What strategy to use to distribute your beer in bars? Part 1

article written in collaboration with Alexandra Berry. 

Before starting, ask yourself the right questions...

Direct or through a distributor?

If you are in the early stages of your development, your volumes will probably only allow you to sell directly. In this case, here are a few tips to keep in mind when soliciting customers:

1. Evaluate your working time

Many brewers start selling to bars and restaurants directly, wanting to do everything and work with everyone. For many, this approach allows them to become well known locally and to develop their brand image. Be careful, however, to preserve your working time and the quality of your service: distribution in CHR* requires a lot of time for negotiation, order preparation and delivery. Determine in advance the time you are ready to devote to it.

*CHR: Cafés, Hotels, Restaurants.

Of course the advantages of selling directly are numerous: margins, visibility, contact with the customer, the guarantee of a well presented product as well as the possibility to make animations, events and to accompany the customer in the development of your beer.

But there are also many disadvantages: numerous deliveries and trips for small volumes, customer follow-up that must be impeccable, logistics costs for small shipments...

Having one or more distributors allows you to negotiate prices on all your products, to send by pallet, to be able to concentrate on production, to access customers that you would not have known, to see your beers in the distributors' catalogs, as well as to have brand ambassadors who talk about your products.

2. Choose your distributor

Partnering with a distributor can offer many benefits, including:

• Time saving: The distributor will usually order by pallet, which will save you time in order preparation, price negotiation and invoicing, thanks to these shared shipments.
• Negotiation of volumes and prices: With orders by pallet, you will have a better estimate of the production volumes to be realized, as well as the margin that you will be able to generate via a single partner, which is less easy with twenty or so direct customers. Your rotation will be more fluid and more predictable.
• Better cash flow: It's a fact that a well established distributor with years of experience will take less time and cause less stress in settling payments than a couple of dozen bar owners. You will have an accountant with regular payments and on time payments. No more customer reminders, cheques to collect or problems with discounts, credit notes or other issues.
• Access to contracted outlets: Sometimes a bar may not be contracted with a brewery, but rather with its distributor. Therefore, it will not be allowed to buy kegs from you. In fact, a wholesale distributor can also finance a point of sale, its draught or even its works, in return for regular orders to amortize this investment. This means that the bar will be contractually obliged to buy its drinks (and therefore its beer) from its distributor. If you are on the distributor's catalog, a bar manager will have every interest in adding you to his menu! This type of contractualization is done with regional wholesale distributors.
• Presence in catalogs and brand ambassadors: The distributor will be able to bring you a wider influence to points of sale that would never have heard of you, or that you would not know. You gain a brand ambassador to place your products. We will come back to this point, but it is very important: the distributor sales representative becomes a key for many doors: pamper him!

There are several types of distributors you can work with:

The choice of the distributor is very important. He will be the representative of your product: he must guarantee the FIFO, the good maintenance of your kegs and bottles, the freshness of your beer etc... Take the time to visit the warehouse, to meet the salesmen and to make commercial rounds to distinguish the type of customer portfolio which he deals with. This could greatly impact your choice.

A bar that does a lot of volume and student nights can be a big customer, but at the expense of your product quality and pricing margin. A network of specialty bars and beer geeks will promote you well, but will require a lot of novelties, rotation and could quickly replace you with a new trendy brewer.

Pay attention to the beer catalog that this distributor already has. You want to differentiate yourself from other brewers, but you also want to make sure that the catalog is of high quality and represents you. Does the distributor take directly or from a distribution platform? Does he know his range well? Does he have special agreements with certain brewers? Try to place your products on the same price list as your competitors: the salesman who will sell your products will try to make a margin and will place first the brewers who will bring him the most profit.

Finally, like the customer, pamper your distributor. When a salesperson has a catalog of a dozen or more breweries, make sure you're the first one they think of when they suggest a beer to an outlet. Motivate the salesperson to represent you, to talk about your brand rather than another. This can be done through incentives, samples, merchandising... Yes, it's commercial, yes, it's a commercial approach and it may not be in your ideology, but this salesman doesn't owe you anything, only his margin and a nice end of month count! Be the best choice for him... and for the customer!

Choose your radiation

When you go into distribution, think about your marketing strategy: where do you want your beers to be consumed?

