3 Ways to Bypass the Distributor Bottleneck
Despite conventional thinking, wineries and craft distilleries are not at the mercy of the middle tier when it comes to selling their goods to consumers and trade buyers.
Compared to six years ago, there are MORE opportunities for wine and spirits brands to control their own destiny than ever before.
I’m not sure why this new reality is so deeply veiled from plain sight, but I imagine it has something to do with blind acceptance of how things have traditionally been done in this industry.
NEWS FLASH: Small and new brands no longer need a “traditional” 3-tier distributor
Yes, there was a time when wine & spirits brands had no other option but to beseech distributors state by state with hat in hand and bated breath. But those days are gone, thankfully.?
In this article, I will tear away the veil of mystery and prove it to you!
For many readers, this will be a shocking revelation. You’ll wonder why no one ever told you this before. Well, I am telling you now, so please read on…
1) Online alcohol sales (eCommerce)
While representing just a fraction of sales from the wholesale channel, the eCommerce opportunity has become a lifesaver for new and smaller producers because there are zero barriers to entry.??
According to IWSR, beverage alcohol eCommerce sales are expected to reach $42 billion across the world's key markets by 2025.?
Even the tiniest brand can legally and compliantly sell products off their website. While the broadest opportunities skew towards wine, the capabilities for selling spirits online have grown thanks tremendously to companies like Speakeasy Company, Barcart, and many others.?
Selling wine and spirits off your own website is one of many ways to play the eCommerce game. Major retailers such as Walmart and Kroger sell beer, wine, and liquor online. Tens of thousands of independent package stores do a booming online business. And home delivery providers like Drizly adroitly convey the “last mile.”
Yes, there is a steep learning curve. Yes, wineries and distilleries must know how to leverage first-party data and master SEO to drive well-qualified traffic to their website's purchase pages, but the great news is that you don’t need any help from the third tier to do this!?
2) Digital 3-Tier has changed the industry forever! (wake up, sleepy heads!)
If you haven’t heard of LibDib yet, you have been fast asleep at the wheel.?
What part of this are you not getting??
While you’ve been sleeping, LibDib has spent the last five-plus years building a groundbreaking wholesale alcohol distribution business and a game-changing eCommerce platform where new/small brands can sell their products to restaurants and retailers unhindered by the “gatekeepers” of the three-tiered realm.
Like the Statue of Liberty, LibDib is a beacon for small brands and startups.?
“Bring us your dejected, rejected, and neglected (by wholesalers) brands yearning to breathe free.” LibDib lifts up its “lamp beside the golden door” of opportunity.
While adding new states continually, as of today, LibDib can handle distribution for 14 states (including the five largest).
All wineries and distilleries are welcome. You don't need to make an appointment.?
The crack team at LibDib will even help brands gain access to major retail chains and assist their members in digitally selling in the three-tier marketplace.
My best advice to new and smaller brands is not to waste one single minute reaching out to “traditional” distributors begging for attention. Control your own destiny!
As if this all wasn’t exciting enough, consider LibDib is strategically joined at the hip with RNDC. Once you prove traction via the LibDib platform, you become extremely attractive to RNDC and stand a much better chance of gaining an audience with them.?
领英推荐
3) Wine & Spirits Direct Deals (“It’s common sense”)
Please take a moment to consider this headline: “Wholesalers clearing wine for reduced margins enables retailer to sell wines from smaller producers more profitably.”
This was taken from an article by Wine Business (published five years ago), and the article's subject was Total Wine & More.
I don’t know if Total Wine & More invented “wine & spirits direct” deals but they have certainly perfected the game.
Please note this term, “clearing,” because it is the key to winery direct and spirits direct success. By getting distributors to “clear” the products for a few bucks per case instead of the 30-35% margin from traditional wholesalers, the retailer can have MUCH fatter profit margins.
The reason small and new brands need to pay close attention here is the competitors’ response to Total Wine’s success with winery direct and spirits direct partnerships of their own.
