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DISTRIBUTION

Distribution Basics:

Quality, Consistency, and Why Self-Distribute?

In any industry that is showing exponential growth, it is absolutely critical that you carefully plan and
execute your business strategy in order to maximize your success. There is too much competition that
will capitalize on your mistakes and use your errors as their growth opportunity. The craft beer industry is no different, and although craft brewers get along quite well on the brewing level and support each other, the distribution tier is where push comes to shove.  As a craft brewer, you need to learn as much as you can, plan as much as you can, and carefully execute each step to prepare for distribution. Set yourself up for success.

First, take a good hard look at the products that you are brewing. Making one good beer is not enough.You need to have developed a product line that is outstanding. When pitching your brewery to anyone, including a distributor, you need to lead with quality. Take the time to bring your beers to events, community functions, to brewing competitions, places where there are knowledgeable people to taste and offer their feedback. Dial it in; make sure there are no off-flavors or problems with carbonation and packaging. Next, brew that same product many, many times. The consistency from batch to batch needs to be absolute, because the end customer wants to enjoy the same beer over

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.

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and over again without fail. If you are brewing specialty products, you still need to consistently maintain your high standards of quality from batch to batch with no issues in production. Distributors will lose confidence in your products quickly if this consistency is not maintained, and distributors without confidence do not sell much beer.

Once you are sure that your quality and consistency are solid, consider self-distribution if it is allowed legally in your area. Self-distributing is a good idea for many reasons, such as:

  1. You & your staff will always be the best sales team for your own brand. It’s your dream, your passion, and you know your products better than anyone else ever will.

  2. Your community is invested in your success. They know you personally, work with and live with your friends and family, understand your dream, and are benefitting from the jobs that you have created with your small business.

  3. Brand recognition has to begin somewhere, and having recognition and sales established before you search for a distributor helps to show the quality of your brand.

  4. You get 100% of the profit margin! Price your products at the price you would like to see on the shelf, at the same price point as those brands that you respect and would like to compete with. Never undercut your competition. Keep the quality image and build your financial strength.

  5. Test your products’ quality and consistency in the market where you can easily fix mistakes. Test out new products. Tweak recipes. Do it all with the people who know and love you before you branch out to those who don’t.

  6. Learn what it’s like to be a distributor, even on a small scale. Look at the market from a distribution perspective, and think about what it would be like to do this on a large scale. The more you understand about the distribution mission, the better partner you will be able to be when you have a distributor handling your brand.
     

If and when you decide to self-distribute, set yourself specific goals or situations that would necessitate the transition from self-distributing to finding a distribution partner.  It is wise to determine how much time, energy, expense, staffing, trucks, etc. you are willing to invest in advance. Once you hit this pre-determined level, you can consider continuing to self-distribute in a specific area or getting out of it altogether.

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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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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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Craft Beer Distribution:

Laying the Groundwork – Financing Expansion

Laura Lodge

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.

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