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Self-distribution or sell to a distributor

Method of distribution  

24 members have voted

  1. 1. Do you use a distributor or self-distribute?

    • Self-distributing
      12
    • Using a distributer
      14


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I am just wondering how many of you are self-distributed and how many work with a distributor? And what have been your experiences either way?

We currently self-distribute. This works for us at our current level of production, but I'm not sure whether we will be able to sustain it. On the pro side, we can sell direct to retailers for more than we could charge distributors, and we get lots of direct contact with our retailers. On the con side, it is terribly time-consuming.

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Unfortunately it's not an option for many of us.

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Here in Maine we have a state controlled system so we must send all of our spirits through the state approved warehouse (which sends them on to retailers). We do retail at the distillery but must buy our spirits back from the state first.

Keith

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Very good question that effects all small distilleries, breweries and wineries. We began self distributing and it had it's pluses. I was able to set up over 60 new wholesale accounts in 3 months. But as you mentioned I started to worry about just how many more new accounts could I open and still service the accounts I had already opened.

So I started interviewing distributors and what a nightmare that was. The big distributors are.... well I cannot print that, and they don't really want to mess with the small guy. And the small distributors want up to 36% (the lowest I have found so far is 30%) and we still have to deliver the materials to their warehouses.

We finally agreed on a small distributor and now we are having other problems such as prompt payment, getting a list of new accounts, follow up, and to be frank I out sold them.

So as we speak today I am back on the trail of finding a new distributor or reviewing how we could continue to self distribute and grow efficiently.

For those who are reading this original posting if any of you have had any experience in co-oping with other small distilleries, breweries and wineries for distribution please share your wisdom on this issue.

It seems as though if a number of smaller localized producers could get along, collectively coordinate efforts and share costs a co-op distribution system might solve some of our problems. Alone few of us have the cash flow and resources to self distribute efficiently but as a group we might be able to help everyone be more successful.

A truck and driver along with 2 - 3 sales people could move a lot of product. And of course someone to coordinate and make it all come together.

In our area for instance we have approximately 30 wineries, 15 micro breweries and 3 small distilleries within a 150 mile radius. All them struggling with this very same issue.

Again good question. Thank you! Beast

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Here In Oregon, we formed a guild with the hope of doing what you're talking about but it's in it's infancy so we haven't gotten to that yet. we have 18 members (Distilleries), with more on the way. The big problem I see is that a lot of the little guys are being absorbed into the big dogs like Southern wine & spirits and even if they remain independent, they want exclusive contracts with no guarantees of good sales

How can we fix this because it sure seems to be broken

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Beast here again.

You are right the big guys want a ton of give away stuff, throttling contracts, and they still won't push your product so you are still saddled with the cost of marketing, promotion and advertising. If you are going to call on all your clients to promote your stuff you just as well be the salesman as well.

No distributor believes more in their product than the people who own their own distillery.

I think a guild or a co-op is a good thing but it is hard (time consuming) to get it put together.

I think if we all put in our two cents and keep it on the front burner it will help form a foundation for those of us who may be willing to get out there and set something like this up.

I think it would be a pretty good business venture for someone. However I already have two businesses to keep up with so I cannot devote myself to another business venture at this time. Maybe someday when I can afford to let go of my non distilling business I will be able to set up a small producers distribution network.

In Colorado I would venture to say that between the small wineries, distillers and micro breweries there are over a hundred producers. If we had a Colorado based distribution company for all of these producers I think it would work out well for everyone. Additionally here in Colorado we are just a couple short years away from legislation that would allow the likes of WalMart and City Market to sell "spirits and wines". When that happens they are not going to be interested in small Colorado producers and the Southerns and National Republics will be even less desirable to work with. At that time here in Colorado small producers will want to be in the specialty stores that concentrate on the spirits that WalMart will not carry. And the distribution will be even more specialized as well.

I talked to a winery in California and they are also a distribution company and distribute not only their product but a wide variety of other wines and spirits. She told me it all stemmed originally from the same issues we all have with getting our products on the shelf.

Distribution for small producers is all new to me so I am listening to all ideas and thoughts.

A co-op or guild built and supported by small producers would be less likely to be swallowed up by the Southerns and National Republics. They would truely be independent and cater to the small producers who own the distribution co-op.

Thanks!

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I haven't thought much about laws in other states - is NY unusual in allowing self-distribution?

Looks like about 32 or 33 of the states allow self distribution. A few have quantity limits in place.

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I suspect the several States also vary as to if they allow ownership interest between producers and wholesalers. WI, for instance, has stricter Tied House rules than the Feds. A winery or manufacturer can't have 'direct or indirect' interest in either a retailer _or_ a wholesaler.

On the other hand, WI _will_ be experimenting with co-ops. Not by choice. We lost our ability to self-distribute in the last legislative session. The condolance prize, as it were, is a new small winery co-op wholesaler permit. Its good features are that it's exempt from many of the Tied house restrictions and the rule that shipments have to 'come to rest' in a warehouse before being delivered to a retailer, and that any winery in the country may join.

