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When the time is right: considerations for microbrewers who are looking for a distributor.

When the Time is Right

Several year ago, when the microbrewing industry was in its infancy, most small brewers distributed their products themselves. But now, as acceptance and awareness of handcrafted beers has increased, coupled with greater competition in that market niche, many more micros are choosing to use wholesale distributors. In an arena usually very unfamiliar to brewers, this step can often plunge a microbrewer into a sea of nightmares. But by following a few easy guidelines, a distributor can be a brewer's best friend, leading to increased sales and profit.

A brewer must first choose when to use a distributor. Many microbrewers self-distribute in their local market. This is usually feasible and profitable, but once a brewery decides to expand into other markets, it becomes less practical. Driving time, fuel costs and reduced product awareness conspire to make it less economical the further away from the brewery you try to distribute. Although you will give up 20-30 percent of your profit if you maintain your price to retailer, the greater resources of a distributor will (hopefully) mean substantially increased sales.

Once you have decided to use a distributor in any given market, it is best, as always, to do your homework. Spend some time in the market. Talk to retailers, both on-premise and off-premise, to see which distributor they prefer to deal with. Also, talk with other microbreweries who use a distributor in that area to see if they are happy with the performance. Keep in mind that product care is very important to products with a delicate shelf life. Stock rotation, product knowledge and care are very important attributes.

Once you have chosen one or two distributors, you must convince them to choose you. Keep in mind that distributors are approached constantly to carry new products. It is best to call, talk briefly about your product and then ask to make a presentation. You may only have one chance to do so, so go prepared. Take lots of samples and bring along examples of any point-of-sale materials that the brewery provides. Like a job interview, be prepared to answer those questions that are always asked. Any distributor will want to know if you have an advertising budget; what point-of-sale is provided; what participation does the brewery staff provide; what sales promotions are provided, such as discounts, salesmen, etc., driver incentives, post-offs; and what sales volumes are expected, keeping in mind that the distributor works on about a 25 percent mark-up. They will want to know their price, FOB brewery or delivered and the expected price to the retailer.

Once a mutual agreement has been made, it is time to work with the distributor. For any product to do well in a market, it takes some participation from the brewery. As soon as your product rolls out the door of a new distributor, you should make a presentation to the sales staff, and the greater their knowledge and appreciation of your products, the more they will sell. Call your distributor occassionally to inquire if help is needed. The brewery should, at times, provide a salesperson to work with the distributor's sales staff in the field and should also work the territory independently on their own. For the limited resources of a microbrewery, this may be difficult, but the more participation for the brewery, the greater the sales by the distributor.

The microbrewer's responsibilities, however, transcend just sales consistency. Consistent supply, consistent product quality, and consistent package and price are all very important to any distributor. Have the distributor fill out depletion reports monthly to help you coordinate supply and monitor freshness. A well conceived price structure, which takes into consideration long-term sales goals, will help achieve constant pricing.

Your relationship with your distributor may become the most crucial aspect of your sales objectives and, as in any relationship, patience, compromise and, above all, communication is imperative. Successful sales for both brewery and distributor will mean an enjoyable and profitable venture.

Tom McCormick is president of McCormick Beverage Company, located in Sacramento, CA. Tom has been active in the microbrewing industry since 1981, and started his company in 1986 to promote and distribute microbrewed and other specialty beer products.
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Title Annotation:small-scale breweries; 1989 Statistical Study
Author:McCormick, Tom
Publication:Modern Brewery Age
Date:Mar 12, 1990
Words:700
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