Few industries have as complicated a relationship with the distribution side of business as distillers. In many states, a distillery isn't allowed to sell directly to the customer. Regulations forcing distilleries to only offer samples about the size of one shot, and only one per customer, are not uncommon.
If sales are allowed, significant restrictions are common. A distillery could be limited to selling one bottle to an individual customer per year. Some states have relaxed the regulations on internet sales, but distilleries still heavily rely on distributors to get their spirits to market. Thanks to the three-tier system distributors have an advantage over distilleries, which means developing a good working relationship is vital.
Marketing
Distilleries need to convince distributors that their brand will sell. This means approaching a distributor with final versions of bottles, labeling, and messaging. It is also a good idea to have a social media presence, or at least a well thought out and actionable social media marketing plan to present the distributor. They will want to see how much of an active partner distilleries will be in selling their product.
No one understands your distillery's message better than you. Push that message to your customers and your distributor. They need to know which segment of the market your spirits are targeted towards. Having a clearly defined mission and target market will help distributors move your product more effectively.
If the people and businesses who buy your spirits ask for it, the distributor will take note. Distributors service several brands and companies. Your company message can get lost in the shuffle, and your spirits promoted to the wrong market or your brand misrepresented.
Inventory and Production
Distributors want reliability. Their job is to keep store shelves, bars, and restaurants stocked with a sustainable line of inventory. They need to know that your distillery can meet orders. A small distillery may need to work on developing a non-allocation policy that will help distributors achieve sales goals.
Distillers need to have an accurate understanding of their inventory and production capabilities. Developing a reputation for being unreliable when it comes to filling orders can severely hurt business. If an inventory or production problem develops, inform the distributor as soon as possible.
Goals & Transparency
Where do you see your distillery going in the future? Whatever that answer is, be sure to include your distributor. A growing brand means more revenue for them. They can also provide market insights that can help facilitate the growth a distillery wants. Keep your distributor informed about impactful market shifts for your spirits, a change in company direction, or anything else that would affect how your spirits are marketed or sold.
Distilleries must keep their business expectations realistic. There is often a stark contrast between the goals a distillery wants to accomplish and the goals that they actually can achieve. Lofty aspirations are fine until they turn into false promises that result in unmet obligations. When a distillery fails to keep promises, it can have a severe negative impact on its working relationship with a distributor.
The harsh reality is that independent distillers need distributors more than the distributors need an independent distillery. This includes your distillery. Distillers must contend with this lopsided power dynamic and keep it in mind when establishing and maintaining a working relationship.
Written by Shawn Patrick