It's bad features is that the upper limit of 'small winery' was set too small. In fact, it was deliberately set by the wholesalers to exclude the biggest third of WI wineries. (About 2/3 by gallons.) (The wholesalers claim they got the number, 25,000gal/year, from a small winery _retailer_ association.) Also, it has an either-or clause. You have to use the co-op or traditional wholesalers - you can't divide up by brand or territory like you can with regular wholesalers. Oh, and spirits producers are exluded. :-(

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It seems we are not the only ones with distribution challenges. I'm sure I'm not the only one on this board who would like to hear more about the co-ops and guilds as they develop - please keep us informed!

A question for Beast, and anyone else who self-distributes: what is your system for distribution? And how wide an area are you able to cover? We have probably about 40 accounts at this point and are delivering pretty much on-demand and without any minimum order requirements. We do all the deliveries ourselves (there are three of us), and are beginning to be concerned about the efficiency of our system - or lack thereof. A particular concern is bars and restaurants that want only a couple of bottles at a time. For those who self-distribute - have you hired salespeople and or delivery people or do you do it all yourselves? Do you require minimum orders and/or run a regular delivery route? And have you ever shipped your product? (We did use FedEx to deliver to one store recently, which was surprisingly cheap - about $1 a bottle. )

Oh, and do you give sample tastes or sample bottles to potential customers?

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When we started, we couldn't get any distributors to return our calls. Luckily we found a way so that we could self-distribute, or we would have been dead in the water. As we grew, it got to the point where we could not grow any further - we had such a wide area and enough accounts that we didn't have time to look for new business if we wanted to keep up with what we had. At that point, we figured we had the choice between partnering with a distributor and building a more robust internal distribution engine.

We decided that since we didn't set out to be distributors, we would look for a partner, and we settled on one. As Beast said, it's definitely true that the big distributors are giving away a lot of stuff, and beholden to the big brands. From our experience, so are many of the little guys - they either import their own stuff (and promote that because they make more money on it) or they have committed to quotas with a larger brand, or both. I'll be very interested to hear about the progress with the co-ops, and that might be a good option here, at least among the small distilleries with similar aspirations.

As for the question of giving samples/bottles, that is a difficult question because virtually all the big distributors/brands are routinely giving away product (how else do you think that new vodka shows up in every bar in town?). We don't give away product. The people who carry our products support what we're doing and what we're all about, and we offer them a great product at a good price. I always take sample bottles around with me, and I am happy to offer a taste - but that's it.

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I would be interested in reviewing the co-op distribution system in Colorado, and seeing what that would look like.

We have tried a small distributor - working on our next. As people have said - they don't mind taking product and selling it, but they seem to really hate paying for the product! Just sent one distributor to collections.

We will still work on the self-distribution, but it is becoming more and more difficult to service accounts.

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ny_spirits

Our system is much like yours. I do all the traveling and call on accounts and deliver products. My partners deliver to local accounts if I am not available. As you know it is hard to keep opening accounts and managing the existing accounts especially with only a limited number of people.

I have the same problem with restaurants and bars. It is a volume issue for us. I would love to have more bars and restaurants but they take a lot of time for the volume. They love the product and seem real supportive until it comes time to actually purchase. Then I get a lot of "we need to reduce our stock first" kind of responses. Which I take to mean "we get a lot of free stuff from the big distributors".

I have inquired with local wineries and at least one other distillery in Colorado and there is an interest in a distribution coop. However it would be a full time job to start up, grow and maintain and none of us have that kind of time. However it is still an option.

Yes we do give taste samples in the stores that allow it. Beast

It seems we are not the only ones with distribution challenges. I'm sure I'm not the only one on this board who would like to hear more about the co-ops and guilds as they develop - please keep us informed!

A question for Beast, and anyone else who self-distributes: what is your system for distribution? And how wide an area are you able to cover? We have probably about 40 accounts at this point and are delivering pretty much on-demand and without any minimum order requirements. We do all the deliveries ourselves (there are three of us), and are beginning to be concerned about the efficiency of our system - or lack thereof. A particular concern is bars and restaurants that want only a couple of bottles at a time. For those who self-distribute - have you hired salespeople and or delivery people or do you do it all yourselves? Do you require minimum orders and/or run a regular delivery route? And have you ever shipped your product? (We did use FedEx to deliver to one store recently, which was surprisingly cheap - about $1 a bottle. )

Oh, and do you give sample tastes or sample bottles to potential customers?

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Hello all, I see that this topic has been idle for a few years now and as I'm about to be facing these same issues. My plan is to self-distribute for as long as I can, but I'm also well aware that it will be a ton of work running around to many different places with a relatively small amount of product for each. Yet, I'm hesitant to go through a distributor because I know that they won't push my product as hard or as WELL as I will. Has anyone has had any breakthroughs or epiphanies since you last posted that they can share? Thanks! Dave

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