This article is penned at 30,000 feet traveling home from a weekend in Las Vegas. Two things about Vegas that are always interesting facts is that in Vegas, the house always wins—always, and second, Vegas is the second largest bar and restaurant population per square block aside from Key West, Florida. There are more bars, liquor stores, bodegas, restaurants than almost any other place on this planet. Here comes a spoiler – there are only 2 main distributors and 3 middle tier (by size) distributors and a few small tier (by size) in the Henderson, Nevada area.
Let me say that again, let it marinade, this is the second biggest drinking city in America and there are 2-3 main adult beverage distributors that service the entire area. This is the exact opposite of demand driving supply. This is the exact reason why, as I often write, that the independent brand will struggle.
Change never happens for the sake of change and by no means am I a torch bearer for change. I am, however, fortunate enough to have a platform and client list that allows me to represent the small guy, the brand starving for distribution, the distributor that cannot compete in the market and finally the retailer (on/off premise) that wants a larger gross margin in order to stay alive and feed their family.
I am not silly enough to think that my published works, my published books, or my speaking engagements will ever change the existing monarchy but we can hope, scream and demand a more efficient business model. Uber did. Amazon did. Echo Logistics did. Airbnb did. Kayak did. These are all technologies that challenges an old, existing business model and teaches users that there is a better way.
What would happen if a new brand in market went with distributors that specialized in new brands? What if the big 5 distributors only sold goods that were 20,000 case items, kind of like a super team of brands. Middle distributors only sold cases between 10,000-20,000 case items and smaller distributors covered the left overs. Would this not create a sort of Major League Baseball type farm system. A, Double A, and Triple A levels. A system where brands slowly graduate up the chain to the biggest distributors while giving all distributors an equal shot to represent the brand. When a brand “graduates” out everyone wins, the brand has been incubated, the customer has goods, the retailer gets service, and the brand grows to a new distributor that can handle the increase case demands.
What I believe happens, and again, I am one person typing on the airplane, and this is my opinion, is that when brands shoot for the stars in getting placed with the big five distributors they are killing their own business. It is with great pride that “new brand A” states we are distributed with SWS. The reality is that SWS is so big and successful that the weight of the business operations depends on selling Kendall Jackson and not “new brand A”. That needs to be realized prior to your brand dying in the back shelf of the warehouse in North Miami. This is not at all a condemnation of SWS. They are smart, nimble, successful and grew from nothing. This is simply commentary how the business could change and look like if distributors take brands at a certain case level, brands would grow and distributors would grow and retailer would have life with increased cash flow. That is the irony of WSWA. Brands go to get noticed and distributors go to notice each other and catch up. Those are different objectives and my phone always buzzes like Kim Kardashian post WSWA because the panacea of getting noticed meets the reality of being the less attractive sister of Kate Upton. The boys know who you are, but they want to date your sister.
Note that 100 new craft items are getting introduced into market every week (IRI Data), and the number of distributors is declining via consolidation and closure. What can a brand do to be noticed?
Here comes the big finish. If you are a brand and want to gain market share you need to align yourself with a distribution model that can incubate your goods from zero cases upward. Wholesales will not build your brand for you. That said, you will be working the same level of effort with a big or small distributor and need boots on the ground regardless. If I were a brand, I would want to date the less attractive sister of Kate Upton, she would pay attention to me and share how lucky she felt that she was chosen over her more well known and popular sibling. It would be a much better and mutually beneficial relationship.