Start Up Distributor?

[Start Up Dist]

With the increase in craft brewing and government limitations of the three tier system, I am looking for some feedback on the idea of a start up distributor that only represents craft breweries? From everything I have read the current system in most states is a major disadvantage to both the small brewer and consumer.

We live within 15 minutes of 3 states (Md, De, and Pa) and have researched the paperwork in each. The regulatory requirements are obviously geared toward those working with the macros but at the same time don’t seem to impose fees that would require that kind of volume to be modestly successful (we are not looking for a get rich quick scheme just a career change.)

So I guess the question are:

Why have more people not done it?
As a brewer would you support it?
Foreign export… We could probably dedicate an entire college economics course to that topic. But would it be a reasonable long term goal?

Thanks for the feedback.

[MCompton]

To answer your questions:
1. Because it's capital intensive and very hard work.

2. It would depend on the brewers you're looking to work with. For us, no we need deeper coverage than most start ups could offer. I think it's a question of scale really. Do the math - how many accounts (on & off premise are there in those three States? How many trucks, drivers, merchandisers, and sales people would you need to cover them on a weekly or bi-weekly basis? My guess is that that scale of operation is just too big to jump into unless you're purchasing an existing operation, related to a Gates or Buffett, or both. My suggestion would be to start more focused. Look at very local breweries that are looking to distribute in a very local area and provide that service to them. Over time, if you do your job right, others will follow and you can build yourself a solid business that can continue to grow into what you initially envisioned over time.

3. I would recommend staying away for exporting. As a brewery, we will handle that end of things ourselves thanks.

[dplittle]

What Marty Said

Couldn't have said it better.

The new distributorships opening in our area are doing just that ... starting by distributing one brewery in the local area and growing from there.

Can you make a go of it by just distributing craft beer? Absolutely! That's what we do and I love being able to say that I enjoy drinking every beer we distribute. In fact, that is a major deciding point when we consider adding a new brewery.

David

[Brewtopian]

I obviously have no idea how much money you have play with but that is the one thing that is really at the heart of the question. You could absolutely open a craft focused distribution house and do extremely well but you've got to be prepared to spend a lot of cash to do it. Even if you start on the smallest scale (a couple guys, a van and a small warehouse) you're going to need a couple hundred thousand dollars to get open and acquire inventory.

The other thing to keep in mind is starting small like this means you're going to have a more difficult time attracting breweries that are in demand with products that people are seeking out since larger distributors have infrastructure, relationships, sales forces, marketing dollars and existing accounts with cash flow to help them attract new breweries to their portfolio.

I would love to see more independent distributors open up but access to vast amounts of capital and a lack of sex appeal compared to owning a brewery keep people out of it.

[Start Up Dist]

Thanks for the replies. When I read Marty’s post it was discouraging at first… Then I realized that he is with Bell’s. I wouldn’t even considering approaching someone the size of Bell’s but that kind of community support is one of the many reasons why I am considering this project.

One thing is for sure, this will not be a rushed project.

Thanks again for the feedback.

[yap]

size doesn't matter

Even though you won't be targeting bigger breweries like Bell's, the song is still the same. As a small guy who only distributes in a limited area, I still want the same attention to my brand in my market that someone would give to Bell's. Service, market penetration, all that. The only difference is that someone like Bell's might be looking for a distributor that can do that for a whole state, whereas a small brewery may be looking for someone who can do that in just a couple of counties. The scale is certainly less, but the methodologies stay the same.

I for one would love to see more small distributors start-up, but at the same time I'm not sure that I would be willing to sign with one. There was a local wine distributor in my area that wanted me to sign on with them as their first brewery client. I was promised top billing in their portfolio and all kinds of other wonderful things. My biggest problem was that I needed to move product and fast. Going with someone new and unestablished would have taken longer to gain traction in the market than going with someone more established. It was hard enough getting my brewery up and running, let alone "helping" a new distributor get going. I guess my point is (if you haven't already done so) try and talk to several small start-ups and see if there is interest in such a thing in your area before you take the plunge...

Good Luck!