How to Engage Your Distributor’s Sales Team in 2024
One of the most important parts of building a brand in the U.S. market is the distributor.
How to Select the Best Markets for Your Alcoholic Beverage
Get an overview of how to select the best markets in the United States for your alcoholic beverage brand.
Video: The United States Three-Tier System for Alcoholic Beverages
The three-tier system for alcoholic beverages in the US can be confusing. This video helps clear things up!
What is the United States TTB?
As the demand for unique and high-quality alcohol continues to grow, craft spirits have become the latest trend in the liquor industry
Four Unique Imported Spirits Growing in 2023
As the demand for unique and high-quality alcohol continues to grow, craft spirits have become the latest trend in the liquor industry
How to Get a US Distributor for Your Liquor Brand: Part 2
Last blog post we spoke about the four different types of distributors, which I have classified as (a) rent-a-distributor, (b) Mom and Pop, (c) Mid-Sized, and (d) the Majors. Today we’ll be dellving into the risks and benefits of each. As always, Helmsman clients get these services for free and if you need a deeper look, we can hook you up with our expert consultant partners to help you plan your go-to-market; just ask! Rent-a-Distributor This is sometimes a good option and it is usually a stop on the way to full distribution, not a permanant solution. Rent-a-Distributors Have a Few Risks Product Availability. Product is not easily available to buy and often has to be shipped at a higher carbon footprint No Sales Coverage. You have to make all your sales Account Setup. Not all accounts use this type of system, so be prepared to have to fil out paperwork on onbaord new accounts. Minimums. Accounts like smaller numbers of distributors, not more, so be prepared to hve to deal with minimums issues Scale. Good distributors scale you – and you won’t get that here. Credit Risk. If the account doesn’t pay, you don’t get paid. One advantage of distributors is that they take the credit risk for you. Rent-a-Distributors Also Have a Few Benefits Margin. You keep more margin. Normally you would give up 25-30% and in this situation you keep it all. Choose Your Own Adventure. It allows you to have the most control over your go-to-market strategy and is often best when it’s you or a key Stateside partner. You may need counsel on visas in this situation, if so, we can recommend some great immigration attorneys who can help you understand the appropriate options. Freedom. You’re free to organize your own life. And isn’t that what America’s supposed to be all about? Mom and Pop Distributors There are many small (and often growing) distribution companies who work in the U.S. marketplace. Often, they start as enthusiasts and begin to add brands. Mom & Pop Distributor Risks Viability. Sometimes these distributors have balance sheet issues or are not familiar with the cash cycle needs of products Scale. You are often working with a company with a small set of final account salespeople, which may be changing all the time because they cannot provide the salary or benefits that larger ones can. Length of Relationship. As with most industries, Alc Bev is a relationship industry so you might have newer reps with a shorter depth of relationship with the larger buyers you might want. Trucks and Logistics. Often these distributors cover a smaller regional focus (i.e. downstate New York focused on Manhattan only, or Miami but not Orlando/Tampa/the Panhandle) General Best Practices. Sometimes these distributors may not have set best practices. Higher Margin Asks. Often these distributors are more dependent on your cash flow and they may ask for larger margin Account Opening. Not all accounts will have an account with these distributors and therefore you may find yourself opening accounts for them. Mom & Pop Distributor Benefits Focus. If you are a successful brand for this distributor, you can sometimes insist on more focus. You are most likely to receive focus from this type of distributor than the others. Portfolio Benefit. Often these distributors have great portfolios; however, sometimes as a brand grows, it will shift to another type of distributor and you’ll be left without the positive sheen from association. In general, these distributors are best when you can grow with them. Mid-Sized Distributors Mid-sized distributors can be a great option as you grow. They are often distributors with strength in another type of beverage (for example wine or beer) that see the growth in spirits and want to send more products to their clients on their trucks. Mid-sized Distributor Risks In general, this is one of the least risky options; however, the devil is always in the details. Strategic Focus. Often these distributors are going through growth themselves and therefore their strategic focus might change more suddenly than you would like, leaving you in the dust. But it can also be an opportunity. Large Accounts. They occasionally do not have as deep a relationship or pull with large accounts (like big grocery, casinos, arenas, etc) as they will be competing tooth and nail with the big guys. Therefore, if your strategy is very focused on those big channels, you may want to consider trying to get into the larger portfolios. Mid-sized Distributor Benefits Balance. These distributors have some of the best balance between focus and breadth,. Great Sales Reps. They often attract an unusual quality of sales rep because they provide best-in-class portfolio, a minimall corporate vibe, and some freedom to do their job. That means you can engage these sales reps on the passion you bring to your brand and quality can sometimes be helpful Strength in Key On-Premise. They often have unusual strength in high-end on-premise like key restaurants and bars, because they provie the smaller batch, cool products with the ease of administration Ease of Administration. They usually have good general market coverage The Major US Distributors The big dogs are the majors: i.e. Southern, RNDC and Breakthru (and will include regional big dogs which might be very influential in 3-5 specific states). The Major Us Distributors Risks Lack of Focus. The reps here have tens of thousands of SKUs and gaining their attention, and their manager’s attention can be extremely diffficult Strategic Focus. Their focus is on beating their opponent, which means that your margin is frankly not so important to them. You may be able to ride the growth of a craft division, for instance, but upper management may deprioritize this one day to the next. Capture. Once you’re in, they’ll often ask for contracts that make it hard to get released. Internal Polltiics. An organization of this size often has political issues to navigate. Turnover. There are times when their rep organization changes frequenlty and it’s hard to keep up
How to Get a US Distributor for Your Liquor Brand: Part1
Whether you are looking to enter the US spirits market or are already in the US and simply need distribution, this guide can help you navigate the best ways to find and procure a distributor for your liquor brand
The United States Three-Tier Distribution Model
When we work with new craft spirits founders, one of the first questions they have is concerning the three-tier distribution system in the United States. Read on to learn about its origins, various legalities, and how it differs across each state.
