In my home state of New Hampshire, I believe the relationships between distributors and craft breweries are very good. There may be an exception here or there, but by and large, distributors and brewers respect one another and the job we each do.
Distributors understand and appreciate the passion, the labor of love, which goes into making the beer. Brewers understand that distribution is a tough job, and requires a remarkable amount of investment in warehouses, trucks, and people to get the beer to market.
In a word, the business relationship works.
However, I realize that in other areas of the country the distributor-craft brewery relationship is strained, at best. There are state laws at play that make the craft brewery feel locked into contracts they can’t get out of and there may be distributors who take advantage.
Likewise, there may be an expectation from a craft brewery that a distributor will get their beer placed in every possible retail location and in some cases it’s an expectation that isn’t met. The reasons may be valid (the brand isn’t selling, isn’t resonating with retailers or consumers) or invalid (the distributor isn’t doing their job to promote the brand to retailers).
When craft breweries and distributors do work together, whether because of state laws, contracts, or simply that this is the best option for getting the beer to market, it’s helpful to explore the key points that can make the relationship successful.
What makes for a good relationship? What are the keys to success that you can implement in your business? What are pitfalls to avoid?
To answer these questions, I reached out to a couple of industry experts on the matter. I have my opinions, which I’ll share in a future article, but I wanted to hear from others who have a different perspective.
Bump Williams is a consultant to the beer industry. His firm specializes in “price gap analysis, promotion assessment, new product launch strategies, National Account Retail strategies, Wholesaler assessment and Craft Centric Portfolio Planning.”
Bump is a former ballplayer, has a cool nickname, and he wrestles sharks in his spare time. He’s also a pretty smart guy, and he had this to say about the keys to successful distributor-craft brewery relations:
Keys to Success
- Open and honest communications, even when the news is bad
- Know the brand and know the consumer of this brand
- Don’t give up on it when the new “Johnny Come Lately” brand shows up
- Hold your people accountable to making this brand a success story
- Manage Expectations
Keys to Failure (Pitfalls to avoid)
- Being a Brand Collector
- Not having senior management involved in the day to day business
- Getting distracted from building relationships
- Taking orders instead of building sales
Chris Farmand is a fellow CPA and owner of Small Batch Standard in Jacksonville, FL. Chris, who has been working with and advising craft breweries for the past seven years, had this to say about the keys to a successful distributor-craft brewery relationship:
Successful relationships (all about the bottom line for the distributor):
- Brewery has strong marketing (beer sells itself)
- Brewery has a sales team, in addition to event team. I am consulting a few guys right now who think they have sales teams…..they are event teams.
- Beer pulls through!
- No recalls
- Brewery is not packaging. Makes it a lot harder to meet your CE quota only shuffling kegs
- Craft manager is overworked
- Distributors begin to cut marketing, pickups, quantity
- Brewery ownership is arrogant about the product and won’t listen to advice of distributor
There’s plenty of food for thought in the lists above. Communication, brand knowledge, strong marketing, and accountability are keys to success in any business relationship, but especially in distributor-brewery relations.
Use these tips as a litmus test for your business – how many of these keys to success are present in your relationships? How many of the pitfalls or markers of unsuccessful relationships are present?
In the next article, I’ll present my thoughts on what makes for a successful relationship.