How pay-for-performance hollowed out wine distribution

The wine industry has spent years looking for someone to blame for sinking sales. Direct-to-consumer sales (DTC) became the preferred villain: cannibalising distribution, fragmenting the market, undermining the three-tier system. The three-tier establishment built an entire policy posture around it. Lobby groups organised. Trade associations issued white papers. The narrative was convenient, and it absolved the distribution tier of responsibility for its own dysfunction. Namely…

A few years before Covid, one of the dominant players in the U.S. wine and spirits distribution system replaced the commission model with something called PFP: pay for performance. The shift was framed as modernisation, an upgrade from the chaos of individualised selling to accountable, measurable performance management. It was the single most consequential structural change to wine distribution in a generation, and the industry spent years attributing its consequences to everything except their actual cause.

What commission built, and what PFP replaced it with

Under commission, a rep’s income was tied to the breadth of their book. Every case moved was money in their pocket, which meant every wine in the portfolio was worth their time, including the small Barolo producer without a marketing budget, the Etna Rosso that needed a story told. A commissioned rep had financial reasons to know their accounts deeply: which sommelier was quietly building a regional Italian list, which independent retailer would take a chance on an unfamiliar producer if someone spent thirty minutes on the story. Niche products had a pathway to market because the rep had skin in their success.

PFP replaced that alignment with predetermined goals tied to specific SKUs, funded by supplier contributions to bonus pools. Large suppliers bought their way into the performance metrics. Reps received meagre base salaries—in most major markets, salaries that required a second income or taking on a roommate—supplemented by management-discretionary bonuses tied to pre-selected targets. The rational response was to cherry-pick the highest-paying goals and deprioritise everything else. The shopping-list effect replaced the book. A wine without a budget behind it became invisible—not because buyers didn’t want it, but because the incentive structure made selling it economically irrational for everyone in the chain.

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