Self-Distribution - It makes sense
At some point, if you’re a brewery that wants to sell beer at wholesale, you’re gonna have to make a crucial decision: whether to partner with a beer distributor or pursue a self-distribution model. This decision has a significant impact on your brewery's go-to marketing strategy, revenue, and growth, and it’s a lot more complicated than you might think.
However, I will argue that self-distribution still makes the most sense for most SMB producers in this country - both from a revenue standpoint and a brand-building standpoint. There are a legion of dependencies at play here, most obvious is the legality of self-distribution in the state(s) in which you do business. Most states allow some form of brewery self-distribution, largely limited by the amount of beer you actually sell to the market. You reach a certain point and you're forced to go with a beer distributor in your state. That’s not always a bad thing however. Keep reading.
The Benefits of Partnering with a Beer Distributor
1. Broader Market Reach
This is the big one. One of the most compelling reasons to work with a beer distributor is the immediate access to a broader market. Distributors typically have established relationships with bars, restaurants, and retailers, making it easier for breweries to get their products in front of a wide audience. This means that your beer can reach consumers in regions you might not have reached on your own, and can do it quickly.
2. Expertise in Logistics
Distribution is a complex and multifaceted process. Beer distributors have the experience and resources to handle logistics efficiently. They manage everything from inventory management and delivery routes to compliance with legal regulations. This expertise allows brewers to focus on what they do best—brewing exceptional beer—while leaving the intricacies of distribution to the professionals.
3. Reduced Financial Risk
Investing in distribution infrastructure, such as delivery trucks and warehouse space, can be a significant financial burden for a brewery. By partnering with a distributor, breweries can reduce their capital expenditures and shift the financial risk of distribution to the distributor. This can free up capital for other essential aspects of the business, such as improving product quality or marketing.
4. Improved Sales and Marketing Support
Distributors often provide sales and marketing support to their brewery partners. They have dedicated sales teams that promote your products to their clients and help you build brand awareness. This assistance can be invaluable for breweries looking to establish a presence in a competitive market.
The Benefits of Self-Distribution
1. Increased Profit Margins
Choosing to self-distribute allows breweries to retain a larger portion of the revenue generated from their beer sales. By eliminating the distributor's margin, breweries can potentially increase their profit margins. This extra income can be reinvested in the business, allowing for growth and expansion. For 90%+ of breweries out there, depending on your goals for the business, self-distribution will be more profitable for you in the first 2-4 years of business.
2. Direct Customer Relationships
Maintaining direct relationships with your customers can be a significant advantage of self-distribution. Breweries can interact with their clients, gather feedback, and create a loyal fan base. This personal touch can be instrumental in building a brand and developing a strong, local customer following.
3. Control Over Branding and Market Strategy
Breweries that self-distribute have more control over their branding and market strategy. They can decide when and where their beer is delivered, which events to attend, and how they want to present their brand to the public. This level of control allows for a more customized approach to market development.
4. Flexibility and Agility
Self-distribution provides breweries with greater flexibility and agility. They can quickly adapt to changing market conditions, experiment with new products, and pivot their strategies when needed. This adaptability can be especially valuable in the fast-paced and ever-evolving craft beer industry.
The decision between partnering with a beer distributor and pursuing self-distribution is a pivotal one for breweries. Each method offers distinct benefits, and the choice ultimately depends on a brewery's unique circumstances and goals. Breweries seeking to expand rapidly and reach a broad market may find a distributor an excellent partner, while those looking for more control and personalized relationships with customers might prefer the self-distribution route.
Ultimately, whether a brewery chooses to distribute its beer through a distributor or via a self-distribution model, success hinges on producing high-quality, distinctive beer and a strong commitment to building and maintaining relationships with customers. We’re building Resin to service these relationships and help you efficiently manage your business… all so you can make amazing beer.
