The Six Biggest Mistakes Start Up Beverage Companies Make - Pt. 5 Distributors and Sales
Mistake #5 - They think the distributor will be their “sales force.”
Large grocery distributors usually carry thousands of brands and tens of thousands of items in their book. Yes, distributors have sales teams. Those sales teams usually spend their time presenting the items that are going on “deal” that month or quarter. Many of them give most of their attention to large established brands.
If your beverage is non-alcoholic you may choose to utilize a few dozen existing grocery distributors in the U.S. As you may imagine most beverage brands eventually seek to have placement in grocery stores such as Safeway, Fred Myer, Whole Foods, Giant Eagle, Beverage & More, Trader Joes, etc. Distributors, although taking 27% to 30% or more margins, do provide a viable option for taking the risk of collecting receivables from retailers, as well as delivering your beverage from their warehouse to the store or restaurant.
Getting in the door of these grocery distributors is not easy or simple. It’s important to know their business before you call on them and make sure you are fully prepared to discuss marketing support that you offer them for your brand going forward.
What months are you going to go “on deal”?
How will that be structured with the distributor and retailer?
How long in advance will you have your discount calendar set up with the distributor? (Your annual promotional calendar)
Are you going to take out advertisements with the distributor and with the retailers as well?
It’s not uncommon for distributors to require a new beverage brand to prove there is a sales demand in the trade – by having the new brand call on significant retailers to get “buy in” prior to their agreeing to add your beverage to their book of products.
We highly recommend that you have your distributor price sheet ready, with all the pertinent information. This includes but is not limited to:
UPC Codes and product descriptions.
Distributor price showing cost per case/unit.
Suggested retail and wholesale price showing the margins for each.
Case and pallet information including:
Pallet Ty & High
Order desk time and phone number
Lead time for ordering
Pick up times, location, and phone number for appointment pickup times for truckers.
We highly recommend that you avoid calling on a distributor to approach them about carrying your product until you have ALL your information together for them. These are very busy buyers. If you do not go in there showing that you understand the business and have all the information they need, they will usually turn you down. If they turn you down, you will sometimes have to wait years to be able to get back in front of them to present to them again.