Distribution

Obligations of beer wholesalers

posted May 14th, 2014 (updated Feb 26th, 2022) by Stan Hieronymus

The following article was posted on May 15,, 2014. It has been reviewed and updated as necessary by the ProBrewer editorial staff. 

The relationship between a brewer and wholesaler is a very complex and regulated one. State alcohol regulatory agencies mandate certain responsibilities of both the wholesaler and brewer such as payment terms, incentives, price posting, contracts, to name just a few. Every state has a different set of regulations. It is extremely important that you familiarize yourself with the rules and regulations pertaining to the brewery and wholesaler relationship before doing business in that state. Many states also have franchise laws that define very specifically the parameters for terminating a wholesaler. Even in non-franchise states, a brewer can not terminate a wholesaler without cause unless they are willing to compensate the wholesaler for relinquishing the brand.

Generally, it is safe to consider your wholesaler as a warehousing and delivery service, with perhaps some brand maintenance (merchandising, stock rotation, POS placement, etc.) provided at the retail level. But distributors are not generally sales mechanisms and are not responsible for the marketing of your products. These functions are incumbent on the brewer to provide.

Read more...

The distribution handbook

posted May 14th, 2014 (updated Jan 26th, 2022) by Tom McCormick

The following article was posted on May 15, 2014. It has been reviewed and updated as necessary by the ProBrewer editorial staff. 

In the current distribution climate, where distributors have many more brands than they are able to adequately and properly attend to, it is imperative for the supplier to take steps to gain and retain mind-share within each distributor. Many times, the distributor needs information about a particular brand, either by request of a sales rep or a retailer. The easier it is for the distributor to access that information, the more likely that information will be passed on as a sales tool to the person in need.

An easy and effective way to make sure your distributor has easy access to the information they need about your brand and company is to provide a “Distributor Handbook”. This is typically provided as a hard copy in a spiral bound binder so that pages can easily be taken out to photocopy and/or in digital form. Managers and sales reps should each be supplied with a copy. Often, it is a good idea to also provide a copy to key internal management such as the inventory and warehouse manger, etc.

Read more...

Distribution 101 – A short course in distribution basics

posted May 14th, 2014 (updated Jan 26th, 2022) by Tom McCormick

The following article was posted on May 15, 2014. It has been reviewed and updated as necessary by the ProBrewer editorial staff. 

Distribution has become one of the most important yet overlooked components in the operation and success of running a microbrewery. A common misconception by those entering the craft beer industry is that once the beer is brewed, packaged and shipped to a wholesaler, the brewer can essentially forget about it, leaving the sales, marketing and promotion up to the distributors. This is not the case as beer wholesalers are primarily a delivery and warehousing mechanism; most do little actual selling and promoting of the brands in their portfolio. Hence, it is imperative that the microbrewer know and understand the second tier of the business to ensure their products are adequately marketed and handled after leaving the caring hands of the brewer.

Self-distribution

Read more...

Distribution Glossary – Terms to know about beverage distribution

posted Apr 22nd, 2014 by Stan Hieronymus

ABC. Alcohol Beverage Control or other name of a state agency that is responsible for regulating the production, sales and distribution of alcoholic beverages.

ABV. Percent alcohol measured by volume.

ABW. Percent alcohol measured by weight.

Read more...

Valuing beer distributors – How to value that important relationship

posted Apr 22nd, 2014 by Stan Hieronymus

by Lamont Seckman

Old wives’ tales keep being told, I suppose, because sometimes they have a modicum of truth. A common old wives’ tale is that “an apple a day keeps the doctor away.” Of course fresh produce has antioxidants which can lower the risk of heart disease, stroke, cancer, and other diseases. However, the same can be said of many other fruits and vegetables…no need to focus on just the apple. And how about this one: the blue sky for beer distributors is valued at 1.5x gross profits, or $5 per case. I’m not sure why many old wives would be sitting around discussing intangible asset values in the beer industry, but these tales keep re-surfacing. And, similar to the tale of the apple, there is a modicum of truth to such “rules-of-thumb.” But of course focusing solely on rulesof- thumb is a mistake. In fact, speaking of old wives, many believe the origination of the term rule-of-thumb is derived from references in old legal works to the idea that a man may legally beat his wife, provided that he use a stick no thicker than his thumb. Many researchers have dispelled this myth but are unclear on the real derivation of the term.

