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DISTRIBUTION

Distribution can be essential for breweries at many different stages of growth. In some states a distribution contract/partner is required simply to sell your own beer to your tap room to serve it. For others, Distribution can be put off until way into the future….perhaps not in the business plan at all. Breweries growing one step at a time may plan to handle limited self-distribution (in states that allow it) to get their feet wet or just to support their neighbors, with the intent to grow into formal distribution someday.

 

Regardless, it is important to understand the benefits and costs of distribution so that any plan can properly account for the time and cost of each step to prepare properly. Therefore, feel free to explore informational articles that may be organized in Open or Grow even when you’re in the Plan stage. It’s never too early to learn.

 

Distribution is necessarily connected at the hip with Accounting, Branding/Marketing, Business Plan, Human Resources, Legal, and Sales. All of these elements are essential to executing a distribution plan well. And quality execution, including utilizing the requisite time and resources, is necessary to ensure maximum success with your distribution partner.

Distribution: Laying the Groundwork for Financing Expansion

In the previous Distribution article, three components were identified as critical to preparing your company for distribution: identity or branding, the ability to finance the change in your business, and deciding where you would like for your product to be sold. Identity and branding have been discussed, so now let’s work on financing the change in your business.


There are many elements to a business expansion of this type. The most obvious is the change in volume of product. Remember to explore the availability of your ingredients on a larger scale as well as planning for the appropriate volume of packaging materials. Take a good look at your equipment and think about how it will handle this increase in volume as well. Do you have enough staff on your brewery team to create this additional product? How much additional temperature controlled storage space do you have to keep the product until it ships to the distributor? Some of these can be incredibly difficult questions, but none are optional for healthy expansion with maximum potential.


When considering scaling up your production, give some thought to which products you would like to distribute and in what size packages. Cost and availability of ingredients and packaging have already

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been mentioned, but think also of your image in this new territory. Are you planning to introduce your flagship beers only? In 4pks or 6pks? A variety pack of these flagship beers can be good marketing for larger events and parties. Seasonals and limited release products can really boost sales with a higher price point, but choose carefully what platform you are building for your brand. It needs to be one you can support going forward on a larger scale if it is successful (or) designed to be limited from the outset. Some geographic areas are really receptive to large format (22 or 25.4 oz) bottles, and others are not. The balance of quality, price and image is essential. 

 

Packaging design is extremely important to your brand, and thinking through the mechanics of your placements can highlight additional requirements. For example, in a liquor store there will be a variety of different shelf heights and widths. Make sure that the packaging you’re planning to send into this territory will work in as many of these liquor store spots as possible to maximize potential placements. Think about how your 12pk will be placed on the shelf. Can the consumer see your branding regardless of how it is placed on the shelf? How will the pricing work in this area? In some instances it might make sense to send 4pks or 6pks to bring the price into a more appealing range.

Durability is also important to your image. That same 12pk, which will almost always be on a bottom shelf if it isn’t part of a display, needs to have carrying handles that will not rip out when the staff puts it on the shelf or when the consumer takes it off the shelf. 6pk carriers that bust out before they are out of the store can also have disastrous results. Quality image means investing in quality packaging that will last all the way to the customer’s refrigerator and beyond.


Packaging and durability both come into play with specialty products, especially during the holidays. Fancy (flimsy) gilt boxes with cut-outs and magnums of holiday products are just two examples of the insane marketing concepts that make their way from breweries to liquor stores. While they do draw attention and can sell for top dollar, remember to be somewhat practical for the sake of the distributor and retailer in order to assist them in getting your product to the shelf without damage. A tattered, broken, dented, torn holiday package doesn’t sell at all and looks miserable on the shelf.


Preparing to expand is not limited to product, brewery staffing, and space limitation considerations. In the next Distribution article, look for information about staffing for the new territory and other distribution expenses to consider.

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Contributing Author

Laura Lodge                                                                                    Owner/Author, Distribution Insight, LLC

As the author of Distribution Insight for the Craft Brewer, Laura shares her experience with distribution on the Western Slope of Colorado for the benefit of brewers everywhere.  A veteran of the craft beer industry, she is also the Owner of Customized Craft Beer Programs, designing events, resort retail programs, and educational programs based on craft beer.

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Truck Self-distributing goods

Self-Distribution:

Marvelous or Onerous?

Laura Lodge

Is self-distribution legal in your state? As of November of 2020, self-distribution was not legal in AL, GA, DE, FL, KS, KY, LA, MO, MS, NE, NV, RI, SC, & VT according to the Brewers Association. Always double-check the regulations in your state to confirm and find out details that could be critical to your business planning.
There are a number of pros and cons to consider when thinking through self-distribution. Some of the 

 

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The Care & Feeding Of Distributors:

Part I

Andy Mansinne

The explosion of new craft breweries, distilleries and wineries over the past several decades has been a benefit to local economies, curious consumers, and to the craft entrepreneurs themselves. However, for every craft brand that “makes it big” (insert your meaning of “big” here), there are many other, equally hard-working craft brand owners who struggle to scale, and still, many more that simply fail. While we cannot address every solution for a craft brand’s business woes, we do want to take time in 

Contract & Pen

Distribution Contracts:

Content, Strategy, and Negotiation

Laura Lodge & Candace L Moon

Distribution Contracts require both an eye to strategy and legal structure/protections. This presentation is intended to showcase the importance of both while emphasizing the diversity in the industry; no one size fits all solutions exist. Please note that this is not to be construed as legal advice.
Fundamental differences between Traditional Distributors, MegaDistributors, and Brand Collectors include their intent to actively sell your products and grow your brand in coordination with you. Read 

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Fantastic Importers and Distributors

and Where to Find Them

Scott Rosenbaum

Whether you’re a potential employee or supplier, here are the qualities you should look for.


No one wants to end up with a dud. No one wants to settle for less than they believe they’re worth. This is true in business as in love. Sadly, too many employees and suppliers settle for what suffices rather than what satisfies when it comes to business relationships. The issue doesn’t stem from the lack of 

PLAN

  • Research Your State Distribution Requirements

  • Review State Franchise Laws

  • Understand Requisite Quality & Consistency

  • Consider Self-Distribution 

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oPEN

  • Establish Self-Distribution Limits

  • Plan Distribution Essentials

    • Product Storage​

    • Keg Rental/Purchase

    • Delivery Vehicle

    • Support Equipment

  • Establish Brewery Distribution Team

    • Accounting​

    • Delivery

    • Sales

    • Warehouse

  • Explore Expansion Needs/ Cost

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GrOW

  • Select New Territory

  • Review New Territory Franchise Laws

  • Create Point of Sale Items

  • Additional Brewery Sales Team

  • Explore Distribution Options

  • Select a Distributor

  • Negotiate Distribution Contracts

  • Train Distribution Sales Team

  • Manage Distribution Partnership