Navigating Your Brewery Through Distributor Staff Turnover
What are the obstacles when turnover is high at your Distributor?
Step one is delving down into the problem. Understanding its root.
Distributor consolidation makes it hard for your brewery to stand out
According to Brauwelt International, the number of beer wholesalers in the U.S. dropped from about 3,500 in 1990 to less than 1,400 in 2021. That’s an almost 60% reduction!
Why is distributor consolidation a problem?
Large distributors might prioritize bigger brands that are more well-known.
Larger brands have more influence (💵) and pressure distributors to meet sales targets.
Distributors play along because it’s more efficient to focus on a few, high-volume customers than a bunch of low-volume ones.
More efficiency means higher profits for the distributors.
The distributor's focus on efficiency means that it’s tough for your brewery to stand out and get the promotion and support you need to make distribution profitable.
Employee turnover at the distributor makes it difficult to build relationships
Relationships are a big part of business. If you have a brand manager that you are in harmony with and all of a sudden they are laid off (or go looking for greener pastures), you've lost a valuable intangible asset. Conversely, if there was a rockstar sales rep that hyped your awesome beer to bars and retailers, losing them could create problems too.
Why is employee turnover a problem?
Your brand manager might have been your biggest cheerleader at the distributor - motivating sales reps to push your product.
If a trusted sales rep leaves, bars and retailers might not have the same relationship with the “new guy/gal”.
It takes time for trust to build between a sales rep and a bar/retailer.
Until that trust is built, you’re not likely to have the same support out in the field. Then, when/if the trust IS established, there’s no guarantee that your beer is what the rep is pushing.
A setup that worked well for you (brand manager > sale rep > retailer) is disrupted with no guarantee that it can be recreated.
DO, keep in mind, though, that there is another side of this coin…turnover could work in your favor. An unsupportive brand manager or sales rep could be replaced with an enthusiastic advocate! 👍🏼
How could the relationships with your distributor team be better?
Ideally, you would have a great relationship with all of the members of the wholesaler team, not just the brand manager and sales reps. There’s also:
The operations folks who handle inventory and logistics
The marketing gang that coordinates promotions
The drivers who actually deliver your beer
Having everybody rooting for you and your brewery would give you peace of mind that the distributor is going to move enough volume to make up for your diminished margins.
While having quality relationships is great, ultimately the numbers have to make sense. The distributor must always justify itself in your supply chain. The quality of this relationship can be quantified by:
Having an annual budget.
Creating and tracking KPIs related to the wholesaling side of your brewery.
Strategic planning with your distributor. E.g., market development plans and goals.
Finally, you would have done your part. As with most things, working with a wholesaler is going to require that you take the lead. Unfortunately, you probably can’t just hand it off to the distributor and expect that all will go perfectly. Doing the following would have helped to build a solid foundation for wholesaling your beer:
You, or your team, hosting/attending sales meetings with your wholesaler.
Educating the sales reps on your beer so that they can be knowledgeable when selling it.
Understanding the market that the sales reps work in so that you can help them overcome objections and obstacles
What are you trying to avoid with turnover at your wholesaler?
What takes place at your wholesaler is largely out of your control, it pays to acknowledge and understand what must absolutely be avoided so that you can be proactive.
As with anything, the Pareto Principle likely applies here. Meaning that 80% of the beer you sell through the distributor ends up at 20% of the bars and retailers. Losing this foothold could make wholesaling a bust. It can’t be allowed to happen. Know who these bars and retailers are and know why they move so much of your product!
If you ever want to know what someone is thinking, look at their actions, not their words. Your distributor might be whispering sweet nothings into your ear. But, when you need them - they’re unresponsive. If you feel that your brewery isn’t getting the attention it needs/deserves, it’s time to reach out to your distributor and have an authentic discussion. Or, maybe, time to let them go.
What is your vision for your brewery’s wholesaling and how can you achieve it?
If you don't know where you want to go, you could end up anywhere. Think about, if you haven't already, what the ideal scenario would be in terms of your brewery selling to bars and retailers.
Is it having strong relationships with multiple roles (and multiple distributors)?
This depends, in large part, on what state you operate in. Some states have more brewery-friendly laws. Others don't believe in the free market as much and are more distributor-friendly.
Furthermore, even if you operate in a brewery-friendly state, there just may not be any other options. 😤
If you're fortunate enough to have options, then it pays to build a relationship across all those different distributors. Though contracts can be tough to get out of, at least the groundwork is laid for new beginnings. Furthermore it pays to nurture relationships with different roles within the distributor. This will hopefully increase the likelihood that you and your brewery are well regarded in that organization. It also keeps you front-of-mind for everybody from the brand manager to the sales rep.
Is it having SMART goals that the distributor actually works toward?
Be firm and forthright with your sales expectations. Your brewery might be small potatoes to the distributor (hopefully not). But to you, working with a wholesaler is a big leap of faith and carries with it a good amount of risk .
