Distributor Contracts Questions

[Schubros]

I'm in the planning stages of a new brewery, but know I need some help better understanding the brewer-distributor relationship.

Would anyone be willing to share any information on yours, or "typical" (which may not exist) brewer-distributor relationships/contracts? In specific some of the questions I have are:

- Are distributors generally receptive to ideas such as carving out small areas for self-distribution within what otherwise would be their territory?
- Are distributors generally receptive to ideas like letting the brewers make sales calls for select accounts (meaning for example that the distributors might focus only on distribution to key accounts, but would perform both sales & distribution to smaller retailers)?
- Are ride-alongs with the distributor representatives common-place?
- From a brewer's perspective, what is the general "cost" of using a distributor? Any number would be much appreciated, be it a markup percentage range, net profit when outsourced vs self-distributed, general dollars/barrel FOB figure, etc.
- How is information generally shared? Is the brewer usually updated regularly on distribution and sales (or is there generally something available on line), or is that information rarely even available?

Beyond those questions, any other intel on how your relations are would be invaluable (even if it's very general, like 'cordial', 'low-communication', 'interactive', etc.).

Thanks in advance,

-Ian

[barleyjac]

Ian,

Those are great questions. They pertain to info you absolutely must know if you are going to be successful in this business. I'll give you the same advice I give to anyone else who asks how they can get started in this business: work for someone else for 6 months to a year. Believe me if you get a job as a brewery sales rep or as a beer distributor rep you will know the answers to all these questions and more. And you will be much more successful at a much faster rate than you could otherwise. It's always better to learn on someone elses dime if you have the opportunity.

[scrubb]

You should make a point of working with your distributor as though they were your business partner in selling the beer. They are.


> Are distributors generally receptive to ideas such as carving out small >areas for self-distribution within what otherwise would be their territory?

Depends upon the distributor and your state laws. Probably not.


>Are distributors generally receptive to ideas like letting the brewers make >sales calls for select accounts (meaning for example that the distributors >might focus only on distribution to key accounts, but would perform both >sales & distribution to smaller retailers)?

They should be. Any sales you make is money in their pocket as well as yours.


>Are ride-alongs with the distributor representatives common-place?

Yes. I would demand them. It's a good way to get to know the relationships that already exist and to meet potential customers.


>From a brewer's perspective, what is the general "cost" of using a >distributor?

There is no "cost". The distributor will generally work on a 25-30% margin. You'll have to figure this in when deciding what your target shelf price will be. Don't forget that you'd have to charge more if you were self distributing to cover the associated costs of delivery and sales. Distributor margins are not necessarily money out of your pocket.

>How is information generally shared? Is the brewer usually updated >regularly on distribution and sales (or is there generally something >available on line), or is that information rarely even available?

You should be getting weekly reports of depletions by brand for each account.


Hope this helps,

Scrubb