Dealing with Demand, Role Reversal

I feel like we handle most customer service aspects at K&L quite well, mainly because everyone who works here truly cares for both wine and people. It's not just another nine-to-five job for us. I'm also very pleased at how the blog has helped explain and clarify many of the industry's current trends and tumbles to those who shop here. I've always found that managing expectations is the best way to prevent disappointment. Therefore, if we know that price increases are coming or that a particular product is going out of commission, it's best to present these issues quickly and clearly to give customers advance notice.

One aspect of retail customer service I'm still not sure how to deal with, however, is the allocation of limited edition spirits to our loyal consumer base. Simply put: we've got more customers than bottles for many of the newest single malt and American whiskey releases. We've tried a number of different ideas for how best to distribute these items fairly, but they all end with a  number of unhappy people who inevitably miss out. Not having enough product is frustrating for us as retailers because we're used to brands catering to us, not the other way around. I hear stories all the time about spirits buyers or bar managers freaking out on their sales reps because they can't get more Four Roses 2013 Single Barrel or an extra case of Black Maple Hill. In this scenario, the roles are reversed, because the brand doesn't need you when their special releases come around, but rather we need them. Sometimes when the shoe is on the other foot it can lead to a serious level of discomfort.

So what's the best way to deal with the current state of whiskey demand? If anyone is aware of the prevalent frustration among consumers, it's me. I get hundreds of emails every day, talk to countless people on the sales floor, and read the blogosphere as much as I possibly can. I'm also ground zero for customer complaints when a certain bottle sells out just a little too quickly. No matter what method we choose there will always be a percentage of customers inconvenienced by the procedure, so we try to simply go with the most utilitarian option. Demand outstripping supply is nothing new in the booze industry, however. Many budding whiskey fans may feel like their current situation is unique and unfair, but it's been happening for decades in the wine trade. With Bordeaux, the job of handling allocations is actually outsourced.

For as long as K&L has been in the wine business we've been dealing with the Bordelais and their negotiants who act as middlemen on their behalf. Like most limited edition whiskey distribution in America, your allocation of limited wine is completely dependent upon how much business you do with the Chateau. It can take years to get into the Bordeaux business, mainly because you have to pay your dues and build up your reputation as a player. Everyone in this game has money, so it's not merely based on your ability to pay. It's based on your history and who you know. Unlike whiskey, however, there are good vintages and bad vintages with wine, making one's loyalty to the supplier quite significant. In order to maintain your access you're expected to buy both in good vintages and in bad. If you're just some cherry picker who drops by to grab a few 2009 first growths, but stays away during 2011 when times get tough, what good are you for their business? No one needs help selling the easy stuff.

The same situation could be said for the retailer/customer relationship. When we get bottles like Pappy Van Winkle or Port Ellen 10th Edition, it's not the customer who's doing us the favor by purchasing them. It's us doing the customer the favor by allowing them to purchase. This is a complete role reversal for most consumers, who are usually in the driver's seat with the option to take their business elsewhere. Sometimes this can make people very upset, simply because they're not used to being in this situation. They come down to give us their hard-earned money and we tell them they can't have the bottle? "Is my money not as good as the next guy's?" Customers are used to feeling special, but in this situation they're simply one of many customers with the same need.

While there are no good vintages and bad vintages for whiskey, there are gluts and shortages. Because whiskey has to be made so far in advance, producers must project their level of production based on the estimated future demand. If they make too much then prices fall and they lose money. If they make too little, they miss out on potential sales, and they lose money. Ultimately, despite the safety from vintage variation, there are still good times and bad times for whiskey producers and distributors. Therefore, before they decide which retailers or restaurants to release their limited edition products to, they want to know that you'll be a solid partner for their other offerings. How much Eagle Rare, Buffalo Trace, and Rain vodka did you sell? We know you want the Pappy and the Sazerac, but how loyal have you been to the brand as a whole?

While we don't necessarily operate in the same fashion (yet), the same situation could be fairly applied to retail purchasing at K&L. Do you only stop by the store when we've got something hot, or do you shop here regularly? What type of profile history do you have? How long have you been shopping with us? These are all questions that are asked of us when we set out to secure limited allocations of hard-to-find products. I've always avoided taking this approach with the spirits department, mainly because I want to make newcomers feel welcome, rather than appear like some stodgy boy's club. We currently employ a raffle system that treats all customers fairly regardless of how often they shop here. But is that really the fairest way? What about all the guys who shop here practically every day?

It's a dilemma, no doubt, but it's not one we're unfamiliar with. In the late 1980s we could buy as much Caymus Cabernet as we wanted. Then, all of a sudden, the winery's popularity exploded and K&L was put on allocation. Total role reversal. It started with Caymus begging us to sell their wine, but ended with us begging Caymus for more to sell. That made our domestic wine buyers at the time very upset, but that's to be expected when you're used to having your ego stroked and your behind kissed. Retailer buyers like myself are used to being coddled and cared for. When they actually have to wait in line, do some work, or pay some dues it can make them very unhappy.

-David Driscoll