Sutter Home Wines is one of the largest wineries, independent family-run businesses in the United States. The winery is located is in St. Helena in California and belongs to the affluent family Trinchero (Sutter Home, 2016). The United States is among the primary consumers of wine according to Forbes’ statistics, as shown in figure 1 below. Trinchero Family Estate also sells other kinds of wines under more than twenty different labels. Sutter Home is a famous estate that has influenced the creation of the White Zinfandel located in California (Sutter Home, 2016). The history of the winery dates back to late 1874 when John Thomann established a small winery in St. Helena. After John’s death, the winery was sold to a family of Swiss origin and was named the Estate Sutter Home (Sutter Home, 2016). Sutter Home Wines continue to be a famous brand for the people of Irish origin because it offers quality wine at reduced costs. Some of the products produced by Sutter Home Wines include Chardonnay, Chenin Blanc, and Zinfandel. Chardonnay is one of the most famous wines in the United States as shown in figure 2 below (Thach, 2015). This paper will focus on the wholesale distribution and import, end consumer distribution as well as incentives in the supply chain of Sutter Home Wines.
Wholesale Distribution and Import
Sutter Home Wines’ management does not rely on the policy of selling only locally but also expands its sale around the globe. Sutter Home Wines can boast of export to more than 47 countries. However, the primary consumers of Sutter Home Wines are the American and Irish people. In addition, Sutter Home Wines shows an optimistic tendency to increase its production until its products become available to other countries around the globe. Sutter Home also is also involved in the online shopping business to ensure that they gain more benefits from foreign customers, who may not necessarily be reached through imports by the Sutter Home Wines (Sutter Home, 2016). Online sales significantly reinforce the company’s image as they help the company to maintain a strong online presence and fulfill its consumers’ expectations.
Wholesale distribution for Sutter Home wines is done to individual countries (Sutter Home, 2016). Wholesale distributors choose wine from Sutter Home warehouse after purchasing at frees on board (FOB) price and transport it to their warehouses. Distributors then mark up to cover their profits, profit margin as well as freight. The price set by the distributor is the wholesale prices at retailer stores. The FOB price, promotional programs cajoling and discounting cannot be influenced by Sutter Home Wines since in some states wholesale margin is dictated by alcohol regulatory bureau set rules. A wholesale distributor may include Sutter Home Wines in supporting special pricing to spur sales. In the state where Sutter Home Wines are based, they are allowed to obtain a commercial license, whereby they can sell to brokers who vend the wines to other retailers. However, as a wholesale distributor, they are authorized to import wines directly if the rules set by their sate allows. Currently the company’s wine is distributed to 47 countries globally, and the company likely to scale up their production to increase their number of customers and maintain their active role in the winery business (Bloomberg, 2016).
The Sutter Home Company imports a variety of materials from other countries, which assists in the production of Sutter Home wines. The imports acquired by the company are mainly focused on improving the quality of wine that the company produces. The imports of the enterprise include a large amount of grapes to facilitate the process of making quality wine, wine yeast that supports fermentation of grapes, and, finally, granulated sugar and filtered water. Granulated sugar assists in lowering alcohol level in the produced wine. Import of raw materials is significant in Sutter Home Wines economy as they play a primary role in maintaining as well as improving the quality of wines. The company ensures they import raw materials securely as well as undistorted by following all the set guidelines of the importation process so as not to compromise on quality.
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End Consumer Distribution
Sutter Home Wines distribute their products mainly through the online platform and a few Sutter Home stores. The online platform ensures that the company’s consumers receive their orders at their convenience. This method of shopping ensures that consumers obtain the best possible products with a click of a button. The online platform for doing shopping is an easier variant of purchasing wines in stores as it offers a greater variety of products and an open cart for one to pick the desired wine and leave what they do not want. Online shopping of wine may, however, become a tragedy in case one misreads the stated ingredients list and thus buy an entirely different brand of wine. Online shopping of wine is also beneficial to both customers and the company as the customer has sufficient time to read through the wine description of all the available wines (Sutter Home, 2016). From the given description the customer can, ultimately, make a decision about purchasing a particular kind of wine, thus boosting the company’s sales.
