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Insights

30/07/2019

Psyche of a Distributor

Photo for: Psyche of a Distributor

For a supplier to be self-aware, it's key to know the mind set of your distributor.

As a winery, brewery, or distillery, it’s very important to know what your distributor’s business is, and what is going on in your distributor’s head. 

Sid Patel, CEO of Beverage Trade Network, the organizers of USA Trade Tasting gives insights about the psyche of a distributor from personal experience, being on both sides of the spectrum as a supplier, and as a distributor.

The Distribution Business…

Distributors are in the case movement business, delivery business, logistics business, and sales personnel business. More of their effort goes into running operations, instead of learning about the wine, beer, or spirits business. 

"It's a box, they don't care what is inside the box. It's super important for wineries to understand that. There are 500 products, and they're going to see it as 500 boxes - and they are going to evaluate each month as to what is faster moving and what is the dollar contribution of that box" say Sid

There are two ways to look at movement as such : either you have less margin per box, and more movement - and that’s what the Budweiser’s and Coca Cola’s are all about. Or, you have a 100% markup and less movement. In turn, as long as the dollar contribution is equal or better, and matching with the volume goods, then you’re safe. But if you’re not hitting either sides, then you’re in trouble as a supplier. 

A Distributor’s Mindset...

Technically, a distributor is a 100% in the sales business. Yes, they are doing it for the love of wine, beer, and spirits - and of course, for the art, but at the end of the day they have to pay their bills, they have to scale, and grow, just like any other business. 

“Distributors will always have to face one guy, who doesn’t care about the art of the product” explains Sid. 

So no matter how amazing the wine is, if the movement isn’t there, the retailers; who are their customers, are going to give them a tough time.  And whichever way you look at it, it’s all measured by the dollar. 

Another thing to take note of is that distributors want everything to be easy. If your case is branded, labelled well, and priced sensibly, then distributors and sales personnel will be able to move it easily. It will keep both the distributors and retailers happy. 

Keep in mind that you don’t want to create any friction. Any unlabelled cases, mismatched prices, hard to recognize boxes is what creates friction - and that is something both distributors and retailers despise.

What distributors are looking for…

Quality is the most obvious thing they’re looking for. It’s obvious that your product should deliver value. 

Next comes the product margin. How does your markup rank? And how far is it going to go. 

Your marketing materials are also something that distributors are going to be looking at. They don’t need the brochure of your winery which tells them where someone is born or where things started. For a distributor, the straight things they need are pictures that showing your case display, and your branding. If you have these in line then you’ve hit a homerun. 

Having pictures, a branding, and things organised differentiates you from the other wines, beers, and spirits they’re tasting. They might need to pick a supplier fast, and if everything you have to offer them is right in front of their eyes, then there’s no way they can decline you. 

How your products are selected by a distributor

In a small to medium distribution business, you end up doing a tasting on a friday morning, because on friday’s people don’t really go out to sell. Contrary to popular belief, the tasting is done in a very relaxed way.

Everyone sits around, pops open the bottle and taste the wine, beer, or spirit. If it’s liked, then the team usually goes through their emails to find out the price and technicality of the product. Some suppliers have a distribution evaluation form, which includes pricing, business cards, sample matching, tech sheet, etc. 

Having a distribution evaluation form makes things much easier for the distributor and his/her team. They don’t have to hassle around much to find things, they don’t have to read too much - all the information is given to them there and then - and they’re ready to make their decision. 

How to get on a distributor’s list…

Getting on a distributor’s list isn’t as hard as you might think it is. It is the little things that make the distributor pick your product to move. 

  • Create standard pricing 

For both distributors and retailers, it’s much easier if you have a standard price for your products. For example, when a retailer is entering a new skew, they want everything as simple as possible. Say, $6.99 for  Merlot, $6.99 Shiraz and so on. A standard price keeps the retailer and distributor happy. This will make them want your product as they wouldn’t have to do too much thinking or calculations themselves. 

  • Having a branded case is key

When a distributor walks into the warehouse to pick up your case, and you don’t have a branded case, you’re creating friction - which both distributors and retailers absolutely hate. Branding your cases to the point where they are easily understood by everyone makes things much easier for you and the distributor. For example, if you have a case marked yellow and a key sheet which says yellow is Shiraz, red is Merlot, and so on, everyone is happy.

People love you, truckers love you, delivery guys love you, retailers love you. It’s about the guy who is going to carry your case. Having a case with no breakages, a good case will make it easier for them. It’s about the guy who is going to pick it up and put it in the truck - he should know that this is your case. A case with no label will cause friction. It’s about the retailer, putting the case in the godown again and being able to find your case easily.

  • Winning over the sales personnel

This might be something you’ve heard over and over again, but building relationships with the sales personnel is very important. The sales personnel are the heart of the distributor. There are many ways in which you can build relationships with the sales personnel. Some of them being, sending christmas cards, or the occasional extra bottle of wine just for them, or a simple thank you. 

You have to be a likable supplier. 

How distributors write cheques....

It’s simple - distributors will write cheques to the one whose product has been moved the fastest, and whose product is in need of a repeat order. Distributors care about repeat orders, and that’s how they pick who to write their cheques to. 

Fun fact: If there’s a tie between two people, being a supplier who has never spoken to them, and a supplier who keeps in constant touch, reaching out, making things easier for the distributor - then of course the cheque is going to go to that guy.

According to Sid, “Understanding the psyche of your distributor is as important as creating a quality product. Keep your distributor happy, minimize their challenges and you’re bound to get on the list”

Looking to grow your brand in the US Market? Exhibit at 2020 USA Trade Tasting and meet 2000+ Importers, Distributors & Key Trade Buyers at one place. Book Your Table Now in Early Bird Offer & Save $600. The offer ends September 30, 2019.