Working With An Alcohol Distributor: A Beginner's Guide

Creating a successful beverage business involves more than a great product. The reality is that you'll need to build key partnerships to sell your brand to the masses and put your drink on shelves.

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 strategizing 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 who help brands connect with and sell their products to the right retailers. That could include convenience stores, grocery stores, restaurants, and bars.

Though each type of distributor has its purpose in the beverage industry, you'll need to find the right fit for your company. Selecting the best distribution partner means understanding your brand's distribution landscape, identifying the services you need, and setting yourself up for success.

In this guide, we'll explore the nuances of working with an alcohol distributor. Alcohol distribution is a complex and highly regulated space, so we hope this expert-curated guide gives you a head start on navigating the many considerations involved in launching an alcohol product.

Understanding Distribution

Distribution is all about relationships. From a topline perspective, a distributor (or wholesaler) serves as an extension of the sales arm of beverage brands (also called suppliers). When a partnership agreement is reached between a supplier and a wholesaler, the distributor assumes responsibility for introducing and selling products to retailers. At the same time, a wholesaler works with the supplier to build a brand that consumers keep buying.

In addition to being a steward of the brand, a distributor serves as a tax collector for the supplier, paying state and local taxes on behalf of the brands they represent. This frees the supplier from the responsibility of ensuring compliance with tax codes in each state and locality where its product is sold.

Beyond that, large distributors can also act as a full-scale resource to their supplier partners - this is where the branding element comes in. It's in a distributor's best interests to consult with their supplier on sales, marketing, and strategic planning to support their success.

Alcohol Vs. Non-Alcohol Wholesalers

The simplest way to summarize the differences between an alcohol and a non-alcohol distributor is the product. However, there are several legal limitations that are contingent on distributing alcohol versus non-alcoholic products.

For one, alcohol distributors experience a degree of federal oversight that non-alcohol wholesalers aren't necessarily subjected to. Federal oversight of alcohol wholesalers extends beyond the product development phase, affecting funding, label creation, and compliance with 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 sell only to licensed premises. Many alcohol wholesalers also carry a number of non-alcoholic brands whose intention is to be sold with alcohol, like a cocktail mixer. 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 product and brand. When should you contact an alcohol distributor?

Depending on who you ask, this can be defined in a few different ways; at the very least, you'll want to have a crystallized concept and a viable business plan. A wholesaler needs to understand enough to see how they would take your product to market and be successful.

A supplier might feel ready to have these conversations as early as 2 years before releasing the product, or as little as several months before 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.

Successfully Pitching to a Distributor

So, you've determined that you're officially ready to meet with a potential alcohol distributor - how should you prepare?

This is the wholesaler's first experience with you and your brand, so you should bring a presentation akin to a pitch deck, answering questions like:

• What's your backstory?
• What got you involved in the brand? What's going to keep you involved in the brand?
• What are 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 you are a good fit for a partnership and that everyone's values and expectations align, so both parties can be successful.

In addition to a presentation, you should provide samples and the spec sheets for your product. Your future distributor should experience your brand the same way a retailer or consumer would. Give them the opportunity to taste, touch, and see it to fully understand your product and brand.

As the wholesaler assesses your product, they will also evaluate its price-to-quality ratio and benchmark 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 cocktail in a can isn't just another RTD, so prove it. Leverage your story!

Picking The Right Alcohol Distributor

Great job, you nailed the first pitch to a distributor! 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, find out whether they are relevant in the market, and specifically in your market. Go to your desired retailers and ask around. Find out who they enjoy working with and why. You want to partner with the distributor that retailers want to work with. That's an easy way to set yourself up for success!

The second consideration is your 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 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 said, while a retail establishment often has more shelf space for a given category, a bar or restaurant may be limited to the 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.

Building A Successful Partnership

The relationship between a wholesaler and a supplier is one of the most important partnerships in scaling a beverage company. This is also why setting expectations together is vital to success.

An alcohol distributor's primary purpose is to break down a supplier's market barriers. Often, that involves working with each retailer to assess what makes sense for them to carry, provide useful product data, and help them efficiently incorporate it into their store.

On the supplier's side, a great partner is expected to be engaged with their distributor. That means picking up the phone to check 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.

Beyond engaging with a distributor to ensure they are effective stewards of the product, a supplier is responsible for the consumer side of brand building. As a supplier, you should be able to answer 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, your passion is what got you into this industry, so sharing your story with the world should come naturally. 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 partner with the right people, and you'll discover the flavor of success!