Distributor meeting

[Josey]

We have a second meeting with a large distributor in Texas in the next few weeks and are seeking some advice as to dealing with distributors, contracts, ect...

I have seen in previous postings that mark-ups vary wildly from state to state. Does anyone know the typical mark-up by the distributor and by the retailer here in Texas?

After perfecting our recipes, we anticipate being ready for full production at the end of September when we receive our bottling line. Assuming that the distributor will take us that close to the holiday season, should we execute a contract (if offered) prior to receiving the bottling line or should we wait until we have the actual production capacity?

In terms of a contract, what type of terms should we expect from the distributor? Also, what terms do you wish you had negotiated (and reasonably expected the distributor would have accepted)?

In terms of logistics, do you have the distributor pick-up the product at your facility or do you have to arrange transport to the distributor? If you have to arrange distribution, what type of carrier do you need? I know in Texas that you need a permit from TABC to transport alcohol, but what type of carrier?

Also, if anyone is willing to share their lessons learned from distributors, particularly from Texas, I would really appreciate the advice.

Thanks!

[kkoch]

Josey,

Before you get eaten alive by this "large distributor" we should talk. Drop me a note/email. Based on your questions, you haven't had much experience with distirbution systems (e.g. 3-tier) and I'd hate for your education to be learned from working with them versus from someone who has lived both sides of that relationship.

[whiskeytango]

Kkoch

I think lots of us would like to hear your advice any chance you can put up some pointers?

[kkoch]

_{Quick note as I haven't gotten back to the boards, and am headed to a meeting...}

_{First, if you are in a state that requries or has distribution contracts as the norm, be sure to review the termination clauses! I've seen too many brands get burned when they switch distributors - having the old wholesaler "dump" product on the market at a discount, flooding the channel and making it impossible for the new distributor to gain any traction. Or, forced to buy your product back at cost + storage! Totally avoidable if you think through the options.}

_{More general comments later, but as part of my business is consulting - and I don't want to make this a commercial - it'll be a few more of those general items!}

_Ken