OK, I’ve got a general whinge to get off my chest. It’s about sales and route to market and the seeming immaturity (infancy?) of the wider British craft/microbrewing market. Take it with a grain of salt if you will – what would I know? I’ve only been in the market for 9 months. But as in everything I do my natural tendency to analyse & optimise is insuppressible. However, as any fellow computer scientist knows, obvious optimisations often aren’t as useful as they seem. So perhaps I’m barking up the wrong tree… I don’t feel particularly well qualified to be talking about these things… but I will anyway… I lie awake at night with all this sort of crap running through my head and I need to purge it somehow.
Small operators like myself are not simply shopfronts for beer. We’re very much unlike online retail for example, who have a wide customer base across the UK. To sell your beer we do a lot of legwork going out forming relationships with pubs, promoting beer at both a time and financial cost to ourselves. So if we’re doing all this hard work on behalf of a brewery and that brewery then go and sells to someone competing on the same turf it costs us – to small operators like myself it can be a huge blow to morale to boot. Bypassing the distributor and selling direct is very similar… we’ve got your beer into there, they’ve liked it, and after that effort of promotion and logistics (and financial risk) on our parts we’re cut out of the picture. Thanks folks!
I understand why bigger pubs may do this. If they get the same price from the brewer as the distributor then it cuts maybe 20p per pint from their costs, which could be as much as 60p to the consumer after being amplified by pub GPs. The onus here is somewhat on the brewery – the cost to them of effectively outsourcing sales to the distributor ought to be a sufficient discount on the beer to make it not worth a pub ordering direct. Across distribution for regions UK-wide (6 distributors, say?) the brewery is definitely saving themselves the salary of at least one full-time sales body. This secures the distributors’ route to the big customers, which in turn makes it possible for them to keep stock to shift to the wider market of smaller customers.
I’d like to see distribution valued higher by small breweries… of course I would say that though, I’m a distributor. So rather than just put that out there, here’s a couple of reasons this is good for you – the brewer:
- Marketing: You get an actual representative – someone keen on and loyal to your “brand”. If the distributor has the security of exclusivity then they can safely invest more in growing their business around your beers. No exclusivity contracts are needed, just a good set of ground rules laid down to define the relationship.
- Sales: You have a reliable go-to contact in a region that you can direct people to for your beer. If you have a willy-nilly bunch of distributors out there who can you point a potential new outlet to? All of them? Do you think pubs really want to chase your beer with 3 different contacts? Will those 3 distributors see buying a pallet of your beer as too risky in case one of the other 2 does as well?
Sure – we may start out as a relatively small account and also shifting a pallet to the chap next door may be quite tempting to a brewery keen on growth. But think long-term. Be committed in your relationship with one of them – to buy their loyalty and then ride with them as they achieve sales growth with your beer.
Further to that I’ll add why I think *I* am the guy you should go to. I care passionately about good beer, I’m no mere sales channel. I am versed in cellarmanship, beer care, and have a lot of beer knowledge. I work hard to ensure your beers go to the right venues and are served in good form. At our end everything is received and kept in temperature regulated storage until delivery – this is expensive in rent and electricity (as you as a brewer probably know).
Some breweries understand all this. Unsurprisingly if you knew which they were you’d be looking at a list of some of the most sought-after craft brewers in the UK. These guys value their route to market and through that relationship build a better sales channel. At times I resent it because I really want to be able to get beers from some of these guys to my customers but I cannot because they’re tied up with other folk in the region. But I respect this too… these guys are doing unto their distributors and I would have my suppliers do unto me.
Also, I’m a very small operator currently, only just starting out. So I can see why you’d want to sell to someone more established – the term “ability to execute” comes to mind. My small size makes my “ability to execute” low – thus I come with my own risks. (Who wants to do a Gartner Magic Quadrant for UK beer distribution?) Then again because I’m small I’ve got more personally invested, and more riding on making those breweries I work with successful for me. I’m also too small to deal with *all* the breweries I want to of course. So by all means if I can’t shift your beer look elsewhere. No worries at all with that. (I wish I could do all the breweries I actually have access to… but it is impractical at my scale unless I just want to be exist only in the crowded “guest ales” market.)
Anyway, please – take note – distribution is your sales channel to the wider UK market. Foster good relationships with your distributors, let them flourish with your brand – your trust in them will be returned by their willingness to invest in representing your brewery as best they can.
This is a bit of a wild thought-exercise on my part. And perhaps I just haven’t a clue. This is a most definite possibility. But something strikes me as broken about the way things work currently. I started doing this as the only one in my region focusing on what I consider the “craft sector”. Within three months 2 other distributors had shown up, both started by folk signed up to my mailing list. Both approaching many of the same breweries. Which makes no sense – why sell the same stuff? There’s loads to choose from out there! I should be flattered perhaps, I’ve clearly chosen the best… but that is a small consolation for ending up in some daft & unviable “price war”. Don’t get me wrong – competition is a fine thing, and part of how any market works. But forging stable business relationships is part of how markets work too. It’s just common sense, no?
I cannot of course separate the thought process from my own involvement so like any such a thing is it a POINT OF VIEW. And points of view are subject to bias and quite often not well grounded in fact. At the same time I have thousands of my savings invested in a business with which it thus is strongly in my interests to ponder the viability of and act to strengthen said viability as best I can. Personally I wish we could all, as much as possible, work together to grow our overall market… it’s such a tiny tiny slice of the beer pie as it is. But perhaps that’s just foolish… if there isn’t enough pie someone’s gotta starve.
I’ve made plenty of mistakes of my own in the last 9 months. Too many to list. A major one is not saying “no” often enough – so simple, but so hard. In 2015 I hope to find focus…
I may have simply got into a bung market! C’est la vie.