Most conclude it relates to the use of the distance from the point of the thumb to the first knuckle as approximating an inch. In my never relenting quest for further understanding I measured this distance on my own thumb and arrived at a figure of one-and-three eighths inches. In other words, if I were to use my thumb to approximate an inch, I would be off by nearly 38%! Perhaps such levels of precision are satisfactory in some situations, but I would propose that buying or selling beer brands and/or distributor operations requires more. Rules-of-thumb should be understood and used for what they are: very broad attempts at describing the values that have resulted from a variety of transactions impacted by a variety of transaction-specific dynamics. While rules-of-thumb, like some old wives’ tales, can have a modicum of truth, they can be significantly wild off the mark in valuing any given brand or distributor operation.

Read more...

10 tips for a valuable distributor sales meeting

posted Apr 22nd, 2014 by Stan Hieronymus

Distributor sales meetings are perhaps the single most time effective way to make an impact on your distributors sales force. It allows you face to face time with the entire sales force and helps put a personal touch on your brand. Distributors should allow you access to a group sales meeting on a quarterly basis. Sales meetings can vary significantly from distributor to distributor. Some wholesalers will only allow you a short 15 or so minutes, often sandwiched in between numerous other suppliers also giving a presentation. Other distributors may give you the opportunity to speak for most of the meeting.

How to best utilize that valuable time? Here are 10 tips for conducting a distributor sales meeting:

1. Have a plan – Have a written outline for your meeting and stick to it. Writing it down helps you stay on course. Be concise and precise. Have specific goals you want to achieve during the meeting; such as introduce a new incentive program, present sales goals or increase sales of a new style.

Read more...

Off-site draft sales for brewpubs

posted Apr 22nd, 2014 by Tom McCormick

As brewpubs continue to proliferate across the country, many are opting to sell their products through retail accounts to utilize excess capacity and increase revenue. Off-site sales can also increase your walk-in business by creating exposure and interest in your brewpub. As attractive as this may seem, off-site sales entail a great deal of time, resources and effort to successfully achieve these objectives. And in some states, brewpubs are not allowed to sell their products outside the confines of the licensed premise.

Where allowed by state law, the practice of off-site distribution has been employed successfully along a full spectrum of implementation. Some brewpubs have grown into full size production plants with the majority of their sales sold off-site through a far-reaching distribution network. This, however, is the exception rather than the rule. Most brewpubs sell their products in draft only to a handful of local accounts. Whatever the applicable scale, it is important to understand the basics of off-site distribution.

Considerations before initiating distribution

Read more...

Specialty Beer Distributors meeting a first

posted Apr 22nd, 2014 by Tom McCormick

In a small windowless hotel conference room amongst sweating carafes of water and large steamy coffee urns, more than 40 individuals from the specialty beer business gathered for a roundtable discussion on the business of distribution. The first-ever Specialty Beer Distributors Conference had convened, and although the setting was classic drab hotel conference room, the spirit and enthusiasm was radiant, and conversation flowed steadily for the two-day meeting.

Taking place just prior to the 21st annual Association of Brewers Craft Brewers Conference and BrewExpo in mid-April, the SBDC was the brainchild of Greg Koch, co-founder and president of Stone Brewing Company, a brewery and distributorship in San Marcos, just north of San Diego. The purpose of the forum was to gather together small, independent specialty beer distributors to fuel the exchange of ideas and information in this growing new category of wholesalers. Attending were a wide variety of distributors, from medium sized operations with a sales force of over 20 reps to companies of only two people and one truck. The common thread was that each company specialized exclusively, or at least primarily in wholesaling specialty beer. It was an opportunity, as Eric Wallace, president of Tabernash/Lefthand Brewing Company and Indian Peaks Distributing said “to learn from each of our various experiences and learn how to survive.”

Anheuser-Busch, Miller, Coors and many large import brands provide various levels of support and training to their distribution network – not to mention high volume sales that support the infrastructure of a distribution company – but specialty beer distributors have few resources from which to draw. There were discussions among a group of small distributors at the 1997 Craft Brewers Conference in Seattle to form a trade organization and market the various companies with a web site, but that effort never materialized. This year’s gathering was the first of its kind, and it had a hint of resemblance to the first craft brewers conferences.

