You have created a mouth-watering spirit and now you are looking to establish your brand by putting it on retail shelves. Not so fast. Before you can connect with retailers and consumers, you will need to find the right liquor distributor. Whether you have already begun looking at distributors or you are at a loss for where to start, this post will make sure that you are able to find the right liquor distributor to support your brand.
Choosing the Right Liquor Distributor
As you take the next step in choosing a liquor distributor and getting your products on the shelves, it is important to remember that not all distributors are the same. You will want to invest some time upfront researching your options and getting all your ducks in a row before you start approaching distributors. This is especially true for new brands that may have a lower production capacity and marketing budget, but may also want to scale up quickly if possible. When it comes to choosing the right liquor distributor, here are some factors you will need to consider:
- Do you live in an open or control state?
To make matters more complicated, liquor and distribution laws vary by state. Most states fall in the “open” category, which means that companies with a license can distribute alcohol. However, seventeen states are deemed “control” states. In these cases, the state and its agents are the only ones legally authorized to distribute alcohol. The type of state you live in will have a significant impact on your distribution channels.
- What are the franchise and taxation laws in your state?
Again, laws will vary widely according to state. New York has a less regulated approach and allows self-distribution along with direct sales. This means that producers can sell an unlimited number of products at tasting rooms. Meanwhile, California restricts the amount that can be sold at distilleries.
Laws that govern that relationship between the producer and the wholesaler are commonly referred to as franchise laws. You will want to be familiar with the laws in your state before you approach liquor distributors so that you can establish a clear and binding contract that isn’t undercut by state laws.
You will also need to research taxation laws pertaining to alcohol. Some states use a wholesale tax that is a percentage of the retail value. Others will apply a fixed-rate per volume and there are still additional variations. When it comes to understanding taxation laws in your state, your best bet is to go right to the source and contact your local tax authority.
For more about alcohol sales tax policies in Florida, visit
To learn more about liquor tax laws in Texas, visit
- What is my ideal distribution area?
Defining a distribution area will narrow down your options. Only so many liquor distributors will deliver to retailers in your target area. Keep in mind that your area may include territories in different states, which may mean that you need to adhere to different regulations.
- Is the distributor equipped to store and transport my products?
Make sure that potential liquor distributors have the necessary refrigeration to take care of your products and deliver them to retailers in optimal condition. Also, ask about warehouse space and verify that the distributor not only has room for your current production level, but can accommodate your growth.
Interviewing Potential Liquor Distributors
Once you have done all the necessary research and narrowed down your list of potential liquor distributors, you will want to put together some questions to ask during your first meeting. Here are some suggestions:
- Describe your experience with other speciality brands.
- Will there be a designated brand manager who is a point of contact for my product?
- Are you able and willing to sell all of my different product lines?
- Do you and your staff participate in ongoing training and professional development?
- Do you have the flexibility to manage seasonal products?
- Do you provide monthly performance reports?
- How do you respond to your competition?
- Describe your relationship with your retailers. What kind of strategies do you employ to cultivate these relationships?
- Do you have delivery minimums?
- Do you engage in monthly programming?
Preparing Your Sales Process and Pitch
Partnering with a liquor distributor should be a mutually beneficial relationship, which means that you also need to be prepared to make the case for your products. Once you are confident that your product is ready to hit the market, you will need to work on establishing price points, designing packaging, coming up with marketing strategies and developing a plan for rapid growth if the opportunity should arise. Keep in mind that liquor distributors prefer to see 40% margins, so you will need to be able to break down the numbers for them and demonstrate that they will be able to get the returns they are looking for.
When you show up to a pitch meeting, here are some other essentials you will want to have on hand:
- Some proof of commitment from retailers who are ready and willing to start stocking your products. Preferably this will be in writing and will demonstrate that there is demand for your brand.
- Product samples and marketing materials. Be sure to use available merchandising tools to understand your audience and create data-driven strategies for successfully marketing your products in stores.
- Documentation that you can avoid running out of stock. Be sure to have a plan for meeting current inventory demands, increasing production and being able to weather any problems that may occur in the supply chain.
- Example of packaging and any additional evidence that shows initial brand success. This can be media coverage, quality ratings, etc.
Finding the right liquor distributor for your brand and product lines comes down to preparation. Not only will you need to understand state laws, you will need to be ready to vet distributors while also making the case for your products. Investing time will be well worth it when you are able to partner with a liquor distributor that understands your needs, is able to connect you with the right retailers and can support the growth of your brand.
FAQs
How do you choose a liquor distributor?
Start by understanding the distribution, franchise and taxation laws in your state. Regulations can vary widely and they will have a significant impact on your overall distribution plan. Next, make sure that your distributor can deliver to your target area, has the right refrigeration and storage capabilities and is willing and able to meet any other considerations that may be specific to your brand.
What do you need to have ready before speaking with a distributor?
Before you meet with a distributor, make sure that you have your price points established along with a detailed breakdown of costs and margins. You may have to field questions about shipping and advertising costs, so be prepared. It is also important to have packaging, marketing and growth plans in place.
What should you include in your pitch to distributors?
Basically, liquor distributors want to know that your brand is ready for market and that the market is ready for and excited about your brand. You will want to bring a letter of intent to sell from retailers, product samples, marketing materials that will be used in stores and any positive media attention or reviews that your brand has already earned.
