The Basics on Working with Distributors

Handling the Wholesalers: The Basics of Working with Distributors

Let’s be honest here, we’ve all spent a lot of time in and around bars. Odds are fairly strong that some of that time exposed us to rumor, myth and innuendo regarding bar ownership. One of the areas most associated with misinformation is spirits distribution; rumors abound concerning what wholesalers will do for an operator opening a new bar. Unless you’re picking up craft beer, craft spirits and small-batch wines directly from the producer, you’re going to need to work with wholesalers. It’s possible that, busy as you are realizing your concept and putting on the finishing touches, interviewing and hiring staff, nailing down your marketing ideas and planning your grand opening, you may have overlooked how to get your hands on the products you need to stock your bar. Here’s what you need to know about working with distributors.

Product Portfolio

Whether you’re operating a no-frills dive bar, comfortable upscale tavern or exclusive nightclub, it’s important to know – or at least have a decent idea – what brands you’ll be offering your clientele far in advance of opening your doors for the first time. Chances are you’ll want to remain dynamic in order to adopt new products from other brands down the road but for now, consider your concept and decide what you’d like to put on your menu. It’s likely that some of your choices will be driven by personal bias initially so get out of your own head and do some research. It never hurts to recon the surrounding area to learn what people are ordering and what the competition has to offer. Speak to your bartenders and managers to find out what they like, want to work with and think are the current hot products. Read up on spirits, beer and wine trends to stay ahead of your competition. To get you started, hit up the distributors’ websites and see what they have to offer. Plenty of the distributors out there, such as Southern Wine & Spirits (a 35-state juggernaut that works with Diageo and Moët Hennessy-Louis Vuitton), have their catalogs and price books available online.

Product Pricing

Sometimes it can be easy to get carried away when a distributor’s portfolio seems to contain all of the products on your wish list. There are some wholesalers out there that have amassed truly impressive selections of popular, premium and rare products along with the staples needed by every bar. You must be aware of your operational costs and not inadvertently order what will ultimately end up as dead inventory. While the obvious strategy here is to keep case costs in mind, you need to know, A) how flexible the distributor’s costs are, B) what it will take for you to receive more favorable pricing and, C) just what constitutes a case for each product.

The standard for most 750ml bottles is that they’re shipped in cases of 12 while 1.5L and 1.75L bottles normally make up cases of six. Just to make things difficult, however, some products come in 3-packs while others are shipped in cases of 15 and still other bottles are available for purchase as single units (rare as this may be). Speaking of cases, ask if the distributor imposes case minimums. Then find out whether or not they’ll allow you to pick up your own orders. If they will allow that, saving you some dollars, find out if case minimums still apply. You can’t avoid a backroom full of bottles gathering dust rather than accumulating dollars if you aren’t aware of case minimums and planning accordingly. A simple standard to keep in mind is to keep no more than 7 days of inventory on hand. Not only does this help to control costs and manage inventory, it can also cut down on theft.

Promotional Assistance

By now you’ve been hit over the head with grabbing distributor or brand dollars to promote your special events. Well, pop a couple of Tylenol because here it comes again. When planning promotional events, talk to the field rep(s) who handle the product(s) you’ll be featuring and find out how far they’re willing to go to support your venue. Whether their support comes in the form of dollars for flyers, branded glassware, tabletop drink special menus or launching new products at your bar, you need to know that your distributors and their field reps are going to support you fully. Find out if their support includes access to brand ambassadors who can educate you and your staff on drink recipes featuring their products and take advantage of that resource. Your reps shouldn’t ignore you until they need to move more cases, they should have your back and be accessible even after you’ve received your order.

Know When to Strike

There are times when your on-premise reps are going to approach you with a fairly heavy hand concerning a particular brand. This usually means that they have been offered an incentive to move as many cases of a specific brand or product as possible. This can be motivated by a need to empty the distributor’s warehouses, urging from brand executives to the wholesaler’s upper management to blitz their products throughout the marketplace, field managers’ teams duking it out for top position or an attempt to capture a larger share of the market with brand-new products. Whatever the reason, it’s up to you to stay ahead of product trends, notice when your reps have become more aggressive and turn the situation to your advantage. Clearly they want you to do something for them so this is the perfect opportunity to find out what they’re willing and able to do to for you and your business.

A Red Flag

Look, competition can bring out the ruthlessness in us all. There are massive dollars at stake in our industry and things can get vicious when it comes to capturing them. Be warned that some on-premise reps may think they can get away with threatening you with unfavorable pricing or refusing to sell you certain products in order to keep you from stocking their competition. Even if you only currently work with one distributor, never succumb to such a threat. Brands leave distribution companies all the time to form their own groups – taking other brands with them – or to sign on with different wholesalers. Nobody should hold you hostage in such a way in your own bar. This is why it’s important to not only get the contact information of your on-premise rep but that of their supervisor and their supervisor’s supervisor. This isn’t a common practice but it’s something ugly that can happen – protect yourself.

Doing Your Part

This is definitely not a one-way street. You need to uphold your end of this relationship not just with paying your bills in a timely fashion but with honoring your agreements. When it comes to orders that arrive via delivery service, the refusal of even a small portion of your order can completely wipe out the wholesaler’s profit and hurt the reputation of the sales rep handling your account. Not only is it wildly unprofessional to choose upon delivery that you don’t want some of what you ordered, it won’t foster a healthy working relationship if you’re negatively affecting your reps’ commissions and making them look bad. Definitely do whatever it takes to receive the best pricing possible but honor your commitments.