Big Distributor vs Small Distributor for craft distillery ???

[TetonDistillery]

I'd like to get your opinions on the pros / cons of working with the big broker/distributors versus the smaller ones.

Here is the dilemma we are facing when considering who to partner with in new states.

In some of the states we have entered, we have partnered with smaller distributors. For example, a company that does a lot of wines but also distributes spirits as a side business in that state. The advantage is that our brand of potato vodka gets more attention because our distributor doesn't have Absolut, Stoli, etc. the salespeople of our wine/spirits distributor only have one potato vodka on their list, so we get a bit more attention.

The other side of the coin is the big broker/distributors (Republic, Southern Wine, etc) They have a ton of brands and they also have a lot of salespeople and accounts they can call on. But is is very easy for a craft brand to get little attention in that system.

Which do you prefer? Any other options? Any advice or warnings?

Thanks

[Jedd Haas]

Teton,

One question that cuts to the chase is to ask them the anticipated size of their opening order, and what they consider as the monthly sales potential. That will help sort things out a great deal. The big guys also tend to have very unequal terms, such as requiring a large payment if you want to cancel, while they can cancel at any time without penalty.

[TetonDistillery]

What about in control states where there are brokers that help with sales in those states. What percentage is typical?

[kkoch]

As a former distributor (small, boutique) who completed against the "big guys" I can safely say that there is no one right answer for any manufacturer, and no single answer across all states. The pros/cons for each type of wholesaler model (excluding a discussion of the control states for now) are several:

For the big guys, the risk of defaulting on payments will be lower than a boutique; they also have tighter relationships with more on/off premise accounts (which can sometimes lock you out with a boutique - regardless of the state laws).

Boutiques will have a better/smaller book of business and you'll get face time with their key accounts more frequently which can translate into a larger continued revenue stream from a small base versus a large one-time scatter sales launch with minimal pull-through.

Could go on and on, but the key is taking the time to investigate both in your target market - asking about their launch and post-launch support of a brand such as yours. If they don't have a marketing plan/support structure, you'll only make great sales when you personally are in the market or start threating to pull (careful, some states are franchise and this is virtually impossible!).

Sometimes having a local or regional broker/consultant who can help you with the market will save you from a bad decision.

[bluestar]

When went the middle road on size, hoping to get between the horns of this dilemma. Jury is still out.

[kkoch]

Thought I'd revisit this thread for a minute....am working with a winery on setting up new distributors/wholesalers. Asked them what profile they wanted and I think he nailed the most important quality:

"I just want a great company that is well respected and pay's their bills on time."

The tough part is finding those that do!