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Thread: Some rookie questions..

  1. #1
    Join Date
    Mar 2018
    Location
    New York, NY 10012
    Posts
    2

    Some rookie questions..

    Hello All.

    We are located in New York City and plan to produce a heavily-promoted, locally-themed
    "New York Pale Ale". Our marketing plan includes a sophisticated social media campaign as well
    as old school "smashmouth", boots-on the ground street teams and mucho swag. We are able
    to expend significant resources on both of these elements for rapid market penetration.

    Questions:

    1. Are there industry-accepted ways for the distributor to contribute to the marketing cost on a consistent basis if
    the sales go exceptionally well (3,000-4,000 cases/month by the end of the year one)

    2.How does it work if we get into large local/regional chains with no involvement whatsoever by the
    distributor? We would invoice and deliver directly to those customers. Is some sort of hybrid arrangement possible?

    3. We see our beer at a $10 supermarket price-point for a six pack. Given that, what would the distributor need to
    buy it for...ballpark?

    Thanks to all

  2. #2
    Join Date
    May 2012
    Location
    Livermore, CA
    Posts
    602
    typical distributor margins are 30-35%.

  3. #3
    Join Date
    Jun 2011
    Posts
    205
    Quote Originally Posted by Blupalm View Post
    Hello All.

    We are located in New York City and plan to produce a heavily-promoted, locally-themed
    "New York Pale Ale". Our marketing plan includes a sophisticated social media campaign as well
    as old school "smashmouth", boots-on the ground street teams and mucho swag. We are able
    to expend significant resources on both of these elements for rapid market penetration.

    Questions:

    1. Are there industry-accepted ways for the distributor to contribute to the marketing cost on a consistent basis if
    the sales go exceptionally well (3,000-4,000 cases/month by the end of the year one)

    2.How does it work if we get into large local/regional chains with no involvement whatsoever by the
    distributor? We would invoice and deliver directly to those customers. Is some sort of hybrid arrangement possible?

    3. We see our beer at a $10 supermarket price-point for a six pack. Given that, what would the distributor need to
    buy it for...ballpark?

    Thanks to all
    1. Marketing done within the distributors market is generally split 50/50 with the brewery. They charge us pro-rated advertising costs, they pay us 50% the cost of the pint glasses we send them, etc. 3k cases is a lot of beer... I hope the plan doesn't hinge on that in year one.

    2. Normally distributors get territories and products. If they own your pale in in that county or city, they have the sole right to distribute it there. I can only speak to how it works in MD though - but I think this is pretty common. If its like MD you cant cherry pick customers. All products are assigned to someone by county. Even if we get in a place with no help to distributor and/or deliver it for them(this is minimal but mistakes happen and people still need beer), it still invoices through the distributor.

    3. $20-21 / case probably.

  4. #4
    Join Date
    Oct 2014
    Location
    Kent, WA
    Posts
    307
    Quote Originally Posted by briangaylor View Post
    [...]
    3. $20-21 / case probably.
    So then, are the distributor margins on small packages typically much higher than the margins on kegs?

    Regards,
    Mike

  5. #5
    Join Date
    Jun 2011
    Posts
    205
    Quote Originally Posted by rdcpro View Post
    So then, are the distributor margins on small packages typically much higher than the margins on kegs?

    Regards,
    Mike
    $20.50 X 1.4 (distributor) x 1.4(retailer) = 40.18 (or $10.05 per sixer)

    If you see lower markups you may be able to get away with charging a bit more and still coming in at $10 to consumers.

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