Creating a successful beverage business involves more than a great idea. The reality is you’ll need a few key partners to bring your dream drink to the masses.
You’ve worked with a beverage developer to create your custom formulation, secured your ingredients and packaging, and found a manufacturer to produce your drink–the next step is mapping out your route to market. So, how do you get there?
Whether you’ve got an alcoholic or non-alcoholic product, you’ll want to find a distributor. Distributors are partners that help brands connect and sell their products to the right retailers–that’s everyone from convenience and grocery stores to restaurants and bars.
Though each has their relevance in the beverage industry, not every distributor is the same. Finding the right distributor means understanding the distribution landscape, knowing what to look for, and how to set yourself up for success.
In this guide, we’ll explore the nuances involved in working with an alcohol distributor, specifically. Alcohol distribution is a complex and highly regulated space, so we hope that this expert piece gives you a head start in working through some of the many considerations involved in launching an alcohol product.
Understanding Distribution: What Is It?
Distribution is all about relationships. From a topline view, a distributor (or wholesaler) serves as an extension of the sales arm of beverage brands (called suppliers). When a partnership agreement is reached between a supplier and wholesaler, the distributor takes on the responsibility of introducing and selling products to retailers. At the same time, a wholesaler works with the supplier to build a brand consumers return to time and time again.
In addition to being a steward of the brand, a distributor serves as tax collector for the supplier side and pays state and local taxes on behalf of the brands they represent. This frees up the supplier from the role of ensuring the tax code is met in each specific state and locality in which their product is served.
Beyond that, large distributors like RNDC can also act as a full-scale resource to their supplier partners–this is where the brand-building element comes in. It’s in a distributor’s best interests to consult with suppliers on sales, marketing, and strategic planning and provide support to help them be successful.
Alcohol Vs. Non-Alcohol Wholesalers
The simplest way to summarize the differences between an alcohol and non-alcohol distributor is the product. But naturally, there are several associated legal limitations that go along with distributing alcohol versus non-alcohol products.
For one, alcohol distributors experience a degree of federal oversight that non-alcohol wholesalers aren’t necessarily subjected to. Unlike non-alcohol distributors, federal oversight of alcohol wholesalers extends beyond the product development phase, affecting everything from funding and label creation to compliance within the nuances of state and local laws.
Another key difference based on the nature of the product is that non-alcohol distributors can serve most retailers, whereas an alcohol distributor can only sell to licensed premises. Of course, many alcohol wholesalers also carry a number of non-alcohol brands whose intention is to be sold with alcohol. This can be beneficial for cross-merchandising and planning programs for retailers to carry multiple complementary products from a distributor’s portfolio.
Contacting An Alcohol Distributor
If you’re reading this, you’re either exploring the possibility of launching a beverage company or you’re in the midst of developing your drink and brand–when should you contact an alcohol distributor?
Well, when you’re ready.
Depending on who you ask, this can be defined in a few different ways; at the very least, you’ll want to have a crystalized concept and viable business plan. A wholesaler needs to understand enough to be able to see how they would take your product to market and be successful doing so.
A supplier might feel ready to have these conversations as early as two years prior to releasing the product, or in as little as several months leading up to a launch. What matters isn’t necessarily when the conversation happens, but whether the supplier is prepared.
First impressions are everything. The reality is that a distributor and supplier’s first meeting together is the pitch. It’s the interview where both parties have the opportunity to sell one another on why they would make great partners.
Acing Your First Alcohol Distributor Meeting
Okay, you’ve determined that you’re officially ready to meet with a potential alcohol distributor–what should you bring with you?
This is a wholesaler’s first experience with you and your brand, so you should bring a presentation. Make sure to include answers to questions like,
- What’s your backstory?
- What got you involved in the brand? What’s going to keep you involved in the brand?
- What is your brand vision and values?
- What plans or innovations do you have for future growth?
- And of course, what is your product and what makes it unique? How does your product fit in the market?
Remember–distribution is all about relationships. A wholesaler wants to know as much about you as they do about your brand and product. You are who they will be working with, and they want to make sure that you will be a good fit in a partnership–that everyone’s values and expectations are in alignment so both parties can be successful.
