.

On the other hand, submitting label applications for approval (COLA) is entirely up to you. It’s not something they can do. Only the appointed, licensed importer and their authorized compliance consultants can submit label applications through COLAs Online.

If the vineyard is organic and biodynamic can I say that on the label?

Organic terms are all subject to strict guidelines and must include paperwork from a certifying body to include with the application. If the producer has all of that, then yes. There is no current regulation regarding biodynamic, so it’s okay to include that without additional documentation.

What about the EU leaf? Can I leave that on if I have them remove the organic statement?

No, this is specifically associated with EU organic certification and cannot remain on the label if all other organic compliance is absent.

Once I set up an import company in one state can I warehouse in another?

Absolutely. As long as you comply with the laws of that state. My import business moved from Georgia to Colorado to California. In all that time (except for a brief period early in my career when I didn’t know any better) I have warehoused in Northern California. In fact, if your objective is to achieve distribution in more than one state it is preferable to warehouse on either coast, specifically the area around the port in New Jersey and Northern California. Distributors across the country are all familiar with picking up multiple supplier goods from these warehouses and truckers will be able to consolidate loads.

Are we out of our minds?

Yes, true question! And it’s not the only time I’ve been asked, but mostly in the form of a reality check. Is what I’m thinking realistic? Does this sound logical? Have I missed the boat on this country, idea, model?

Although many potential or new importers come to me with what they consider revolutionary concepts that have never been thought of before (they usually have), each one also comes with a unique background, experience, perspective and personality. This is really a recurring theme with me, but I think it’s also the most important advice I could give: you can make a success of this business if you are prepared, realistic and persevere.

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