Agents play an integral, but often not fully understood role in British Columbia’s liquor supply chain.
“In BC, it is very different from other provinces in the country. Here the agent is the most important part of the mix in the whole equation,” says Jim Williams, President and Managing Partner at Appellation Wine Marketing.
The Role of Agents in British Columbia
There are currently 460 agents in the province. “We order from the supplier wherever they are located,” Williams explains. “We coordinate the forwarding and have the product brought into the BC market. When it arrives, we warehouse it, and then it is shipped out to a customer, whether that be on-premise, private retail, or government.”
Agents also provide support in sales and marketing as well as compliance with labelling guidelines. Ted Latimer, Executive Director of Import Vintners and Spirits Association, adds “Agents do everything when it comes to import wines. In some cases, this includes strip labelling in French and English, so the wine complies with Canadian labelling guidelines. We also do programming with the liquor board, including promotions, LTOs, in-store tastings, and helping design ads on radio and Instagram.”
Latimer says agents make the smallest margin in the supply chain. Most agents are paying for product up front and long before it is purchased by the customer. Agents also cover the cost of promotions. “If we put wine on a $2 LTO,” says Latimer, “we’re paying that $2 on every bottle that is ordered. We have to budget it as a loss leader.”
How Agents Choose What Products to Sell
When it comes to choosing what products to bring in, Latimer likes to think that part of an agent’s job is to be a detective.
When Latimer ran his agency, he would tell his sales staff to ask a sommelier indirectly what they were looking for. For example, ‘What is your top seller on your list and what changing drinking trends are you noticing?’ Latimer would also get information from his sales force and understand the marketplace by going to international trade fairs like ProWein and seeing the trends in Paris, London, and New York.
The Challenges Agents and Buyers are Facing Today
Supply chain challenges that were exacerbated and accelerated by the pandemic have made the job of agents more challenging.
“The international shipping of goods was very challenged throughout COVID,” says Williams. “There are so many factors that impact the supply chain and getting product from a winery overseas to a customer’s table in BC. Some of the biggest challenges are related to availability of containers, availability of trucks, and availability of staff.”
Williams and Latimer say we’re still feeling the impact of all those things, citing shipping times as an example. The same order that used to take three months to ship from Europe to Canada can now take six months or more.
“Delivery times are less consistent and more difficult to plan,” says Williams. “When you add in changes in consumer buying patterns, it is harder to manage. When there are variables and surprises, your costs go up, that you don’t plan for, [so] it becomes tough.”
“The days of having just-in-time inventory are over.”
The days of having just-in-time inventory are over. Agents end up having to carry more inventory, and as a result more costs.
Unlike Alberta, agents in BC can’t react as quickly to changing costs. “You can change your price in Alberta every week and react to exchange rates and increased freight costs,” says Latimer. “But in BC, we’re 60-90 days out to price changes.”
Some of this cost increase has been passed onto the buyer. Williams notes the average shelf price in almost every category has gone up over the last 24 months, but prices are starting to level out.
There have also been key products in and out of stock. “The best example would be a category like champagne,” says Williams. “There is unbelievable worldwide demand for it combined with a shortage of supply and supply chain issues.”
How Buyers Can Succeed in the Changing Market
Buyers need to be adaptable and proactive to succeed going forward.
“To me, the top private retail and on-premise buyers have been very proactive about adapting to what’s happening in the market,” says Williams. “Changing things up to be more adaptable to the current environment is key to the future.”
When it comes to champagne, for instance, Williams says the top operators and buyers have sourced new products to fill in the mix. “They’re out there, you just have to put in some effort to find them.”
Williams acknowledges that being able to move and adapt takes resources, but agents can help. “The best buyers and operators are working closely with their top agents,” says Williams. “They get help from their agents to make those decisions and help them find other solutions.”
“A buyer is relying on the agent to maintain a consistent supply.”
Clearly communicating your needs and expectations with your agents is also important. “A buyer is relying on the agent to maintain a consistent supply of products,” notes Williams. “The agent is carrying the brunt of that. If a restaurant puts a wine on their wine list, they’re expecting the agent to keep that wine in supply.”
Agents are working hard to do that, but Williams also encourages buyers to be flexible. “A lot of operators are used to putting something on their wine list or shelf that is going to be available year-round, but savvy buyers are now adapting more to what’s available in the market today.”
On the flip side, Latimer encourages agents to do their research and due diligence beforehand—,understand if a liquor store specializes in something or the type of community they’re located in. He also notes the different ways people prefer to communicate now. What used to be an in-person or phone conversation between the buyer and agent to close a deal may now take place over Facebook messenger or text.
Agents are the only ones who touch the supplier, liquor board, retailer, and restaurant and it’s clear their role is important. Latimer wonders how we can next get consumers understanding the role of agents and how the liquor they want ends up on their table.