In addition to a presentation, it goes without saying that you should have samples, as well as the spec sheets for your product. A distributor should be able to experience your brand the same way a retailer or consumer would. Give them the opportunity to taste, touch, and see it–to use all of their senses to fully understand the product and your brand.
As a wholesaler assesses your product, they will also be determining its quality and quality-price ratios, in addition to benchmarking it against other products in their portfolio to determine whether it makes sense for the relationship. Keep this in mind as you prepare your presentation–your craft gin isn’t just another gin, so, prove it. Leverage your story.
Picking The Right Alcohol Distributor
Wow, you’ve impressed your distributor. That’s wonderful! Now, how do you determine that they are the right fit for you, too? There are three main elements that can help you make a decision.
First of all, find out if they are relevant in the market–specifically, your market. Go to your desired retailers and ask around. Find out who they enjoy working with and why. After all, you should want to partner with the distributor that retailers want to work with. That’s already an easy way to set yourself up for success.
Second is route-to-market strategy. This is a primary responsibility of your alcohol distributor, so naturally, you’ll want to make sure your expectations are in alignment. Are they receptive to the direction you’ve envisioned for your brand? What can they contribute to bringing that vision to reality?
A distributor should both be willing to work with you on where you want to go with the brand and be equipped with the resources and relationships necessary to do so. Not every brand makes sense for every distributor, and that’s okay.
This third consideration goes back to understanding the distribution process. A great wholesaler manages to balance multiple brands within the same category and avoid conflicts of interest. It’s a juggling act, but there is a place for most viable brands in the market.
That being said, while a retail establishment often has more space on the shelf for a given category, a bar or restaurant may be limited in that same real estate. Knowing what competitive products an alcohol distributor carries can help you determine how often your product might be put aside in favor of another, competing product in those circumstances.
Building A Successful Partnership
A relationship between a wholesaler and a supplier is like a marriage–it’s a true partnership. This is also why setting expectations together is an important part of building a successful relationship.
An alcohol distributor is there primarily to break down a supplier’s barriers to market. Often that involves working with each retailer and assessing what makes sense for them to carry, providing good data for them around a product, and helping them successfully build a product into their store.
On the supplier’s side, a great partner is expected to be engaged with their distributor. That means picking up a phone and checking in, planning business together, walking through marketing strategies, and utilizing the wholesaler’s resource teams. It also means having reviews to follow up and ensure plans are coming to fruition as expected.
RNDC utilizes a “work-with” schedule, where suppliers have the opportunity to venture into the market to present that product with the sales team to retailers and customers. Not only does this educate the sales team, but it also creates a personal relationship between the supplier and retailer. This is incredibly valuable because the best suppliers are those that are engaged with their market and their wholesaler relationships.
Beyond engaging with a distributor so they can be effective stewards of the product to retailers, a supplier is responsible for the consumer side of brand building. As a supplier, you should know the answers to questions like,
- How do you plan to market your product and brand?
- What kind of digital presence will you have? What about events? Where else can you reach your target consumer?
- How will you drive people to the store to buy your product?
Once a product has been placed with a retailer, how do you make sure consumers know that, or even care to seek it out? That’s your job, as the supplier.
Of course, passion for your dream is what got you into this industry, so sharing your story with the world should come as second nature. While the other aspects of creating a beverage may be a challenge, the good news is that you don’t have to do it alone. Take the time to educate yourself and find the right partners, and you’ll discover the flavor of success–your drink.
When you’re ready to talk about developing your beverage idea with Flavorman, fill out this web form or give us a call at (502) 273-5214. Let’s change what the world is drinking, together. If you want to learn more about RNDC, visit rndc-usa.com.
About Republic National Distributing Company (RNDC): RNDC is one of the nation’s leading wholesale beverage alcohol distributors, specializing in wine and spirits. RNDC serves as a brand-building and product expert liaison between suppliers and those who sell or serve alcoholic beverages. Customer service, product expertise, and executional excellence are the hallmarks of RNDC’s enduring success. Visit rndc-usa.com to learn more.
About Casey Cline: Casey Cline is the Division Manager over the Portfolio Management Team at Republic National Distributing Company, Kentucky. He has served with RNDC for 15 years, managing each element of the business, including off- and on-premise sales. He now manages all brand teams.