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Global Supply Chain

3 Ways Wine & Spirits Importers Can Gain a Competitive Advantage

Ned Blinick

Chief Product Officer

Competition for Wine & Spirits (W&S) Importers is pretty fierce, and is only getting more intense. There are lots of companies importing adult beverages into the US; being able to provide product on time and at a competitive price is becoming increasingly important. As a W&S Importer, your goal is to continually push for better, faster, cheaper. As a W&S Importer, there are a number of things that you can do to increase your competitive advantage vis a vis other importers. Here are the top three things that will enable you to import alcoholic beverages better, faster, and with less cost:

  1. Effectively Dealing with First Sale, Discounts, and Free Goods at CustomsThe chances are high that your company faces challenges when dealing with each of these concepts. Claiming ‘First Sale’ when entering your product saves your company money. But the management of the documentation and data is onerous and often overwhelming. Most companies forego the ability to claim First Sale as the administrative cost outweighs the financial benefit.Dealing with discounts and free goods pose a different challenge. In both cases, the calculations need to be done properly and that the appropriate values for duty are used when calculating duty and the right volumes need to be used when calculating excise taxes. Companies that have less control of their data and processes defer to their customs broker to manage much of this. In these cases, your broker is charging you for these services, whether you realize it or not. They are also prone to errors. There is a likelihood that your company is either overpaying duties and taxes, or underpaying. In both cases, that results in inconsistent data, and would be made quite evident if ever your company were audited, opening you up to significant fines and penalties.Being able to effectively deal with Discounts, Free Goods, and First Sale in a manner that is controlled, auditable, and tied to cash settlement will save your company time and money. 
  2. Ensuring that your Data is Customs ReadyW&S Importers face a huge challenge when it comes to Product and Vendor information. New products are being added constantly, with vintages are changing annually. Product-related information needs to be kept up to date, such as COLAs, alcohol content, HTS codes, duty rates, excise tax rates, etc...Vendors are also being added on a continual basis, and their information needs to be kept current. This year, for instance, W&S Importers will be faced with the challenge of ensuring their vendors have re-registered with the FDA. The larger the Importer, the bigger the challenge of managing this process. Companies with the appropriate systems in place spend less time managing their data, have fewer shipment held at the border (either by CBP or FDA), and are able to move their product much faster through their supply chain.  
  3. Consolidating Shipments Across IORsWe’ve heard this many times: a company with two (or more) IORs has enough product to ship a full container if they were to consolidate shipments from both IORs, but there are administrative and management hurdles. A decision is therefore made to either manually deal with the additional administration and management of consolidated shipments, which is very time consuming and not scalable, resulting in increased labour cost and minimizing the cost savings due to the consolidation, or not to create consolidated shipments and ship LTL, making things simpler to execute but more expensive.Companies that can easily manage their data are able to manage consolidated shipments across their IORs, allowing them to reduce their import costs dramatically.
  4. BONUS: Self-filing your Customs EntriesThere is a likelihood that you are using one or more Customs Brokers to file your entries. Odds are, you are paying between $115 and $175 per entry to file your ISF, Entry, FDA, and TTB information. There are additional costs if you are making post summary corrections or need to reconcile your entries.If you have the appropriate level of control of your data, self-filing your entries (rather than using a broker) is a snap. Self-filing would drop your entry costs likely by more than $100 per entry. For each 1000 containers that you import, the savings would amount to $100,000. Every year. The cost of getting a system to automate and manage this process could cost as little as $24,000 per year.

Importers are starting to understand that controlling their data is the foundation to having a system optimized to achieve these 3 (+1) benefits. In sum, they represent a significant cost savings, enables the importer to scale their operation without adding additional headcount, and allows them to price their products more competitively than their competition. In short, it creates a competitive advantage.

Are you working towards this end? Let us know how you are doing! If you need help, give us a shout...we help W&S Spirits Importers with this problem on a daily basis. Want to learn more? Drop us a line at solutions@3rdwave.co.