You put a substantial amount of resources and effort into setting up your distillery. Opening a new distillery can cost upwards of $30,000, with time and money spent securing a location, purchasing equipment, following the legal requirements of establishing a business, locating suppliers, creating recipes and distilling liquors. Yet, while the work of churning out your first batch under your professional label may have seemed like a lot, a larger task lies ahead in growing your sales to be successful and profitable.
Some smaller distilleries will sell their bottles directly, but scaling your business usually means working with a distributor who will take charge of selling to retailers. Managing growth for your distillery means nurturing relationships with your distributors. Here are some steps to get started.
Find the right distributor
A successful partnership with a distributor begins with finding the right distributor for your brand. You will want a distributor who has an enthusiastic and talented sales staff with a proven track record of pushing new brands.
Additionally, you want to ensure that you employ a distributor with a full understanding of the type of partnership you will have. Generally, there are two types of distiller-distributor relationships:
- Strategic Partnership: Under a strategic partnership, the distributor and the distillery work together on marketing and branding. The distributor will provide feedback to the distiller and share market expertise, which allows the distillery to hone its brand and its products to fit the market demand.
- Tactical partnership: Under a tactical relationship, distributors focus on increasing sales, leaving the manufacturer to work alone on product development and marketing.
The type of partnership you choose is less important than the level of understanding you have with your distributor. Be sure as you enter into an agreement with a distributor that both sides understand the type of partnership you will have. You need to openly communicate the goals you have for your distillery with your chosen distributor and ensure that they are prepared to help you meet those goals.
Provide your distributor with what they need to sell your products
Distributors deal in a multitude of brands, many of which sell similar products. Ultimately, distributors are far more likely to sell products that they understand well and that they have the tools to market. To ensure your products are at the forefront of your distributor’s sales pitches, you must provide them with the knowledge and the materials they need to sell your spirits successfully.
Be sure to educate your distributor about products and have educational materials easily accessible. It is wise to have a website for your distributors that allows them to access spec sheets on all of your products on demand. For easier outreach to retailers, be sure that your distributor always has an ample supply of branded spec sheets, brochures and other marketing materials that help them to push your products.
Follow up on sales leads
While your distributor will be mainly responsible for selling your products, you still play a valuable role in providing them with sales leads. Agree on a method for sharing and following up on leads with your distributor. Some businesses employ sales-management software for this task. The type of system you use will depend on your needs, but no matter what, you need to talk to your distributor about the types of leads that are useful to them and follow up on leads you give them so you can gauge which most often generate sales.
Maintain good relationships with your suppliers
It may not be an intuitive part of managing the growth of your distillery, but just as important as maintaining your relationship with your distributor is maintaining your relationship with any suppliers you may have for items such as bottles, labels, etc. You need reliable suppliers to fill orders and meet your sales goals as you grow. Talk to your suppliers regularly, pay your invoices promptly and clearly communicate any tight deadlines or upcoming large orders you may have. Also, talk to your counterparts in the industry to make sure you are dealing with reputable suppliers and to stay aware of any red flags suppliers might be waving that could negatively impact your business.
Managing growth for your distillery is no easy task, but it is a rewarding one. By maintaining relationship with your distributors and your suppliers, you can grow your distillery to meet your business goals.
How much does it cost to set up a distillery?
Generally speaking, a small distillery can be set up for around $30,000. That breaks down to around $5,000 for a facility lease and licensing, $5,000 for equipment, $9,000 for insurance, $6,000 for a work-related vehicle and $5,000 to staff the distillery.
How do distributors work with manufacturers?
Distributors purchase products from manufacturers to sell to retailers. Distributors work to market products to retailers and advocate for shelf space and positioning of the manufacturer’s product within a retail space. Distributors also follow up on any sales leads provided by the manufacturer.
How do you manage your distributors effectively?
To manage your distributors successfully, you must provide them with the tools they need to market and sell your products. That means educating your distributors about your products and giving them the marketing tools they need to reach out to retailers. You also should have a system in place for providing your distributors with sales leads and following up on those leads.
How can distributors increase sales?
Good leads lead to more sales. Distributors can increase sales with a better system for prioritizing and following up on leads. A good system that allows for lead tracking, prioritization and feedback can help distributors work with you to increase sales.