Working With An Alcohol Distributor: A Beginner's Guide
Creating a successful beverage business involves more than a great idea. The reality is you'll need a few key partners to bring your dream drink to the masses.
You've worked with a beverage developer to create your custom formulation, secured your ingredients and packaging, and found a manufacturer to produce your drink-the next step is mapping out your route to market. So, how do you get there?
Whether you've got an alcoholic or non-alcoholic product, you'll want to find a distributor. Distributors are partners that help brands connect and sell their products to the right retailers-that's everyone from convenience and grocery stores to restaurants and bars.
Though each has their relevance in the beverage industry, not every distributor is the same. Finding the right distributor means understanding the distribution landscape, knowing what to look for, and how to set yourself up for success.
In this guide, we'll explore the nuances involved in working with an alcohol distributor, specifically. Alcohol distribution is a complex and highly regulated space, so we hope that this expert piece gives you a head start in working through some of the many considerations involved in launching an alcohol product.
Understanding Distribution: What Is It?
Distribution is all about relationships. From a topline view, a distributor (or wholesaler) serves as an extension of the sales arm of beverage brands (called suppliers). When a partnership agreement is reached between a supplier and wholesaler, the distributor takes on the responsibility of introducing and selling products to retailers. At the same time, a wholesaler works with the supplier to build a brand consumers return to time and time again.
In addition to being a steward of the brand, a distributor serves as tax collector for the supplier side and pays state and local taxes on behalf of the brands they represent. This frees up the supplier from the role of ensuring the tax code is met in each specific state and locality in which their product is served.
Beyond that, large distributors like RNDC can also act as a full-scale resource to their supplier partners-this is where the brand-building element comes in. It's in a distributor's best interests to consult with suppliers on sales, marketing, and strategic planning and provide support to help them be successful.
Alcohol Vs. Non-Alcohol Wholesalers
The simplest way to summarize the differences between an alcohol and non-alcohol distributor is the product. But naturally, there are several associated legal limitations that go along with distributing alcohol versus non-alcohol products.
For one, alcohol distributors experience a degree of federal oversight that non-alcohol wholesalers aren't necessarily subjected to. Unlike non-alcohol distributors, federal oversight of alcohol wholesalers extends beyond the product development phase, affecting everything from funding and label creation to compliance within the nuances of state and local laws.
Another key difference based on the nature of the product is that non-alcohol distributors can serve most retailers, whereas an alcohol distributor can only sell to licensed premises. Of course, many alcohol wholesalers also carry a number of non-alcohol brands whose intention is to be sold with alcohol. This can be beneficial for cross-merchandising and planning programs for retailers to carry multiple complementary products from a distributor's portfolio.
Building A Successful Partnership
A relationship between a wholesaler and a supplier is like a marriage-it's a true partnership. This is also why setting expectations together is an important part of building a successful relationship.
An alcohol distributor is there primarily to break down a supplier's barriers to market. Often that involves working with each retailer and assessing what makes sense for them to carry, providing good data for them around a product, and helping them successfully build a product into their store.
On the supplier's side, a great partner is expected to be engaged with their distributor. That means picking up a phone and checking in, planning business together, walking through marketing strategies, and utilizing the wholesaler's resource teams. It also means having reviews to follow up and ensure plans are coming to fruition as expected.
RNDC utilizes a "work-with" schedule, where suppliers have the opportunity to venture into the market to present that product with the sales team to retailers and customers. Not only does this educate the sales team, but it also creates a personal relationship between the supplier and retailer. This is incredibly valuable because the best suppliers are those that are engaged with their market and their wholesaler relationships.
Beyond engaging with a distributor so they can be effective stewards of the product to retailers, a supplier is responsible for the consumer side of brand building. As a supplier, you should know the answers to questions like,
How do you plan to market your product and brand?
What kind of digital presence will you have? What about events? Where else can you reach your target consumer?
How will you drive people to the store to buy your product?
Once a product has been placed with a retailer, how do you make sure consumers know that, or even care to seek it out? That's your job, as the supplier.
Of course, passion for your dream is what got you into this industry, so sharing your story with the world should come as second nature. While the other aspects of creating a beverage may be a challenge, the good news is that you don't have to do it alone. Take the time to educate yourself and find the right partners, and you'll discover the flavor of success-your drink.