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Thread: Distributor asking for 28% margin

  1. #1
    Join Date
    Aug 2014
    Posts
    2

    Distributor asking for 28% margin

    I'm curious if this is normal. We're negotiating our contract and pricing and have no idea what is fair.

    Any other comments for a first time contract with a distributor?

  2. #2
    Join Date
    May 2014
    Location
    Pittsburgh, PA, USA
    Posts
    17
    We do not have one but those we have talked to have been between 25-28%.

  3. #3
    Join Date
    Aug 2005
    Location
    Torrance, CA, US
    Posts
    224

    Depends on where you are

    Standard distributor take is 25-30% and I have seen it as high as 33%.

    It depends on where you are and what they are doing for you. Do they have sales people that will help grow your brand? Or are they just a delivery truck? Will they maintain accounts and clean the beer lines for you?

  4. #4
    Join Date
    May 2009
    Location
    Huntsville, AL
    Posts
    237
    Virginia reputable top craft distributor 32%.

  5. #5
    Join Date
    Aug 2005
    Location
    Torrance, CA, US
    Posts
    224

    Self Distro

    Does your state allow self distribution?

    If so, make sure the contract maintains that you can still self distribute at least a small portion of your volume. It makes it way easier to deal with last minute events, small batch releases, and puts a little extra dough in your pocket once in a while.

    Have you spoke to other distributors to compare services and %?

  6. #6
    Join Date
    Jul 2012
    Location
    Conroe , TX
    Posts
    285
    Very normal.

    We were able to negotiate a slightly better margin for the first couple of years with the idea that as a new/smallish brewery we could use the extra cash to help us grow which in turn helps them as well. With that said every situation is different, but just sharing our experience.

  7. #7
    Join Date
    Aug 2016
    Location
    hangzhou/china
    Posts
    2
    I think mainly depends on your 1. brand reputation 2. price strategy 3. distributors quantity

  8. #8
    Join Date
    Nov 2002
    Location
    Mobile, Alabama, USA
    Posts
    203
    That seems normal, 25-30%, pencil kegs get a slightly higher markup than half barrels. Distributor margin is based on the price that the market will bear at retail, then counting backwards between what price the retailer will pay and price from the brewery.

    So another question to you brewers, what markup average do you charge to the distributor over production cost (cogs)?
    Todd G Hicks
    BeerDenizen Brewing Services
    Serda Brewing Company
    OPEN - Finally!!!

  9. #9
    Join Date
    May 2008
    Posts
    9
    I would say that that is in the "normal" range but keep in mind that while you can, and should agree to suggested pricing, you cannot (legally) command pricing in your contract.
    Marty Compton
    Director of Sales
    Bell's Brewery, Inc.

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