The Death of Beverage Brokers

This will undoubtedly get some hate mail sent my way. What can you do? All good mainstays in business at some point die. Who remembers marketing companies owned by retailers? Who remembers merchandising companies owned by suppliers? Who remembers when a beer distributor would park a semi on your property on busy nights like NYE and only charge you for what your sold off the truck? Those were the good old days, and as time passes on the regulations become tighter and tighter on “grey” area tactics. Beverage Brokers and their end is not a grey area, it is very black and white, and it is very over.

Let the hate mail ensue, but let us realistically talk about the premise of a wine/ liquor/ beer broker. 

1. Brokers often work for commission only, so the #1 motivator in America is not there. 
2. Brokers often have hundreds of items in a “book” and sell what they want to whom they want with no concern for supplier needs. 
3. Brokers work when they want and are not accountable to the supplier. 

If you look at those three points of differentiation alone, that is not a wonderful business model. Let’s see how this plays out, “sell my items for no pay, also sell hundreds of often competing items, and work when it makes sense in your schedule.” How is that a pro industry activity and depletions? How does that possibly help the supplier? Finally and probably as important; distributors, both national and local, do not love working with brokers, because the follow through is limited and the brands are small. That is a very big catch 22. 

I would venture to say that is why we have success at BevStrat. The evolved model involves pay, focus, limited brands in a bag, and targeted accounts. Suppliers are always eager for ways to sell their brands. Accounts are always looking for ways increase the offering and rebalance the inventory. That should be a match made in Booze Heaven, yet more and more brands are seeing limited brokered sales.

Our business is notorious for slow adaptation of current trends. The trend now in selling for independent suppliers and brands is to be smart, focused, and methodical. Have a marketing plan for your brand. Read, use, and understand data to your benefit. Be available to your sales teams, no matter who they are and manage your own expectations. Expanding territories is not a direct relation to expanding sales, but it is a direct correlation to increasing costs and effort.

Brokers work for brokers and their needs. Suppliers work for their own brands and thus are critical in this process. In a focused sales world what is working now is not 300 brands carried in a book, Willie Loman style. What is working now is tight, educated selling in a targeted area. We call that BevStrat style.

The current state of the three tier system is killing the broker system. The independent sales world is alive and well and working. If I remember the kids fable correctly, the tortoise wins the race.