How Michigan Wineries Are Expanding Sales

To comprehend Chateau Grand Traverse’s (CTG) reach beyond its home state of Michigan, you need only check out the winery’s Facebook page.

One recent post: ‘Spring Break: CGT Late Harvest Riesling and Ship of Fools spotted at Sharky’s On The Pier in Venice, Florida,” along with an image of a table placard perched against a backdrop of blue, sunny skies. Scrolling down the page, another post announces Ship of Fools by the glass at the newly opened Publican Quality Meats in Chicago.

For Chateau Grand Traverse, one of  Northern Michigan’s largest wineries with 100,000 cases produced each year, boosting out-of-state wholesale distribution is an important part of business.

‘I’d say the majority is still sold within the state of Michigan, in Indiana, and Ohio,” says Sean O’Keefe, vice president and specialty winemaker for CTG. ‘But we’re making an aggressive effort in New York, Miami, Washington D.C., and Chicago.”

O’Keefe says the winery exports ‘a modest 1,500 to 2,000 cases” out of state, with plans for increasing this amount in coming years. Chateau Grand Traverse also has on occasion distributed to destinations such as China, Australia, and Germany.

Working with one new out-of-state distributor,  Vino 50 Selections in Washington D.C.,  is proving fruitful for the winery.  ‘It already looks like our 2010 Ship of Fools will be poured by the glass at Graffiato, celebrity chef Mike Isabella’s D.C. restaurant,” O’Keefe says. ‘And our Traverse Bay Winery Cherry wine is being poured at several D.C. restaurants as a component of high-end cocktails.”

While few northern Michigan wineries work with out-of-state distributors to place their wines into shops and restaurants, the larger ones — Chateau Grand Traverse  and Leelanau Cellars  — are finding success by taking this route.

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Some industry insiders say it’s possible that more Michigan wineries may follow suit in coming years by trying to sell more wines out of state if they’re able to find a wholesale distribution model that works well for their operation.

‘The problem in Michigan is most wineries are small and sell almost all of their wines out of tasting rooms. When you try to go to distribution, it’s too expensive,” O’Keefe says. ‘You have to decide how you’re going to sell and then price accordingly.”

For example, Chateau Grand Traverse’s approach to out-of-state distribution is focused on quality rather than quantity, and O’Keefe is willing to do what it takes to ensure its wine stands out from the rest. ‘It’s not a matter of trying to sell as much as possible; it’s trying to get our more expensive or prestigious wines at nice restaurants,” O’Keefe says. “You have to put your best foot forward.  It makes more sense financially to have Chateau Grand Traverse’s more expensive labels featured on wine lists at upscale restaurants instead of competing with the multitude of low-priced wines at larger retail establishments.  This means pushing certain wines. An example of a premium Chateau Grand Traverse vintage that’s used this approach is 2008 Gamay Noir ‘Reserve.'”

According to General Manager Tony Lentych, Leelanau Cellars also is trying to increase its out-of-state distribution, but unlike Chateau Grand Traverse’s approach, Leelanau Cellars’ out-of-state distribution is concentrated in neighboring states.   “It is a significant part of our growth,” says Lentych, adding that the distributor relationships are different beyond Michigan’s borders. ‘It’s nice to go out-of-state and meet with a distributor. In Michigan, for us, because we’re older and have historical relationships, we have multiple distributors, and we have to work with each of those distributors when we distribute in Michigan. But when we opened up Indiana, Ohio and Illinois, we had just one distributor for each state.”

Specifically, the winery is focused on larger retail stores in these areas. “It’s interesting, we do have a couple of products that have appeal beyond the Midwest.  We have a seasonal spiced wine called Witches’ Brew, and it’s taken off,” he says of the Halloween-themed bottle first sold 15 years ago.

Getting the word out

The 35-year-old Leelanau Cellars has had a dedicated sales manager the past seven years which has helped build out-of-state distribution.  ‘When you develop a market, you do a lot of educating of your distributor sales force. You go with them to targeted businesses. Usually there’s a couple likely suspects in each state,” he says of finding new markets.

“Whether a winery chooses to push its wine to restaurants or retailers comes down to what makes the most sense financially.  Each winery has to decide if it’s worth it — there are a lot of restaurants and a lot of wine out there.  Is it worth your time to get a couple of pours at that restaurant?” he continues. adding that for some wineries, going with a retailer that can provide a large display may be better for the bottom line than counting on restaurant sales.

A Chicago distributor’s perspective

Lou DeFalco, wine director at Stoller Wholesale in Franklin Park, Ill.,  has a “wait and see” opinion of Michigan wines.  (Stoller represents over 1,400 labels from across the world and describes itself as “the fastest growing wines and spirits distributor in Illinois.”)

‘I think people who visit Michigan wineries will come back home and want to buy Michigan wine,” DeFalco says.   Yet the 30-plus-year veteran of the wine industry doesn’t see a huge demand for distributors like Stoller Wholesale to push Michigan wines beyond its borders.

‘For an Illinois wholesaler like us to take on a wine from surrounding states – it doesn’t work for now,” he says. ‘There’s not enough business to bring inventory.  There’s so much wine, so much competition.  With a few exceptions —  like Door County regional wines because they do a good job with their brand — it’s just one more brand you have to worry about.”

Still, DeFalco acknowledges that out-of-state distribution can work for some wineries, if they’re following models similar to those of Leelanau Cellars and Chateau Grand Traverse. While Stoller Wholesale isn’t serving as a wholesaler for either of these wineries, DeFalco says appreciates how their respective marketing approaches can work.

He suggests wineries ‘find a retailer — a big retailer — who is interested in your wine.  “A big store that has some muscle can say to a wholesaler, ‘Why don’t you bring this wine in?’  I’d expect that winery to come here, meet the salespeople, work the market. That’s how you build brand. It’s just not enough to say there are a lot of customers who want to have this wine.”

Carving out a niche

In promoting his wines to distributors and potential out-of-state customers, O’Keefe tells a story of his home state.  ‘I have to sell Michigan as much as I sell the wine,” he says, adding that he meets many people, including sommeliers, who feel a connection to Michigan. ‘There are a lot of people who associate our state with vacations, but Michigan has also been in tough times. People who have left the state, they have a fondness for Michigan. And that’s opened doors for us.”

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