Every major retailer considering Total Wine & More a competitor has sought out partnerships with SMALL PRODUCERS of its own.
Are YOU a small producer? Do YOU want a piece of this action??
How would it feel to start selling wine or spirits by the pallet or truckload and never have to leave your office?
How would it feel to sell your entire inventory year after year without discounting the price?
How would it feel to do this without paying sales team salaries or travel & entertainment budgets???
Now, there is a small learning curve, but most of this simple math combined with common sense.
Stop letting others control YOUR destiny!
In my line of work, I speak to dozens of new brand owners every week.?
The current environment is very difficult because there are just too many brands and too few distributors.?
The key, therefore, is to tear up the “old playbook,” pick up the new, more modern playbook and start taking charge of your own destiny.
The simple truth is that there are multiple ways to play the three-tier game. Stick to the ones that afford total and complete control of your own path to success!
Let go of the old, outdated, “traditional” thinking and embrace the modern way of selling wine & spirits and growing brands.?
Do you need a wine/spirits "Sherpa?"
Most small producers, especially new ones, need to be equipped to navigate the choppy waters of this industry. Most of the strategies that used to work no longer work (or work as well).
There is really only one reason a brand owner would engage in the “old” ways of doing things; no one has shown them the NEW ways!
I want to be your wine & spirits “Sherpa!” I will help you separate the myths from the facts.?
Please feel free to send me a private message, and we can schedule a time to talk.?
ABOUT THE AUTHOR: Ben Salisbury is a consultant, coach, content creator, public speaker, thought leader, subject matter expert, and entrepreneur for the wine and spirits industry. His expertise in sales and marketing strategy accumulated over four decades working with some of the largest adult beverage companies in the world, including Ste Michelle Wine Estates and Constellation Brands. His approach is to disrupt the status quo of how wines and spirits are marketed and sold, to challenge outdated practices, and to provide innovative solutions to help wineries and distilleries sell more products. Ben is a frequent speaker at industry conferences, creates original content on his blog and YouTube channel, and has contributed articles to the Wine Business Monthly.
Brad Haskel Consulting
1 年Hi Ben, Thank you for weighing in on a subject that plays on everyone in the trade. If you are an artisinal winery, the 30+ percent cost per case plus sales incentives, plus travel and incidentals, and little leverage with a distributor, leads to a losing proposition. Direct sales, whether local or internet, leaves healthier margins all the way down the chain. Those dollars are better used for marketing, and more profit. I hope the future allows the repeal of post prohibition state laws, and the allowance of creativity and ingenuity at all tier levels.
We help home service companies get more qualified leads through search marketing.
2 年eCommerce DTC is a small number, primarily because wine brands have not invested enough into the channel to see significant results yet. While you don't have to sell the farm to start building out your eCommerce channel, it does take a lot of effort to get it going. Another reason is that I don't think enough wine brand owners believe that they can sell their wine online. Thankful this limiting belief is starting to change! Even if it's only a trickle.
Western Regional Sales Manager Yarden Wines
2 年Based on my experience with an online platform, Merchant 23, we learned the hard way that their "national" distributor network were really the ones taking possession of our wines and collecting payment. In our case we never got paid by their?distributor and when contacted they (Merchant 23) never did anything. Our exposure wasn't too extreme but I would vet these platforms carefully and see who is really responsible for payment.
High Spirits LLC - Founder/CEO
2 年Excellent post Ben Salisbury!
We help home service companies get more qualified leads through search marketing.
2 年As someone who is much newer to the wine industry than most, I see things from an outsider’s perspective. It seems many Wineries go the 3-tier approach simply because everyone else is doing it. We are in a new age we’re the internet has brought on astounding democracy to nearly every industry, even the wine industry. The opportunities available to the wineries that embrace e-commerce will be enormous. You made a point that the learning curve is steep when it comes to selling wine online. I agree in that there is a lot to learn and a lot of changes required. Although there are lots resources and experts to help with that change, which can make it significantly less steep.