Read more...

Obligations of beer wholesalers – What you should expect

posted Apr 22nd, 2014 by Stan Hieronymus

The relationship between a brewer and wholesaler is a very complex and regulated one. State alcohol regulatory agencies mandate certain responsibilities of both the wholesaler and brewer such as payment terms, incentives, price posting, contracts, etc. Every state has a different set of regulations. It is extremely important that you familiarize yourself with the rules and regulations pertaining to the brewery and wholesaler relationship before doing business in that state. Many states also have franchise laws that define very specifically the parameters for terminating a wholesaler. Even in non-franchise states, a brewer can not terminate a wholesaler without cause unless they are willing to compensate the wholesaler for relinquishing the brand.

Generally, it is safe to consider your wholesaler as a warehousing and delivery service, with perhaps some brand maintenance (merchandising, retail rotation, POS) provided. But distributors are not sales mechanisms and are not responsible for the marketing of your products. These functions are incumbent on the brewer to provide.

There are no strictly defined responsibilities of the beer wholesaler, but the following are considered standard obligations of both parties:

Read more...

Distribution 101 – The distribution handbook

posted Apr 22nd, 2014 by Tom McCormick

In the current distribution climate, where distributors have many more brands than they are able to adequately and properly attend to, it is imperative for the supplier to take steps to gain and retain mind-share within each distributor. Many times, the distributor needs information about a particularly brand, either by request of a sales rep or a retailer. The easier it is for the distributor to access the information, the more likely that information will be passed on as a sales tool to the person in need.

An easy and effective way to make sure your distributor has easy access to the information they need about your brand and company, is to provide a “Distributor Handbook”. This is typically in a spiral bound binder so that pages can easily be taken out to photocopy. Managers and sales reps should each be supplied with a copy. Often, it is a good idea to also provide a copy to key internal management such as the inventory and warehouse manger, etc.

Contents should include:

Read more...

Distribution 101 – A short course in distribution basics

posted Apr 22nd, 2014 by Tom McCormick

Distribution is one of the most important, yet commonly overlooked components in the operation and success of a craft brewery. A common misconception by those entering the craft beer industry is that once the beer is brewed, packaged, and shipped to a wholesaler, the brewer can essentially forget about it, leaving the sales, marketing and promotion to the wholesaler. This is not the case, since beer distributors function primarily as a delivery and warehousing mechanism. Most distributors do little, if any, selling and promotion of the beers in their portfolio, with the exception of the top selling two to three brands. Hence, it is imperative that the craft brewer know and understand the second tier of the business – distribution – in order to ensure their products are adequately marketed.

Self-distribution

One option brewers have available to ensure good distribution is to distribute themselves. This practice is not allowed in some states and is only practical within the local market area. Self-distribution should be limited to within about a one-hundred-mile radius of the brewery (depending on market density) in order to maintain cost efficiencies. The local market is both your most important market and also the easiest to gain recognition and retail placements because of the “local appeal.” Self-distribution has the advantage of personal, hands-on selling that beer distributors cannot give to most products, given the extent of their product portfolios. The disadvantages are the time and resources involved in running a company within a company. Distributing yourself requires a focus from management, additional personnel and equipment and an investment in time and money.

Read more...

Distribution – Our Top Distribution Resources and Info

posted Feb 27th, 2014 by pbrewadmin

Distribution is perhaps the most difficult and frustrating issue facing the specialty beer segment. In a highly regulated three tier system, access to market has grown exponentially more difficult for small brewers in just the last decade. Consolidation within the distribution tier has created far fewer and much larger wholesalers to choose from.

Understanding and awareness of these newly created dynamics is imperative to navigate a small brewer’s beers through the distribution and retail tiers and into the consumers hand. ProBrewer.com has created the Distribution Toolbox as a means to disseminate information, empowering the small brewer with the proper tools to achieve proper and successful distribution.

Questions on distribution?

Post your questions, find answers on ProBrewer’s moderated discussion boards.

Read more...