Self-distribution sales contracts?

[lthendricks8]

Maybe a silly question, but the search feature didn't turn up anything too useful so I figured I'd ask ...

We're a small, 100% keg microbrewery that will begin self-distributing (assuming anyone wants to buy the beer, ha) in a few months. I'm in a country where there are no distributors, so self-distribution is really the only option. Acknowledging that every country has a different legal scheme and local laws have to be taken in to account, my question is, in such a situation, how does (or how SHOULD) the actual transaction between brewery and point-of-sale take place?

Is a contract signed for an ongoing relationship with the establishment? I was a lawyer in a former life and can draft up a contract easily - I'm just not as familiar with this side of the operation in practical terms. What provisions would such a contract usually have? Obviously you'd want to have a provision dealing with a keg deposit/reimbursement for non-wear'n'tear damage to the keg, probably some general waiver of liability provisions ... but what's obvious that I'm missing here? What is a retailer going to want to protect against? What am I as a self-distributing brewery going to be want to protect against? What's industry standard to expect here?

I'd also like to add that my country doesn't have much of a craft beer history - all the beer now comes from one national beer company, and so this will not only be new to me but likely to a lot of retail establishments in the area. As such, there's an opportunity to put less of an emphasis on "how has this been done/how is this done" and instead focus on "how SHOULD this be done."

Thanks in advance for any insight those more experienced than I might have!

[AnthonyB]

Usually between your commercial liability insurance and the point-of-sale's commercial liability insurance, your liabilities are taken care of.

We self-distribute and in my experience, you want to make the sales process as quick and painless as possible. The last thing I would want to do is introduce some multiple page contract to the process where they need to engage legal counsel just to buy a keg from you. We do the absolute minimum, license numbers from their liquor licenses, tax id numbers (since we aren't charging them sales tax), and contact information. If your national beer company does have some long drawn out process for setting up an account with them, anything you can do to streamline your own process (obviously within the laws of your land), will be yet another differentiator for you from your competition.

[populuxebrewing]

Well, since your small and new you could do it the way a lot of small, new breweries in the US do. Show up with a few samples, explain yourself, tell them you take orders on Monday and Tuesday for delivery on Wednesday/Thursday, leave a card and see what happens. If you have a tasting room and the beer is good, then retailers will start to hear about it by word of mouth as well. If you're alone in the market word will get around fast.

I've not heard much about contracting with accounts. Maybe that happens with larger producers, but with the tied-house history and third party distribution system in the US (distributors who you most definitely contract with) I'm sure it would take some legal wrangling.

[Coolhand]

Obviously your mileage will vary due to local conditions, but when I self-distributed (for a whopping three months) the only paperwork in place was a form required from each new account for tax purposes, since as a wholesale transaction we weren't charging the retailer taxes.

The accounts will not hesitate to fire you if you don't provide good beer and good service, so I think they would be very hesitant to sign contracts.

My biggest lessons during our stint of self-distribution was just how big, sparsely populated, and cold this damn state is (Wyoming) , and more importantly just how long you can expect to spend at each account. If your country's beer system is anything like ours, the distributor is expected to take care of the tap lines. So a five minute visit will automatically turn into 30 - 60 minutes, depending on how many tap lines you have at that account, and you will have to purchase a (preferably commercial) tap line cleaning system.

All that said, at least you're not giving away XX% of each keg to a distributor

Justin

[lthendricks8]

Thanks guys. Like I said, this isn't the side of the beer business I've handled before, so it's good to get a picture of it - sounds like simplicity's the name of the game, and the #1 priority is removing any possible impediments to them accepting your kegs or excuses they might have to replace it. We have a ton of used kegs that we're using - given that they're used (and relatively inexpensive), would you also suggest waiving a keg deposit fee as another "hurdle" to be eliminated and simply burying an "expected loss factor" in to the price of the beer (maybe offering a discount if someone's willing to put a credit card on file or give a refundable keg deposit)?

[Thirsty_Monk]

No always ask for keg deposit.

[Coolhand]

I think you have to charge the deposit, and they're certainly used to paying them.

Even with the deposit and a distributor, we still struggle getting the kegs back, especially in a reasonable time.