Locally, you will have the advantage of doing direct business rather easily and of building loyalty among your customers who will like to taste a beer brewed close to their home. In this case, try to find points of sale that can become your flagships, your brand ambassadors, with fixed spouts that will ensure visibility and volume. Then, animate it! For the owner as well as for the customers, a rotation of the range and evenings to meet the brewer will keep a large customer base. Organize contests, tastings and involve the bar as much as possible so that it can fill its point of sale... and the glasses with your beer!

If you prefer to have a national influence, you can differentiate yourself by your origin or the conception of your brews, but this will require a greater vigilance as for the follow-up and the quality of your beers. When you want to expand nationally, the question of a distributor becomes really necessary, but this option is not mandatory. You can target certain cities that seem to have an interest for your products and make agreements with local distributors. This would allow you to offload a large part of the negotiation and delivery by giving you a few targeted contacts to accompany.

When using a distributor, try to make time with the distributor to visit the outlets together. The distributor can provide perfect delivery and follow-up, but the bar owner will be much more likely to sell a beer he knows the brewer. Also, as explained earlier in the article, the distributor will introduce you to outlets that you might not have thought of or been able to access before.

Not only in bars!

Don't neglect the wine and grocery stores, especially in touristy cities, which will feature local products. Bistronomic and gastronomic restaurants will be able to present craft beers made close to home. Think of cultural hubs: theaters, small concert halls, etc.

When you have seasonal traffic, partner with tourist offices or physical activity venues: a draft in the climbing gym, next to the mountain bike rental point, the ski slopes or the kayak club. These are places to push your basic "lager", a thirst-quenching beer that you make in large volumes and on which you can work the price. This audience will be looking for an affordable beer, but will be happy to drink local!

Also think about markets, cultural events, local events... renting a fountain with two barrels at the end of a race of a few hundred people can bring you a lot of visibility!

Be present

Whatever your choice, direct or via a distributor, and whatever your distribution partner, be there.

From the first presentation of your products at the bar to the serving of your beer, be sure that the point of sale and its staff like and want your products to be discovered. This includes explaining your brews, styles and their particularities. Make sure your kegs, bottles or cans are stored in a cool place away from light (there's nothing worse than drinking your beer and finding out it's gone bad). Check the maintenance of the tap lines, the FIFO and the cleanliness of the glasses. You want to be sure that each of your beers will be enjoyed in the best conditions and as you intended.

As noted above, this is an extremely time-consuming follow-up, which requires a lot of support, patience and trust. You may feel the need to have a sales person dedicated to this mission, who can also animate the points of sale with tastings and Tap Take Overs. Again, if you choose a trusted distributor who knows his customers well and who likes to animate and energize his points of sale, this can be a huge help.

Similarly, if a bar complains about the quality of your beer, listen to them, go and find the problem (if possible) and find a solution together. First of all, to show that you are available and willing to help, but also to see if the problem does not come from the installation of the draught or its hygiene. Don't be afraid to point out these possible problems if you see them and especially if they are points raised repeatedly.

BONUS: Stainless steel or plastic barrel?

Depending on the age of the brewery, your volumes and your cash flow, you will opt for plastic (Keykeg, Polykeg...) or stainless steel kegs. The goal here is not to advise towards one or the other but rather to draw attention to the impact this will have on your distribution strategy.

If you do direct mail, you will be confronted with your customers' preferences. Some prefer the plastic drum so they don't have to keep and manage the deposits. Others will prefer the ecological aspect of the stainless steel drum. If you are dealing directly with local customers, you can be more flexible on this point.

On the other hand, a national distribution will require you to choose the right packaging or distribution strategy.

Indeed, the stainless steel drums will be consigned and cost you a lot of money to buy, so to ship farther than in your region, it is strongly advised to work with a regional distributor such as a wholesaler. This one will be used to manage the deposits, to recover the empties on a daily basis or almost at its customers CHRs and will be able to return the empties to you at the same time as a next order.

Plastic drums have the advantage that you can ship anywhere without having to manage returns. On the other hand, it is recommended that you pay extra attention to the storage conditions of your distribution channel. If your plastic kegs filled with fresh IPA are stored in a sweltering shed all summer long, the quality will be greatly affected!

Conclusion

The distribution strategy is therefore very important for your development and there is no right answer. It will depend a lot on the clientele you are looking for, your outreach and your relationships with distributors.

If you use a distribution network, our best advice is to get closer to these actors. Be sure of the storage and the concern of quality that they bring to your products, of their knowledge of the brews, of their customer follow-up. Above all, be present for them as well as for your customers. He can be a great brand ambassador if you give him the right motivation 😉