For a supplier to be self-aware, it's key to know the mind set of your distributor.
As a winery, brewery, or distillery, it’s very important to know what your distributor’s business is, and what is going on in your distributor’s head.
Sid Patel, CEO of Beverage Trade Network, the organizers of USA Trade Tasting gives insights about the psyche of a distributor from personal experience, being on both sides of the spectrum as a supplier, and as a distributor.
The Distribution Business…
Distributors are in the case movement business, delivery business, logistics business, and sales personnel business. More of their effort goes into running operations, instead of learning about the wine, beer, or spirits business.
There is one simple way in which distributors make money - case movement versus speed, and dollars on each case.
In simpler words, you can hand over a box to a distributor, and what is inside the box wouldn’t be their first lookout.
"It's a box, they don't care what is inside the box. It's super important for wineries to understand that. There are 500 products, and they're going to see it as 500 boxes - and they are going to evaluate each month as to what is faster moving and what is the dollar contribution of that box" say Sid
There are two ways to look at movement as such : either you have less margin per box, and more movement - and that’s what the Budweiser’s and Coca Cola’s are all about.
Or, you have a 100% markup and less movement. In turn, as long as the dollar contribution is equal or better, and matching with the volume goods, then you’re safe. But if you’re not hitting either sides, then you’re in trouble as a supplier.
A Distributor’s Mindset...
Technically, a distributor is a 100% in the sales business. Yes, they are doing it for the love of the alco-bev space - and for the art, but at the end of the day they have to pay their bills. Just like any other business, they have to scale, and grow as well. So in the end it’s all a cycle of business.
“Distributors will always have to face one guy, who doesn’t care about the art of the product” explains Sid.
No matter how amazing the wine is, if the movement isn’t there, the retailers; who are their customers, are going to give them a tough time. And whichever way you look at it, it’s all measured by the dollar.
Another thing to take note of is that distributors want everything to be easy. If your case is branded, labelled well, and priced sensibly, then distributors and sales personnel will be able to move it easily – and easy moving products is what makes not only the distributors, but even the retailers happy.
Pro Tip: Don’t create any friction, or don’t keep a window open for friction. Any unlabelled cases, mismatched prices, hard to recognize boxes is what creates friction - and that is something both distributors and retailers despise.
How your products are selected by a distributor
In a small to medium distribution business, you end up doing a tasting on a Friday morning, because on Friday’s people don’t really go out to sell. Contrary to popular belief, the tasting is done in a very relaxed way.
Everyone sits around; they pop open the bottle and taste the wine, beer, or spirit. If it’s liked around the room, then the team usually goes through their emails to find out the price and technicality of the product. Some suppliers have a distribution evaluation form, which includes pricing, business cards, sample matching, tech sheet, etc.
Having a distribution evaluation form makes things easier for the distributor and his/her team. They don’t have to hassle around much to find things, they don’t have to read too much - all the information they need is right in front of them - and they’re ready to make their decision.
What distributors are looking for…
Without mentioning, quality is the first thing that they look for. It’s the most obvious aspect of knowing what a distributor is looking for.
What they look for next is the product margin. How does your mark-up rank? And how far is it going to go.
Another thing that distributors always keep an eye out for is your marketing material. Most wineries are inclined towards sharing a brochure about their story and where they began from. This is of course an important aspect when it comes to shelf selling, but it isn’t the main need of a distributor. For a distributor, they want everything to be straight forward and point-to-point. What they need are pictures showing your case display and branding. If you have these in line then you’ve hit a homerun.
What Distributors Want To See In Your Marketing Material:
Pictures of your product and case display
A tech sheet (including price per case, varietal and other vital information)
Distribution Evaluation Form
Having things organised and ready for them to pick is what would differentiate you from other wines, spirits, or beer that they taste. Most of the time, distributors need to pick a supplier fast – and the easiest way for them to do so is if they have everything in front of them and they don’t need to look around too much.
So if you have an organised palette of everything they need and it is right in front of their eyes, then there’s no way they can decline your product.
How to get on a distributor’s list…
Getting on a distributor’s list isn’t as hard as you might think it is. It’s the little things that matter. Here are a few tips to get on a distributor’s list.
Create standard pricing
For both distributors and retailers, it’s much easier if you have a standard price for your products. For example, when a retailer is entering a new skew, they want everything as simple as possible. Say, $6.99 for Merlot, $6.99 Shiraz and so on. A standard price keeps the retailer and distributor happy. This will make them want your product as they wouldn’t have to do much thinking or calculations themselves.
Having a branded case is key
When a distributor walks into the warehouse to pick up your case, and you don’t have a branded case, you’re creating friction - which both distributors and retailers absolutely hate. Branding your cases to be easily understood by others is going to make things easier for you and the distributor themselves. For example, if you have a case marked yellow and a key sheet which says yellow is Shiraz, red is Merlot, and so on, everyone is happy.
“People love you, truckers love you, delivery guys love you, and retailers love you. It’s about the guy who is going to carry your case. Having a case with no breakages, a good case will make it easier for them. It’s about the guy who is going to pick it up and put it in the truck - he should know that this is your case. A case with no label will cause friction. It’s about the retailer, putting the case in the warehouse again and being able to find your case easily” explains Sid.
Winning over the sales personnel
This might be something you’ve heard over and over again, but building relationships with the sales personnel is very important. The sales personnel are the heart of the distributor. There are many ways in which you can build relationships with the sales personnel. Some of them being, sending Christmas cards, or the occasional extra bottle of wine just for them, or a simple thank you.
You have to be a likable supplier.
How distributors write cheques....
It’s simple - distributors will write cheques to those whose products have moved the fastest, and whose products are in need of a repeat order. Distributors care about repeat orders, and that’s how they pick who to write their cheques to.
Fun fact: Personal relationships matter. If there’s a tie between two people, let’s say a supplier who has never spoken to them compared to a supplier who keeps in constant touch, reaching out, making things easier for the distributor - then of course the cheque is going to go to that guy who has a personal relationship with them.
According to Sid, “Understanding the psyche of your distributor is as important as creating a quality product. Keep your distributor happy, minimize their challenges and you’re bound to get on the list”