Another method used by Sutter Home Wines for selling their wine is through open stores that act as shops for the sale of Sutter wines. Sutter Home Wines use industry mark-ups to create a suggested retail price. The retail price is also regulated by the state’s alcohol regulatory bureau. Apparently, retail sales vary significantly in legality within states. A consumer may be required to obtain a license to pay states sales taxes. However, the level of compliance concerning the requirements, costs as well as consumer responsibility for paying and filing taxes and compliance differs from state to state. Similarly to retail shops, any other wine stores stock wines from wine cellars and do over the counter payments. Wines are sold according to their year of brewing, with the oldest wine fetching the highest price and the recent wine fetching a lower price. The winery process is not as complicated as termed to be (Sutter Home, 2016). However, long time is required to obtain high-quality wines, which is the reason why very few companies are engaged in the business of wine production. As a result, Sutter Home Wines have managed to be in business and consistently distribute quality wines for their consumers availed in the nearest retail stores.
The company’s website also gives customers a chance to find physical location of Sutter Home stores by asking them to input their current cities, zip code and state code (Sutter Home, 2016). This enhances the process of locating wine stores as the buyers do not necessarily need to move around searching for wine stores owned by the Sutter Home Wines.
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Incentives in the Supply Chain
Many producers of specific commodities fail to understand the importance of their supply chains. They neglect the fact that their supply chains should be more efficient without the intervention of any other party. Moreover, it is required that all costs, benefits, risks and opportunities are equally distributed within the supply chain network (“Supply Chain Management,” 2012). Misaligned incentives lead to incorrect forecasts, reduced services to customers, stockouts and even excess inventories.
Sutter Home Wines ensure that their supply chain is efficient as it ensures that every partner is a key player in the production process. All the supply chains in Sutter Homes Wines are interlinked to ensure that the business succeeds, with all the chain partners pursuing the sole objective of providing maximum benefit for consumers.
Sutter Homes ensures that their retailers, suppliers, distributors and logistics all integrate to form organized team goals towards perfection of the company’s production and supply. The secure supply chain enabled the company to generate steady profits and gain a loyal customer base. In addition, the company retails its products at a low price. These strategies ensure that the other players in the supply chain can reap maximum benefits from the sale of their products (“Supply Chain Management,” 2012).
Sutter Home Wines use three ways to align incentives within the supply chain. The company does this by recognizing different goals that the players in the supply chain have and harnessing the goals to act for the wine company’s benefit. The company also pinpoints the causes of goal difference and tries to identify other possible alternatives that will ensure maximum benefit from the supply chain. To achieve this, the company utilizes the strategy of taking undue risks. Finally, Sutter Home ensures that it has overcome goal difference within the supply chains by providing solutions that can be easier to implement. For instance, these solutions may include adopting contracts for sharing revenues, employing technology to track wines as well as working closely with intermediaries to strengthen trust among partners in the supply chain. At the same time, Sutter Home Wines ensure that all players of the supply chain gain benefit (Sutter Home, 2016). Sutter Home also provides maximum supply chain benefits by re-assessing benefits after a given period as changes in both technological and business world are constantly altering the incentives alignment.
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Sutter Home Wines also align incentives in the supply chain by modifying contracts with their partners. Whereas any misalignment stems from veiled action of partners, the company executives take hidden actions by creating a contract that penalizes or rewards partner firms depending on the results.
The Sutter Wine Homes Company is the key market player in the wine industry, with its success attributed to both mastery of art and secure supply chains. Sutter Home Wines remain aimed at increasing their production to extend their global reach and improving the winemaking art. The distribution channel of the company ensures that all the stakeholders gain benefit both from warehousing and retailer sale. The supply chain is also efficient since the incentives are well-aligned.