U.S. Market Wine and Spirits Industry Glossary
by Steve Raye
A big part of finding success in the American market is understanding the lingo used in the U.S. trade, meaning importers, wholesalers, retailers, on-premise, brokers, et al. Luckily, our good friend Steve Raye of Bevology, Inc. is here to help us out.
Steve literally wrote the book “How to Get U.S. Market Ready.” We’ve read this gem cover to cover there’s lots of good stuff inside. However, one of our favorite pieces of content is Steve’s “U.S. Market Wine and Spirits Industry Glossary.” It’s a glossary of every word and phrase you need to know if you are working in this industry. It’s like a dictionary for the U.S. “bev alc” market, as the industry is referred to in America.
LibDib reached out to Steve to see if we could share this invaluable information with you. He not only obliged, but agreed to do a guest webinar for us as well (Taking place Thursday, June 20, 2019. Register here).
Check out his glossary below. Attend his webinar. Then go into your next account or distributor pitch like a BOSS.
Steve Raye’s “U.S. Market Wine and Spirits Industry Glossary”
ABV: Alcohol by Volume
ACV: All commodity volume. The dollar value of stores in which a product has scanned in a geography divided by the dollar value of all the stores in that geography. Used as a measure of distribution in markets dominated by retail stores that scan UPC codes. So, for the U.S. wine and spirits industry, this does not apply to states such as NY and does not include on-premise
Actual case: A count of cases based on one carton or reshipper, which may have just 6 or 12, 750 ml bottles, vs. an 9L equivalent case.
Agency Brand: Traditional import model in which the supplier sells the brand to an importer, who in turn takes full responsibility for logistics, storage, registration, marketing, promotion, PR, sales et al
Bailment: Goods are shipped to a designated warehouse in a given state, but title and risk of loss are held by the importer or supplier not the state in which the warehouse resides. They don’t count as a depletion or sale until the product moves out of bailment and into retail distribution
Basic Permit: Federal (National) license issued by TTB (Tax and Trade Bureau to import alcoholic beverages)
BDI: Brand Development Index relates the percent of a brand’s sales in a market to the percent of total market. The brand development index measures the relative sales strength of a brand within a specific market. BDI= (% of a Brand' s total sales in a particular market)/(% of total population in a particular market ) x 100
Call: On-premise, when a brand is requested by consumers rather than the category, e.g., Patron rather than Tequila
CBMTRA/CBMA: Craft Beverage Modernization and Tax Reform Act. A significant tax credit program the first such decrease Federal wine and spirit taxes since the Civil War
CDI: Category Development Index is an indicator of how well a product or service category performs in a given market segment as compared to its performance in the total market as a whole. To determine CDI, a category’s percentage sale in a specific market is divided by the total population percentage of that market and then multiplied by 100
Cellar Door Sales: Direct to consumer sales by a domestic winery or distillery either at the production site itself or via e-commerce through brand/supplier dedicated clubs, newsletters or allocated inventory schemes
COLA: Certificate of Label Approval. Formal authorization from the TTB to commercially sell a specific sku
COLA Waiver: Granted by the TTB for shipping samples into the U.S. that have not received a formal COLA
Control State: Basically, a monopoly structure where the state functions as the wholesaler (Maine) and/or retailer (Pennsylvania and New Hampshire, Ohio for spirits only)
COGS: Cost of goods sold
CPG: Consumer packaged goods. Generally recognized as referring to food and related products sold in grocery stores
DA: Depletion Allowance
Depletion: Product sold from the distributor to a retail or on-premise customer
Distributor: Synonymous with wholesaler but fundamentally different from an importer. Distributor buys from an importer and resells to retail/off-premise in a given state. A distributor may also import, and an importer may also distribute, but they would operate the two entities as separate companies
DTC: Direct to consumer. Sales directly from a domestic winery to a consumer that bypasses the Three-Tier System. Currently not available to export brands
