Alcohol Distribution Channels

How Alcohol Distribution Works

As every craft distiller has experienced, gaining market access is a struggle and it feels like the industry is stacked against you. So, the question is, what can you do to overcome this?

We all know that we currently must work within the established 3 Tier system that was created in the 1930s. And while the system of spirits distribution channels is antiquated, it is being supported by those who benefit from it. The big distributors and big suppliers are not going to change any time soon.

Therefore, to gain market access into the alcohol distribution channels, it is necessary to get distributors to agree to represent your brands and be successful in driving distribution of your brands into the targeted On & Off Premise accounts where your target consumer shops and socializes. Of course, brand distribution is just a first step, you will still need to drive brand awareness, communicate the key selling points of the brand, and provide the “pull” for the brand to be successful.

Spirits distributors are very selective in the brands that they agree to represent.

A typical distributor is presented with hundreds of unique brands per year and typically agrees to take on less than 5% of those brands.

Alcohol Distribution Channels

Alcohol Distribution Industry

Why are distributors so selective in terms of the brands that they agree to represent? The big players in the alcohol distribution industry have a host of reasons including:

  • They don’t like spirit liquids
  • They don’t like the packaging
  • They don’t like the brand’s pricing strategy/price point
  • They don’t like the segment that the brand is positioned (like brands within growing segments and don’t like brands in declining segments)
  • They believe that they have sufficient brand offerings within the segment where the brand is positioned
  • They don’t believe that the brand will provide sufficient sales volumes to provide meaningful incremental profits to their company
  • They don’t feel that they have the “bandwidth” to provide the necessary attention to the brand
  • They feel the brand “conflicts” with brands they currently represent, especially if the conflict is with a brand from one of their “major” suppliers
  • They don’t believe that the new brand has the resources to provide the necessary support (sell in deals, sales force incentive, samples, advertising, “boots on the street”) to position them for success

The first step in gaining market access and being integrated into the alcohol distribution channels is creating “Commercially Viable Brand Propositions” that are relevant to the “Trade” (Distributors, Retailers, On-Premise operators), while also keeping in mind the relevance and appeal of the brand to the target consumer!

Spirits Distribution Channels

What is a “Commercially Viable Brand Proposition”?

A Commercially Viable Brand Proposition is a brand that is perceived by the trade as a brand that has “all their stars aligned” in terms of outstanding branding, liquids, packaging, pricing strategy, and can stand up to any brand within the brand’s “completive set”. A Commercially Viable Brand will also be attractive to Retailers, On-Premise operators, and consumers to a level that will result in “meaningful” incremental sales and profitability.

The brand’s competitive set is not just other “craft” brands that reside in the same spirits segment & price point, but every brand in the world that falls within the same segment and price point! A distiller’s brands are competing with every brand within their completive set including brands from the major suppliers, such as Diageo, Bacardi, Pernod Ricard, Brown Forman, Proximo, etc. These suppliers invest significant resources in brand development and produce very high-quality spirits, use proprietary/customized bottles, use the best label designers, and conduct rigorous research with both trade and consumer panels to maximize their brand propositions.

Can your brands stand up to those brands? If not, we have some work to do!

Appealing to Alcohol Distribution Companies

As discussed, alcohol distribution companies are very selective in terms of the brands they agree to represent and will only select the best Commercially Viable Brands available. The Firewater Firm, with their 50+ years of spirits industry expertise & experience, knows what the distributor community is looking for and how to build and deliver those brands to their Portfolio Managers and Executives. Our brand development process will address every aspect of the brand and will ensure the brands can stand up to every brand within our competitive set and be seen as Commercially Viable with the trade.

In addition to fantastic brands, distributors are equally interested in the “support” the brand will be investing to best position them for success after putting them through the alcohol distribution channels! Again, just as with the brand proposition, the level of support a brand will provide is compared to brand support being provided by the “major suppliers”! Typically, a distributor will be looking for “aggressive” programming, especially in the early stages of the brand’s market introduction.

Programming support will come in the form of: 

  • “Sell in Deals” to motivate the Retailers and On-Premise operators to buy (Buy 2 Get 1 Free)
  • “Sales Force Incentives” to motivate and reward their Sales Reps to sell ($30 for brand placement)
  • “Samples” for all Sales Reps & Managers to show and taste the brand with their customers
  • “Marketing” to drive brand awareness, communicate the brand’s key selling points and drive “pull”
  • Many distributors are also extremely interested or demand “boots on the street” (distiller Sales Rep or Brand Ambassador) to assist the distributor sales team with brand presentations/ sales to key customers.
Alcoholic Beverage Distribution Channels

Your Customized Alcohol Distribution Business Plan

Are you able and willing to provide your distributor partners with the brand programming they need to make your brand successful? The Firewater Firm, with their 50+ years of spirits industry expertise & experience, knows what the distributor community is looking for as far as programming support and how to work with the distributor to deliver that support to their Sales Team!

The Firewater Firm understands the dynamics of the spirits industry and takes its clients through a 3-stage process to be successful. This process includes:

  • Building a Commercially Viable Brand Proposition
  • Aligning those Commercially Viable Brands with the “right” distributor within targeted markets and managing those partnerships with creative and consistent programming to drive brand distribution to targeted Retail and On-Premise accounts.
  • Developing and implementing creative and efficient marketing strategies to drive brand awareness, communicate the brand’s key selling points and consumer “pull

Utilize Our Experience in Spirits Distribution Channels

Starting a successful alcohol brand doesn’t happen overnight, and it’s not the easiest process to navigate. The good news is that our experience is full of success stories for tons of alcohol brands, so all you need to do is get in touch with us. Your bottles will be in stores and bars before you know it.

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