If your distributor knows your specific sales targets and you have the data to back those targets up - then the likelihood of reaching those goals goes up. Again…if you don't know where you're going then you could end up anywhere.
As mentioned earlier, regular performance reviews are essential to be sure that you're on track to reach those goals .
Is it having a process for bringing new sales reps up-to-speed?
Employee turnover is a commonplace thing. Your rockstar, cheerleader of a sales rep could be moving large volumes today and gone tomorrow. Wouldn’t it be nice to have a plan in place to give the new guy or gal what they need to match or exceed their predecessor?
Some things you might consider are:
Literature that efficiently covers details of your beer and sales tips that the old rep used to move all those bbls.
Regular training sessions that keep you front-and-center in your reps mind when they are out making sales calls.
Having a point of contact at your brewery that is always available to answer any questions your rep might have.
Streamlining operations to meet distributor demands
Expectations run both ways in your dealings with your wholesaler. You have to fulfill your end of the bargain.
Having your operations in order will help you do so. Bosque Brewing Co. in Albuquerque, NM utilizes business management software (Ekos) to help them track inventory and production. It can also help with sales and order management.
In the linked article, Bosque does mention “Ekos glitches” and the software being “cumbersome.” If you’re interested in leveraging software like this to help you work more efficiently, you might check Ekos out. Or…there are potential alternatives out there like Ollie and Beer30.
Ekos hides their pricing. The other two options seem to range from around $120/mo to $370/mo.
Where can your brewery get help with turnover at your wholesaler?
Okay, so you’ve isolated the root cause of all these obstacles. You’ve established how things could have gone better to this point and how you would like things to operate going forward. Furthermore, you faced the worst-case scenario and are clear about what you want to avoid.
This is a big issue to tackle all by yourself. So where can you get the help you need for your brewery?
State brewers guilds
You are probably already familiar with your state’s brewers guild. Use them as a resource.
Your state brewers guild might be able to:
Offer the services of a distributor relations committee
Provide best practice documents
Provide educational resources for working with distributors
Mediate distributor conflicts
Just search ‘[your state] brewers guild’ if you’re not yet familiar with them.
The National Beer Wholesalers Association
Here is the other side of the coin. Ideally, brewers and wholesalers work in lovely harmony. It’s in everyones’ best interest for that to be the case. Your success is the wholesaler’s success and their success is yours.
The NBWA website could give you some insight to what people are talking about at your distributor. You could make it a point to read up on the blog or the resources regularly. Pro tip: run the articles you’re interested in through AI software to summarize - if you're crunched for time.
Network with other brewers
This is, admittedly, a vague platitude. But, where, how, and who to network with depends a lot on you. What you’re comfortable with. How much time you have. And so on…
From what I’ve observed, most brewers in a given community have good relationships with their peers. While there is an element of competition, obviously, it seems like there’s also a sense of “rising tides raising all ships.” So, start there - with your peers. Compare experiences, share information, coordinate and share resources - if possible.
A distribution market performance worksheet
Brewery Distribution Market Performance Worksheet
This is something I created to accompany this post. The goal is to help you track, on a quarterly basis, your distributor sales. At a glance, you’ll be able to see quarter-over-quarter and year-over-year changes.
Additionally, you can plug in market size and active account information to determine market penetration. This could help for making forecasts and SMART goals with your wholesaler team.
Finally, sales and marketing metrics can be plugged in to visualize the correlation (if any) between these efforts and sales. Again, valuable information to have when working with your wholesaler team and planning for the coming year.
Why will employee turnover at your wholesaler be okay?
Let’s end on a positive note!
It’s been done before
The bottom line is that breweries have navigated these waters and overcome these challenges before. And, whatever has been done before establishes the fact that it CAN be done.
Some notable examples of breweries that have scaled up enormously in that 1990 - 2021 period mentioned earlier are Sierra Nevada, New Belgium, and Dogfish Head. These breweries have used distribution as a means to propel their business into the stratosphere all while the number of distributorships has plummeted.
Stone Brewing, for instance, started in 1996 in San Diego. They grew regionally…then nationally Now they brew over 350,000 bbl annually (with a second brewery in Virginia to serve the East coast) and serve all 50 states.
New staff = new perspectives + a fresh start
New employees at your distributor, if they’re go-getters, will likely look to make a mark early in their tenure. They will want to hitch their wagon to whatever is going to make them money and give them their biggest return-on-energy. New (and better) expectations for your bar and retail performance can be set!
Additionally, these new hires can bring valuable perspectives from other industries. They can be keen on opportunities that might have previously been overlooked.
I think you get the point - turnover at your distributor CAN cause problems. But, like anything, this is a “problem” that can represent an opportunity for your brewery to take that next big step forward in scaling up your operations and achieving your vision for your brewery.
