Graduation season has come and mostly gone, and it has made me think of how many “graduations” I have been selling wine, beer and spirits. I graduated college in 1992 and my son just graduated high school. If you take into account the countless hours that a family business requires, I feel as though I just started my 31st year in the game.
Many things have stayed the same:
- Off and on premise are mostly “feel good” environments and customers are generally happy to be there.
- Distributors still rule the landscape albeit less of them.
- Suppliers are still innovating daily to push the boundaries of what is considered a libation.
- Good brands, packaging and liquid still sell.
Some things are very different:
- There are less distributors and more brands than ever before
- There has been no time in history when the in-balance between makers and distributors has tipped towards the brands. Re choices.
- With social media and crowd funded marketing, a small brand can appear to be a large brand at a fraction of the cost.
- The popularity of 3PL’s compliance and distribution companies means you can be in select markets in under 30 days if all the stars align.
Taking the above and really digesting it, it is important that your go to market strategy uses the bullet points so you can weave your way thru the forest of adult beverage selling and producing. The biggest take away is that distributors will no longer build a brand. This has been the unspoken but screamed truth. Not for lack of desire, not for a malicious intent, but rather time versus profitability equation. Private Equity has a phrase “buy or build”. Distributors are no different and big global brands the same. ABI buying Goose Island. High West being bought. Constellation selling deep into its portfolio. All of this activity points towards an M and A heavy market and with that comes the distributors continued focus towards brands that demand share of wallet and share of mind. Your brand is likely not that.
Those are the rules and landscape. What can do you, as a brand, to assist yourself, in the current climate of distributor hand sitting and M and A roll ups.
- Get into market personally
- Create pull programs
- Use data to sell to the right person that will pull brand multiple times
- Negotiate your % with importer and distributor knowing that they are not doing the work any longer like they used to, thus decreasing their cost of sales.
- Understand where depletions are coming from and work backwards to who caused them and note that to your distributor.
- Price using market pull data not where you want to be.
- Certain segments sell better than others by category and that data is critical
- Market will tell you where it wants your brand to be purchased at
The real net/ net here is that if you understand the what and how of your distributor’s operation, you will be better served. Understanding when your distributors fiscal year end is, what are competing brands in the book and is the base account list on or off premise. How many salespeople and what is their tasting policy, etc. These are questions you need to know to be more informed about the selling landscape than your “partner” is currently.
Finally- as much as partner is used in a pitch meeting and “friend of the brand” is tossed about, the reality is that it is you against the world. The landscape can be level and fair if the rules of the game are known and followed.
Three Tier Talk
by Brian Rosen, www.BevStrat.com
Brian Rosen is Former CEO of America’s #1 Retailer, Sam’s Wines in Chicago, Former Partner at PricewaterhouseCoopers in Retail and sought after retailer consultant.
EMail: [email protected]