Distribution woes

[Richard Stueven]

Good morning, all!

We've been selling our draft beer through a couple of wholesalers, one here in Wisconsin and one in the Twin Cities. "Selling" is something of an overstatement...I'm sitting on a cooler full of beer right now. Accounts are placing orders that aren't being filled. The wholesalers aren't returning phone calls. I've still got most of my Oktoberfest beer because the wholesalers decided that "two brands was enough". They're not taking delivery of our new case beer, even though there are accounts that are asking for it.

I say the heck with them; let's start distributing the beer ourselves, like we should have done from the start. There may, of course, be contractual issues with this approach, but the wholesalers simply aren't doing their jobs.

I haven't seen our actual contracts myself, and I'm guessing you haven't either, but do you have some ideas on how we can either do an end-run around the wholesalers or terminate them altogether? I know we're supposed to talk these things out, but when they won't even return your calls...

Thanks!

have fun
RDS

--
Richard Stueven, Brewer
William Kuether Brewing Company
Clear Lake, Wisconsin
richard@sconnieales.com

[frigatebay]

What type of wholesaler are you with? independent or one who has one of the big three. I sell through two wholesalers, one for most of NY and one for eastern PA. I've found the best way to get hold of them is to physically show up at the office. I routinely check in weekly with them and do an inventory count myself. I've found I get more attention then my sales warrant. I've have no idea how to self distribute. I've got two jobs and two young kids so its not an option for me.

[Richard Stueven]

They're both Bud houses. There don't seem to be any independent wholesalers in these parts.

[frigatebay]

Have you looked at what wholesalers other small brands in your area use? I've been doing that in an effort to find a wholesale for downstate NY. Haven't had any luck yet

[Diamond Knot]

Originally posted by Richard Stueven
Good morning, all!

...........I say the heck with them; let's start distributing the beer ourselves, like we should have done from the start. There may, of course, be contractual issues with this approach, but the wholesalers simply aren't doing their jobs.

Richard Stueven, Brewer
William Kuether Brewing Company
Clear Lake, Wisconsin
richard@sconnieales.com

Hi Richard,
We been brewing for 10 years, and though we're a 7 Bbl rig, we turn out around 1,100 Bbls a year. We've been self distributing for 9 of those years.

We made the mistake of going with a Dirstibutor once. They charged us $25 per keg to do exactly what you've described. What they are exactly is a delivery house and sales is not part of their work statement. The Distributors in Washington rely on the Breweries to go out and sell with the accounts notifying the Distributor that they want the product. It's been my humble observation that Distributors want to only deal with 1 style preferrably, 2 at the most, from the Breweries in their stable.

Now that we're in the midst of building our second facility, a 15 Bbl rig with loads of tankage and floorspace, we'll still be self distributing. We have always had great luck with dealing directly with our customers and it gives us a competitive edge, I think.

However, this can sometime bite you in the backside when it comes to selling bottle product. Many retailers will not deal with a self distributed product since they rely on Distributors to do the cold case sets. I reckon we'll deal with that when it comes.

We purchased a used Isuzu NPR a while back with a gate lift and do all the sales / delivery aspects ourselves. To get orders, we have a dedicated phone voicemail and have a regular call list. Many of our customers are even on a "Don't call, just bring." basis. Also, by self distributing, you are saving a tun of cash and pocketing all that yourselves as well as moving all the brands you think you can in the market.

Another option, and it is an extreme one, is to go in with a couple of other Breweries and form your own Distribiutorship. We've discussed it up here on occassion, and it is allowed in most 3 tier systems. It does have some complications, but would allow Breweries to pool resources such as trucks, etc., if they can work together for a common goal and not let local competition get in ther way.

Anyway, just my $.02.

Brian Sollenberger
Diamond Knot Brewing Co.

[Larry Horwitz]

Ease up the distributor guys. In the beer market today you just can't have the expectation that your distributor is going to "sell" your product. Remember that the big 3 put sales dollars into every distributor...tons and tons and tons of sales dollars. They buy tv, they ship pop and pos, they put trucks on the road, they sponsor sporting events....you get the idea.

The big 3 also provide a nice fat margin for the distributor, and will often account for as much as 90% of a distributors sales. Why would they give you any time at all...including "just delivering" your beer? Because they like you and your uniqueness...as long as you are a professional acting in a manner befitting your high quality product.

As craft brewer you can't expect to compete on the same level and in the same way as one of the 3. So don't, and don't expect the same treatment.

Here's what you do: Make unique, high quality product that compels people. Support it yourself and help the distributor help you. If you work hard on your brand you will get a dispraportionate amount the distributor's time.

Also: Read distribution 101 in the library section of this site.

Remember: The distributor won't do what you won't...if you will not / can not support and sell your own product why sould they?

Good luck!

[Diamond Knot]

Originally posted by Larry Horwitz
Ease up the distributor guys. In the beer market today you just can't have the expectation that your distributor is going to "sell" your product. Remember that the big 3 put sales dollars into every distributor...tons and tons and tons of sales dollars. They buy tv, they ship pop and pos, they put trucks on the road, they sponsor sporting events....you get the idea................

................Remember: The distributor won't do what you won't...if you will not / can not support and sell your own product why sould they?.............

Hi, Larry,
The points you make are good, sound ideals, but usually that hasn't been my observation........at least up here in the Northwest, anyway.
Distributors have "courted us" at our facility on a few occassions...........promising the world, the stars, the heavens. They also want $26 per keg to deliver the keg. I'm sure there are really good Distributors out there, but you mentioned it yourself, they really work for the Macro's and not the little guys. In my humble belief, it takes more than just great product to ensure solid sales.

To clarify my point in the prior post, if you realize that they are not really working for you, and you're going to pay most of your margin to get that quality of service, then why not just distribute your own products? Why deal with the grief?
My point wasn't to say, "Don't go out and sell yourself." It was to say, "If you already have to sell yourself, then just finish the job and deliver it yourself and save the money.

Anyway, good points, Larry. Good discussion.

Regards,

[frigatebay]

Larry

I have to disagree somewhat. Your wholesaler is also your sales person. That is why they take such a large cut of the money. If they were just a delivary service they would operate on lower margins than they do. Yes the bud guy doesn't do a lot of selling but they also don't have the same mark up on a case of bud as they do on a case of craft beer. The higher markup should be to account for sales effort. I've got two distributors. Both are independents. The one with 6 salesman, and a few delivary guys does about 55% of my business. The one with 2 salesman and 1 delivary guy does 45%. The smaller one actually sells my beer and also delivers it. I wish my other one did the same.