Control States in the 2023 Spirits Industry
The more you get into the United States wine and spirits market, the more it becomes like an old souk: twisting and turning and very, very confusing. Today we are going to delve into a particularity (although not totally unique to) the United States market: the phenomenon of the “control state.” As we have elaborated on in other blog posts, there are open states and control states (and franchise states and four-tier states – those will be a topic for another day) What Are Control States? As the three-tier system developed, some states elected to place the entirety of their distribution under the state government. In these “control states,” the government typically operates a monopoly over the wholesale distribution of liquor, which means that they have a direct hand in importing, warehousing, and distributing alcoholic products. Additionally, they often regulate the retail sale of liquor through state-run or state-contracted stores. The primary goal of this system is to maintain strict control over the sale of alcohol, with the intent of promoting responsible consumption, generating revenue for the state, and preventing illegal sales. While liquor control states may vary in the extent of their control and regulations, they all share a common thread of government oversight in the alcohol industry, distinguishing them from the more common system of private liquor distribution seen in most other U.S. states These include states like Maine, New Hampshire, Vermont, Pennsylvania, Ohio, West Virginia, Virginia, North Carolina, Alabama, Mississippi, Idaho, Montana, Wyoming, and Oregon. How do US Control States Work? Each of them is a bit special, but they share a few general characteristics in that there is no distributor because it is completely controlled by the state government. In some states (Pennsylvania), but not all (Ohio), the retail is controlled and owned by the state government as well. In some states, the on-premise must buy from stores in a cash-and-carry-like system, and in some, they may buy from the state distribution. The below list provides a framework for how many control states work, but remember, each one varies. Government Monopoly on Wholesale Distribution: In control states, the government often maintains a monopoly on the wholesale distribution of alcoholic products. This means that the state government or an appointed agency is responsible for importing, purchasing, warehousing, and distributing alcoholic beverages to licensed retailers. Retail Sales Control: Control states also exert control over the retail sale of alcohol. In many cases, they operate state-owned retail stores, commonly known as “ABC” (Alcoholic Beverage Control) stores or “state liquor stores,” where consumers can purchase alcohol. Some control states may allow private retailers to sell alcohol, but they are subject to strict regulations and oversight. Pricing and Markup: Control states usually set the prices for alcoholic products sold at both the wholesale and retail levels. They often apply a markup to the cost of products, which contributes to state revenue. This pricing structure can vary widely among control states and can impact the affordability of alcoholic beverages. Licensing and Regulation: Control states establish comprehensive licensing and regulatory frameworks to govern the sale, distribution, and consumption of alcohol. These regulations can cover aspects such as licensing requirements for retailers, legal drinking age enforcement, hours of sale, and the types of products that can be sold. Revenue Generation: One of the key motivations behind the control state system is revenue generation. By controlling the distribution and pricing of alcoholic beverages, the state can generate significant revenue through taxes, markup, and licensing fees. Promoting Responsible Drinking: Control states often emphasize responsible alcohol consumption and public health. They may have stricter rules regarding the sale of alcohol to intoxicated individuals and underage customers. How can I sell spirits in Control States? So how do you sell product? Well, brands often work with what might seem like a national distribution company but is actually termed “a broker,” i.e., they don’t actually purchase your products but just shepherd them through the system at a lower margin (usually around 10 percent). You can think of control states more like a big grocer than anything: you can sell to them in two ways: a special listing (sometimes referred to as an LTO) and a full listing (in which your products are placed in a footprint of stores). Often taxes are very high in these markets, and they are very competitive to get into because certain ones, like Pennsylvania or Ontario (a Canadian province), are some of the biggest buyers in North America. The long and the short of it is it might be a hard ask for some of these states, but you should definitely not avoid them as they can get you strong results. This is where Helmsman can help. We know the ins and outs of the US control states, including their rules, regulations, and unique attributes. If you’re debating on entering a control state or need help untangling the confusing rules of compliance across all the states, please reach out to inquiries@helmsmanimports.com as we can save you the time and headaches that go along with registering in control states.