Exclusive rights in Europe: does it still make sense?

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Nebbiolo Prima 2011 is finally over, and I needed a day or two to metabolize all of the encounters and to create a treasury of the experiences and comments left by the industry professionals who were invited to the event. In particular I had a heated, but enjoyable, debate with two fascinating buyers from Poland who were invited to the event: Beata Gaweda of Vini e Affini and Anna Smaga of Wine Korner on the question of exclusive rights for a wine in a European Union state.

All producers selling abroad will have posed the question of whether or not to give their importer in a given country exclusive rights to the product. Normally one carefully assesses the importer in question, considering whether he or she is reliable, buys a significant quantity, and follows acceptable rules of conduct.

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The difficulty lies in the reality of the facts: there are no more frontiers, Europe is open and it is very difficult to control the sale of one’s own product. Take for example Luxemburg, wedged between Belgium, Germany and France. It is an appealing market for anyone and everyone, given the buying power of its inhabitants. If one concedes exclusive rights to a wine shop in Luxemburg, one cannot however safeguard it from the offer of the very same product by a distributor in Liege, Belgium, in Metz, France, or in Trier, Germany. These three cities are in fact located very close to Lux and obviously have a keen interest in entering this highly lucrative market.

Another critical zone is western Poland, where its neighbours from ex-DDR Germany are trying to invade it on commercial terms, thanks to lower prices due to the high competitiveness of the German market.

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Other complicated areas are Alto Adige, Tirol and Bavaria where everyone sells to everyone else, despite that there are three nations that divide them.

And what about Internet sales, that have no territorial confines? You sell in Denmark and then the very same company offers your wines in Germany, the UK or Sweden. How can all of this be controlled? Does it really need to be controlled? Certainly one needs to try to manage the politics of pricing, which is fundamental to the perception of a brand, but it is not always easy to impose. I ask myself then if it is really so worth it to dig in one’s heels to obtain exclusive rights in a state, or is it only the taking of a position on principle, that makes the importer with pseudo-exclusive rights feel proud?

This reasoning is obviously only valid for Europe, since in the greater part of nations outside the EEC it is much more complicated to have more than one representative. In some states in the US it is forbidden by law, in Canada where wine is under a monopoly system, one can have one agent per confederate province. In China on the other hand, one has a market that is enormous in terms of kilometres, but still relatively small and immature for comprising exclusive rights with various importers in various macro regions, even if the mentality is inevitably destined to change.

Returning to the old world, by now to be considered a single large nation, the states are made up of great regions and the regions are our provinces, in my view exclusive territorial rights are fair and justifiable, but they are at the same time difficult to keep under control.