F/D/M: Food, Drug, Mass Merchant. Includes supermarkets/grocery, drug stores that sell wine and spirits e.g. Supermarkets such as Publix, drug stores such as Walgreens, and Mass Merchants including Target, Wal-Mart, Costco
FDA: A federal regulatory agency. Every winery and distillery has to be registered with the FDA and have an FDA number. It's required information for the Prior Notice documentation needed to accompany sample shipments
FET: Federal Excise Tax
FOB: Technically Free on Board or Freight on Board. With imported products it describes the price of a product once it is over the rail on the international transport ship. Some/many distributors will call the price they buy the product from the importer for (which includes FET) as FOB as well
Franchise State: Generally, describes a state where, once a wholesaler relationship is established, whether by a signed contract, one-time delivery of products or a series of sales to a wholesaler, a manufacturer or importer has limited ability to terminate the relationships. While there are situations where a wholesaler can be terminated, termed a good cause, often these are extremely narrowly defined. The net result is that once a distribution relationship is set up, the supplier is effectively locked-in
Frontline Price: The undiscounted price offered by a wholesaler to a retailer
FSA: Floor stock adjustment. Discount applied to move aging inventory out of a retail store
HHI: Household Income, used in defining demographic groups
Interstate: Refers to activity across state lines
Intrastate: Refers to activity within a given state
IP: Intellectual property
KPI: Key Performance Indicator, primary metric used to track performance against objectives
Landed Cost: The total paid by the importer for receipt of goods at a destination warehouse, and includes the importer paying the excise tax
Laid-In Cost: The price charged to the distributor for receipt of goods from an importer. It includes interstate transfer costs, warehouse costs, state taxes.
LDA: Legal Drinking Age (in the U.S. it is 21)
Lockup: The master brand image for the product which usually incorporates the brand name, key graphic image, colors and logo all together. It is a visual representation and presentation of The Brand
Margin vs. Markup: Markup is the percentage difference between the actual cost and the selling price, while margin is the percentage difference between the selling price and the profit
MIP: Manager Incentive Program
MOU: Memorandum of Understanding. A non-binding agreement as differentiated from a contract
MSRP/SRP: Manufacturer’s Suggested Retail Price. Usually rounded to end in $XX.49, $XX.99
OND: October, November, December, aka Q4, 4Q
OOH: Out of home advertising which includes things like billboards, transit, digital signage and the like
PA: Purchase Allowance
Package Store: Retail store that primarily sells wines and/or spirits
Price posting: States require distributors post or submit prices to the state by a fixed deadline to be authorized to sell in that market the month following the posting due date. Examples include New York and Connecticut
Private Label vs. Control Label: Private-label is a store-owned brand name sold in a given store or chain. Control label is a brand name owned by the producer and sold exclusively to a given retailer or in a given geography
Proof: Used to define alcohol content. Equal to 2X the ABV. Reference is to process of mixing alcohol and gunpowder. If it explodes, it’s proof the alcohol is above a minimum level
Proof Gallon: Used for spirits only, not wine. A gallon of liquid at 60° F, which contains 50 percent by volume of ethyl alcohol having a specific gravity of 0.7939.
Reshipper: The cardboard outer carton for 6 or 12 pack cases
RIP: Retailer Incentive Program (commonly used in New Jersey)
ROI: Return on Investment
Service Importer: Company that provides a limited set of services to an export producer. Commonly includes importation, logistics, freight consolidation, customs clearance and transport to storage warehouse. Service importers may have distribution licenses however typically do not have sales personnel or trucks, but can subcontract those services
S/G/A: Selling, general and administrative expenses
Shipment: Product sold from supplier to Importer
SPA: Special Purchase Allowance
Specialty Store or Specialty Retailer: Retail store that primarily sells wine and spirits.
Wine Gallon: 231 cubic inches (4 US liquid quarts or 8 US liquid pints) or about 3.785 L
Work-With: When a representative of a supplier rides with a distributor salesperson on their daily route.
WSWA: Wine and Spirits Wholesalers of America