Mechanics of self distribution
I'm about to jump into self distribution for my startup, and I've got very little sense of what the basic mechanics of servicing an account are like once the product has been "sold in". Here are the questions I have today, though I'm sure there will be lots more shortly...
What is replenishment like - Should I plan on checking in with them twice a week, or do they give me a call when they need a new keg?
What kind of payment terms are commonly used? Checks? Accounts/invoices?
How do you manage keg deposits/returns, and what do you typically charge for a deposit?
Pricing: What's the going rate for a 1/2 bbl of micro in your area, and for a 1/6 bbl?
I'm sure this stuff is all over the map, but any info will be helpful.
These are some pretty detailed questions, but I’ll answer them in quick summation for now.
It sounds like you are only doing draft for now, so I’ll address your questions only for kegs. Bottles are a whole different set of dynamics.
Call frequency: This ultimately depends on the account; how fast they go through your beer and how much back stock they are willing and able to handle. Once you make a placement, I would initially check in on the account every few days. This will probably almost certainly be more frequent than they need, but it is a good idea to monitor the account closely until you get a feel for the velocity of sales. You can also ask the account what sales volume they anticipate – this will help you set the initial call-back frequency. Some accounts go through a keg every few days – some go through a keg every month. It depends on the account and the beer. After a month or so, you’ll get a good sense of how often you will need to check in on an ongoing basis.
Payment terms: Payment terms are often dictated by the state regulatory agency and vary by state. Check with them – you will need to know this, and many other regulations that are mandated by the state. A few states mandate that you collect payment upon delivery, other states require that you receive payment within 30 days, some states have no regulations at all. Typically, if it is allowed by the ABC, most distributors extend a 30 day credit.
Keg Deposits: Most distributors apply a $15.00 or $20.00 deposit on the keg. This is tacked onto the invoice as a separate line item. When picking up kegs, that same amount is given as a credit.
Pricing: This varies by region. It is a good idea to talk to a few retailers and get to know them well enough that they will share price sheets with you from other distributors. This will let you know pricing for other brands in your market.
Hope that helps.