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Demystifying DtC Sales
by: Julia Herz, HerzMuses Enterprises

With challenge comes opportunity, and I am incredibly optimistic about what is ahead. Right now, I see thousands of breweries (there were 8,500 on the record before COVID-19 in March 2020) evolve in ways that show how small businesses can be agile and adaptable.


In the August 2020 press release from online retailer Drizly, they shared: "As consumers migrate to purchasing alcohol through e-commerce channels, Drizly forecasts 20% of off-premise alcohol purchases — normally at liquor, grocery, and drug stores — will be transacted online within the next five years. Less than 2% of these were online earlier this year."


Letting that sink in, it's fair to say that due to COVID-19 online sales of beverage alcohol will never be the same, especially for breweries. So…what is DtC and E-commerce anyway, and what should a beverage alcohol producer keep in mind?

Direct to Consumer (DtC) vs. E-commerce


E-commerce
Anything tied to website/app sales of curbside, delivery, to-go, shipped beer, pre-sales, or merch sales is an E-commerce sale. Common e-commerce platforms are Amazon, Drizly, and a variety of other marketplace websites.


DtC
Shipped sales directly from the producer to the consumer equate to DtC. DtC is a part of e-commerce. Common DtC platforms are brewery websites using their site to process transactions for their beer sales, merchandise, food, etc. who then use a third-party carrier to ship directly to the customer’s address.


For U.S. breweries, ten states plus D.C. allow out-of-state brewers shipping beer directly:

  • Alaska, District of Columbia, Kentucky, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oregon, Vermont, and Virginia

  • Montana, Pennsylvania, and Rhode Island allow more restrictive out-of-state brewers

 

In contrast, consider that U.S. wineries can ship to 45 states and even wine retailers can ship to 15 states! With that, the U.S. beer industry has a lot of work ahead to ensure more states’ approval to even the playing field.

So if you are a brewery and want an expanded marketplace reach, your eye should include the above states.
90% of customers never make it to a restaurant website.
Don’t let that happen to your brewery. <Bevv.com>

What to Keep In Mind

  • A brewery website is an additional sales channel where breweries can sell not only their beer but also, where allowed, bundle their beer sales with pre-packaged food pairings, offer subscription services for regular beer delivery and ongoing credit card sales, plus open the door for 'treat me' sales that increase digital shopping carts and a brewery's bottom line.
     

  • Look for emerging technologies like predictive personalization and SaaS (software as a service) to enhance and customize brewery and retailer online sales.
     

  • Own (On)-premise sales in the modern world: View your website as an online taproom and its own separate sales channel. So…view it as a webstore. Set up sales goals and be on the lookout for technologies that allow you to provide a customized user experience based on each visitor.
     

  • Contactless ordering offers the opportunity to increase sales at the point of purchase (your taproom or brewpub).
     

  • QR Codes can be printed on marketing materials, including advertisements, menus, tables, menus board, and more. These codes take the visitor directly to your online webstore to order!
     

  • The thirst for video is real. If you don’t have videos promoting each product, you can get them produced and place them next to each product listing on your website.
     

  • Keep in mind the future of voice search…you read that right. Get ready for us all to want to search webpages via voice just like we are already doing on our connected TVs and with Alexa.
     

  • The use of artificial intelligence to learn about your shoppers and predictive personalization of content for website visitors is being developed. Brave new world, people. Brave new world.
     

  • The use of chatbots is more common than ever. Does your website have one? If not, then consider looking into it. Just like your staff answer the phone, they too can be set up to answer a real-time online inquiry.
     

  • The ease of mobile shopping and how your site functions compared to desktop shopping are both critical. Always design for both!

Julia’s Gems To Consider BEFORE Updating Or Creating Your Brewery Website

  • Block out weekly meetings for the core team
     

  • Gather analytics from your website CMS (content management system), your taproom POS system, Email/newsletter sending platform, inventory system, etc.
     

  • SEO keywords:

  • Summarize merchandise sales program, fulfillment process, profit, products sold, volume
     

  • Outline current sales and or goals if a new brewery:

    • On-premise sales: xxx of revenue

    • Distributed sales: xxx of revenue

    • Online sales: xxx of revenue
       

  • Outline loyalty/subscription program
     

  • Consider bundling and upsell to each order

    • Pre-packaged food from area vendors, Chapstick, merchandise, etc.

    • Name your bundle packages with fun brand names and promote those as individual products in your store

    • Before checkout on each order, offer an add on, “Add xxx item onto your order.”
       

  • Catalog media and digital assets for the press
     

  • Schedule quarterly virtual event tastings with a select six-pack to be purchased in advance. Send those who purchase a link to the virtual tasting.
     

  • Gather user-generated reviews for addition to the website shopping experience
     

  • Be ready to create the augmented reality of each beer - 360-degree views of products
     

  • Address 21-Verification and liability
     

  • Prep to offer text marketing as a channel of communications
     

  • Plan for the website design/update process to take at least three months, if not more.
     

