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  • Sample Distribution Contract

    Hello! I was wondering if anyone in this thread would be kind enough to send me a sample distribution contract that you use when signing on a new brewery.

    I was hoping to look one over and get an solid idea of what to expect.

    Also, had a few general questions:

    1. Do you use escalator clauses on how commission would increase or drop based on volume? Do you have example percentages?

    2. What type of marketing materials do you expect from the brewer to help train your staff or use in the sales process? Do most of you still use paper pamphlets or one page sheets? Or do you expect the customers will go online to learn about the product?

    3. How do you balance between sales being driven by the distributor's sales sales staff getting into new accounts vs the breweries marketing staff creating events, awareness, and driving new business? Do you change revenue splits?


    Thanks,

    AC

  • #2
    [QUOTE=ac77;89278]Hello! I was wondering if anyone in this thread would be kind enough to send me a sample distribution contract that you use when signing on a new brewery.

    I was hoping to look one over and get an solid idea of what to expect.

    Also, had a few general questions:

    1. Do you use escalator clauses on how commission would increase or drop based on volume? Do you have example percentages?


    2. What type of marketing materials do you expect from the brewer to help train your staff or use in the sales process? Do most of you still use paper pamphlets or one page sheets? Or do you expect the customers will go online to learn about the product?

    3. How do you balance between sales being driven by the distributor's sales sales staff getting into new accounts vs the breweries marketing staff creating events, awareness, and driving new business? Do you change revenue splits?


    Per #1, commission splits for who? Distributors don't work on commission. They generally markup 28-32%.
    #2 Who are you addressing this to, a distributor? Experienced breweries or industry sales reps? What they expect will vary from market to market and distrib to distrib. Some distribs are very progressive and know about beer more than you. Others just switched from driver sales to pre order. Your job is to educate the distrib on your beers and story. The sell sheets are good for their rep and the account. One page is fine. Make it easy to read, pricing and a quick bit about your brewery. Customers will look you up on beer advocate etc.. and your website. Don't make a cheap ass website that says little about who you are, where you are... People want to read your story. What makes you different and why are you here. And of course the beers. I suggest using many photos of the brewery, your people, tap room, whatever. People want to connect.

    #3 You don't. I could and should write an entire dissertation on the difference between (brewery reps) on commission vs salary, car allowance, and bonus etc.. Here's a quick synopsis. (from an industry sales veteran) I recently had a brewery that is 3 hours of me offer me a commission job to run this market I live in which is their nearest big city. They are currently 5000-8000 barrels I think, if that. If this market doesn't take off, their future looks dim (in my experienced professional opinion) They are already looking into expanding to another state (bad idea) They are in a distributor who has all the local beers, most of the state ones and BUD. They are craft focused and knowledgeable. Their offer to me was $450 a week, $2 a case and $10 a draft line. No mention of a car or gas allowance.

    As you mentioned, this game is more than selling beer to an account. It's festivals, distributor education, distributor management, order forecasting, cooperage management, account promotions etc... Success is measured over a period of time, a quarter, a year. Yes, keep track of daily or weekly placements, but that's not a measure of pay. Some accounts rotate handles. Do you want to pay a fee for an account to do one keg then kick your ass out? You going to pay your rep to hunt down your $30 tap handle? Get that $80 vessel back?

    Here's a word to you breweries that don't have a clue about distributor sales... You need a rep, the D isn't going to do it for you. Their job is to warehouse and deliver beer. Try to hire a commission guy, you will get problems. Why should I care about your long term success when you aren't compensating me for the work? What happens when the commission guy takes some in house brands off a bars lineup and puts yours on because that's how he feeds his family? You do know that's a big NO NO with the distributor right??? Pisss the D off and expect it to show in your numbers.

    Don't be a cheap ass. If you can't play to win, don't play. Good news for you little guys with bootstrap startups... A few years from now, when these investor breweries (guys who made $$$ in other industries and think this game is a gimme) go belly up because they just don't get it... There will be breweries for sale on a discount for you to move into.

    Expect to pay a rep, a decent rep with some experience (so they know the rules and how to play) at least 35 or 40K, plus his gas at least.

    For me?? I declined the job. I have a plan for a 1.5-2 MM brewery that will be vetted this month. I have investors in the wings. So in the meantime I'm sitting back watching that brewery sink...

    Comment


    • #3
      My apologies for the vent. Back to the question... Just ask any distributor for their agreement. In most states, state law wins at the end of the day anyway. Make sure you're in love with your D because divorce is expensive. You hold no cards, the D has them all. You basically cant get rid of them. Here's some good news, D's will now pay even a startup for their Distribution rights. Not necessarily in your market, but in mine one new guy just got 100K. You can google a sample contract. I have one somewhere I could send. My advice, forget about this part. You have no say in the contract. You have one shot at picking your D. Interview them well. Do you know what co-op dollars are? Have a plan for out of code beer? it will happen. who pays?

      Comment


      • #4
        distribution

        When you load up a tractor trailer of beer for the distributor and realize your take on the profit margin is a mere $750 you realize more focus on the tap room, developing brands, brewing some killer beers and keeping local is much better for your bottom line. Tracking the vessels, all the swag that has to be developed, printed, paid for....then there is finding the right rep. Take Small steps, watching the other over-invested breweries and/or over-indebted breweries water down their quality, lose tap lines, panic at their quarterly meetings - we have no debt, no investors, and customers love the daily offerings of our beers plus other small boutique breweries that cannot be found anywhere else. Find a niche and own it.

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