First meeting with potential distributors

[Jeff Wuslich]

Hi team,

I have a meeting with two potential distributors and I want to get your feedback. I want to know what you wished you would have asked or how you would have presented yourself at early meetings with distributors. This is for a no-controlled state, but we do have the 3-tier system. I'm excited that these distributors are willing to meet with me, but I need to be cautious. Here's some of my thoughts. I'd appreciate your feedback. Thanks!

1. What can the distributor offer us?

1. What kind of trucks and warehouses do you maintain?

2. How many sales reps and how are they divided?

2. What terms?

1. Margins and market up on products

2. The distributor is responsible for breakage after it leaves our facility

3. How will they work purchasing the product? Do they purchase it when they take it from our facility or when it is sold?

3. Promotion and marketing:

1. What is their policy on ride alongs

2. Tastings - do we have to go through you? Who drives this process?

3. Promoting our product at event, fairs, etc.

4. How does our marketing budget/effort effect your cut

4. Do you offer exclusivity?

5. What range/area do you cover?

6. What references can you provide?

[Scott @ Twenty2Vodka]

Hey Jeff, I've responded to your list in bold below. These are my thoughts on each from my experience dealing with a couple different brokers in different states. I hope they will more prepare you for the answer (I feel) they are likely to give, to ensure you have proper follow ups and that you are entering this conversation with as much information as possible. Forgive the pessimistic tone if you detect one, this side of the game is very challenging, very competitive, and influenced greatly by the big player brands out there with lots of $ to throw around.

Best of Luck,

-Scott

1. What can the distributor offer us? - Usually this is limited to the ability to enter the market you are trying to enter. They also will deliver your product upon order. This system is setup where they are a required link in the chain, don't be surprised if they don't remove their feet from their desk...

1. What kind of trucks and warehouses do you maintain? - The kind that deliver your product. If you are in a position to not go with a distributor because they give answer here that you don't like, I envy your position.

2. How many sales reps and how are they divided? - This is not guarantee that they are going to move a qty of product

2. What terms?

1. Margins and market up on products - Expect around 40%, though I've been in talks with some in 1 state that wanted 130% (seriously)

2. The distributor is responsible for breakage after it leaves our facility - This doesn't really happen that often, and you might get a "yea sure" or "we'll split the difference"

3. How will they work purchasing the product? Do they purchase it when they take it from our facility or when it is sold? - Very very very important. We have a mix of consignment and pay after delivery.

3. Promotion and marketing:

1. What is their policy on ride alongs - They should want you there, these are effective and make them look good too.

2. Tastings - do we have to go through you? Who drives this process? - Expect this to be mostly on you, though some do this too.

3. Promoting our product at event, fairs, etc. - Expect this to be 100% on you.

4. How does our marketing budget/effort effect your cut - Expect to do all of the marketing work and thank your stars if in the end they do 10%. See #1

4. Do you offer exclusivity? - They will likely require it. As in you cannot work with any other distributor in the state.

5. What range/area do you cover? - Also very very important. They will likely respond with an area 10x in that they "cover it", but infrequently visit it. Also ask, where do you focus your efforts? and Why there?

6. What references can you provide? - Imporant as with all business transactions, though again I envy your position if you have the choice.

[Absinthe Pete]

Luckily or maybe Unluckily we are a distributer as well as a distillery so I wouldn't know the answer to any of these questions, but for the last question on references, make sure you get references from any small producers they carry, if any. Because a small producer will give you the best answer to how that distributer is treating them and their sales to date.

[Palmetto Coast]

Also, talk to bars and liquor stores to get references. They sometimes have inside information. I found out that one producer has trouble keeping product stocked and another just hired a big name to help revive their ailing sales.

Todd

[DPM]

I just started my distillery and will now have possibly 11 states that I will distribute to. Main thing for me is "Persistence!" I don't give up even if someone tells me no. My product is so unique that when I meet with a new distributor, and after some tastings, I tell them what I want for my product and don't budge. I had a distributor in Milwaukee that wanted to pay $xxx for my product. It was so low that I said, no and thanks for your time and left. After that, I've gained all the states that I have, with the price that I had asked for and then more. If you believe in the quality of your product, do not budge or undercut yourself short. You have to make some profit too! Overall, I've been blessed to have all the states that I have and when I was going to all the liquor stores in my states to introduce my product, less than half of them told me NO but more than half said YES! All my prices are FOB prices and I do not have to deliver anything.

Believe in your product and you will succeed. Like they say, "If you build them, they will come", well, this goes true about us as distillers. Best of luck to you and don't give up!

Cheers!

Po Lo

Lo Artisan Distillery, LLC