  • An incredible way to prep for your website update is to pay attention to other websites you purchase from and note how they present their products, what the shopping cart experience is like, and what offers and prompts they extend to you.

 

Out of State Shipping

  • If you are already conducting DtC out of state, how is your current compliance handled (taxes, licensing, etc.)?

    • How are you paying out-of-state fees each month? Do you hold licenses for the states you are shipping to? If not, you are subject to fines that threaten your ability to hold a license.

    • Several states require your business to use a third-party age verification provider or store a copy of a government-issued ID for each purchaser.

    • A few states require you to report the date of birth of the purchaser and recipient by collecting that information at the point of sale

    • Be aware of product registration, TTB COLA Registration, and Excise tax requirements

    • Volume limits for each state

 

How do you pay for it all? Let me help you get REAL about how to pay for this new webstore.

  1. Do you have a taproom guest check average calculated? Whatever it is, increase it by $2 per sale x customers in a year = $$$ new revenue. Get each of your staff on board to reach this new goal. Doing this one act alone could pay for your new website.
     

  2. Now… what is the volume of beer, merchandise, and food you hope to sell via the new website in a year? And what is your estimated profit over cost for these sales?
     

Do you see where I’m going with this? With the above in mind, when done correctly, your website is not “just another business expense," but it is a solid investment in your business that has a clear ROI.

Resource Links:


For more information, and to emphasize many of the above points, feel free to watch my Craft Beer Professionals presentation “Demystifying Opportunities and Options of Direct to Consumer Sales” at the Craft Beer Professional Spring Conference in April, 2021.

Let me know how I can help you with your website updates and e-commerce solutions. I have a talented and experienced team ready to deliver cutting-edge, modern, and effective website sales solutions. You can see more at www.HerzMuses.com.

Sales strategy should be at the forefront of your mind when starting a brewery. This is the phase where you graduate from homebrewer and humble beer fan to a licensed brewery owner and/or operator. You can produce some of the best beers in the world, but in order to make your beer your business, you must know how to sell your products.

 

A thorough understanding of the science behind successful selling will help you along the path towards profitability. Selling is more than just handing out samples and rattling off attributes like ABV and malt variants. Successful salespeople understand the essence of a brand, can identify and communicate their unique value propositions, and work hard to build long term relationships with customers. Selling is about providing the right product solution for the right customer. When you learn how to make a successful brand connection with your target customer and continue to provide valuable solutions for their needs, you establish long term brand loyalty that will continuously fuel demand for your products.

 

Sales can also take many forms - onsite from your taproom, self-distribution in the retail market segment, or mass distribution in the wholesale channel. In addition to making plans on where you will be selling your beer, you also need a definitive sales strategy to compliment your overall business goals. With the crowded nature of today’s craft beer market, a well-structured sales plan will give you a competitive edge over other brands that skip this step.

 

As your brand presence grows and demand increases, your sales plans will evolve as well. You should create short and long term sales plans, with specific timelines for expansion into various market segments. In your sales plans, you should take into consideration a timeline for market expansion, necessary sales personnel, the cost of sales materials, how you will formulate annual sales projections, and how to track your sales data.

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Contributing Author

Julia Herz                                                                                                                        CEO, Herz Muses Enterprises

 

Julia Herz is a strategic consultant & educator who supports small business & nonprofit entities. Prior to consulting, Herz was the Craft Beer Program Director for the Brewers Association and Publisher of CraftBeer.com. Herz is a BJCP Certified beer judge, an award-winning homebrewer, a Certified Cicerone®, and co-author of Beer Pairing: The Essential Guide from the Pairing Pros.

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The country is beginning to see some semblance of normalcy since the COVID-19 vaccines have begun to roll out and case counts go down. Restaurants are beginning to allow sit down dining in limited capacity along with and bars and taprooms being allowed to let patrons sit down for a few drinks. As this reopening continues, make sure your brewery is ready to recapture (and possibly enhance) that once lost source of revenue and exposure. Here are few tips on how to successfully bring draft back.

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When you plan an extended trip somewhere, very few people just hit the road without any knowledge of their destination or how to get there. If you didn't, chances are that you will get lost or drive around in circles without any direction. To avoid this, you need a clear destination and assistance from tools that will route your best path, like a map or GPS.


You should apply this same concept to selling your beer. Your Sales Vision Plan will be the guiding 

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Have a Distribution Business Plan Ready 

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So you’ve got yourself a contract with a beverage wholesaler and the sales should just start rolling in any time now, right? Wrong. One of the most common mistakes that you can make as a craft beverage business is to assume that your lagging sales will be miraculously increased by the addition of a distributor partner.

PLAN

  • Identify Sales Channels

  • Identify Sales Timeline

  • Consider Sales Staff

  • Budget for Sales

  • Sales Projections

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oPEN

  • Create Sales Goals

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  • Assess Market

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GrOW

  • Work with District Sales Teams

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