Keep It Lean: The Smarter Way to Manage Wine & Spirits Inventory

For decades, wine and spirits inventory at wholesalers followed a model of large first orders. Makers shipped big quantities to distributors, who stocked them in massive warehouses and waited for orders to roll in. Today, that model is mostly gone—unless you’re part of the top ~20% of Makers doing tens of millions in annual sales under contract. Few Makers reach that level, and contracts of that size are rare.

So why aren’t large inventory purchases common any more?

What’s Changed

Here are a few of the major reasons:

1. The Cost of Money - Wholesalers typically carry inventory financed via lines of credit or similar instruments, and are paid back when accounts pay. Interest rates now are much higher than a few years ago, so carrying inventory (i.e. borrowing money to finance it) is more expensive.
   
   
2. Excess Inventory Already in the System - There is a large glut of wine and spirits sitting in warehouses across the country. Distributors and wholesalers are overloaded with product; turnover is slower. Media outlets have documented this heavily. For example, WineBusiness reports that many wineries are holding two to five years of inventory on average. Another article, US Distributors Awash with Wine, describes how inventory piles up and the negative financial consequences of holding so much stock
   
   
3. Risk & Inefficiency of Moving Inventory Without Demand - Makers often ship product to new distributors hoping for good sales, but frequently much of that product returns if it doesn’t sell. Shipping costs, handling, storage—all add up. Moreover, many wholesalers enforce Floor Stock Adjustments (FSA): if the product doesn’t sell, the Maker (supplier) may pay for returns or write-downs.

Why Large Inventory Orders Are Rare Now

Putting together the above, here’s why asking for or expecting large inventory orders from any distributor is generally a bad idea:

• Unless demand is clear and consistent, moving large shipments risks tying up capital and increasing carrying costs.
• Even if the cost per unit shipped is lower in bulk, the risk of aging inventory, obsolescence, or needing markdowns can offset those savings.
• Starting with smaller orders allows for real feedback and demand validation. Once sales are proven, scaling makes sense.

LibDib’s Approach: Demand-Driven Inventory

At LibDib, we do things differently:

• For Gold members only, our purchases are strictly on demand. If 40 cases sell in a month, we buy 40 cases—not more.
  
  
• This approach helps LibDib keep mark-ups low, avoid over-stocked warehouses, avoid dated inventory, and reduce waste and cost for both Makers and LibDib/partner wholesalers.
  
  
• Excess inventory is like an albatross around a distributor’s neck—tying up capital, space, and creating risk.
  
  

• The Silicon Valley Bank “State of the U.S. Wine Industry Report 2025 shows working capital and interest costs are under pressure, in part because inventory holding has increased significantly for many producers.

What This Means for Makers & Distributors

• Makers should aim to align production and shipping with actual demand, not forecasts alone.
  
  
• Distributors will increasingly favor makers who can supply reliably but without burdening the system with slow-moving stock.
  
  

Bottom line: The old model of large inventory purchases is being replaced by leaner, demand-driven ordering. This reduces risk for everyone involved. LibDib’s model is built for this new reality.