What's Trending— Spirits Distributors' Tips for Brands in 2024
Jun 26, 2024
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Mark Harmon, from the Independent Distributor Network, and Emily Pennington, a spirits industry expert, dive into the complex distribution landscape for 2024. They discuss the intense competition for shelf space and the pressing need for brands to grab distributor attention. Key insights include the impact of the pandemic on distribution strategies, the importance of understanding profit margins, and emerging trends like craft spirits and cannabis-infused beverages. The duo also emphasizes building genuine partnerships and setting realistic goals for growth.
The podcast emphasizes the need for spirits brands to adapt their strategies due to evolving distribution dynamics post-COVID-19.
Distributors are prioritizing inventory management and collaboration with suppliers to maintain effective distribution and shelf space in 2024.
Deep dives
Impact of the Pandemic on Distribution Trends
The discussion highlights the significant shifts in the distribution landscape due to the aftermath of the COVID-19 pandemic. During 2020 and 2021, the industry experienced unprecedented retail growth, while on-premise operations suffered. As the market stabilizes in 2024, there is a notable inventory reset as distributors adjust from overly stocked levels during the pandemic to more manageable inventory practices. These changes reflect a broader need for brands to adapt and strategize for a post-pandemic environment where consumption patterns and economic conditions have also evolved.
Challenges of Inventory Management
Inventory management has emerged as a critical focus for distributors in the current climate, as excess supplies from the pandemic era lead to a significant reset. Distributors are reverting to shorter lead times and more calculated inventory levels, which reflects a shift from the panic-driven strategies necessitated during supply chain disruptions. The operational philosophy is now centered around maintaining lower days of inventory and fostering a collaborative environment with suppliers to effectively move products without losing shelf space. This highlights the need for suppliers to actively participate and innovate in managing inventory flows to ensure successful distribution partnerships.
Vetting New Brands for Distribution
The vetting process for new brands entering the market is stringent and requires potential partners to exhibit quality, preparedness, and a clear understanding of their business models. Distributors stress the importance of a well-defined vision and the necessity for brand owners to demonstrate commitment and realistic expectations. Brands seeking partnerships are encouraged to focus on building deep relationships within fewer markets rather than trying to expand rapidly across many. Successful distributors prefer informed brand owners who are proactive in market presence and can effectively support the growth of their products.
Setting Realistic Goals and Expectations
Establishing KPIs and collaborative goals is crucial for successful brand-distributor relationships, especially for newer entrants in the spirits market. Early-stage brands should focus on demonstrating product viability and consumer interest before delving into extensive goal setting. Once a brand establishes a solid market presence, qualitative goals—such as shelf placement or cocktail menu visibility—can take precedence, gradually transitioning to quantitative metrics like sales volume. Overall, it's emphasized that a mutual understanding of attainable goals and ongoing collaboration is key to navigating the complexities of the beverage distribution landscape.
Beverage alcohol distributors sit at the epicenter of a cluttered product landscape where, according to Mark Harmon of the Independent Distributor Network, “God isn’t making any more shelf space.” Distributors only have so much time and attention they can give to each spirits brand. What’s left is for brands to do everything in their power to make a compelling case that their products deserve to take up a meaningful share of a distributor's attention.
Emily Pennington sat down with key figures at Southern Glazers, Breakthru Beverage Group, Skurnik Wines & Spirits, and the Independent Distributor Network at Bar Convent Brooklyn this month to discuss the current state of beverage alcohol’s second tier. This diverse cast of key wholesalers offers a window into how distributors are viewing and operating the market for spirits brands in 2024.
They'll explore the evolving dynamics within distribution in the wake of the pandemic and uncover what distributors are looking for when considering a new brand partnership. They'll also highlight the red flags that can derail a brand's chances of securing distribution.
Featured Guests:
Ray Lombard, Executive Vice President of Craft Spirits, Southern Glazer’s Wine & Spirits
John Oliver, Sr. Director of Supplier Business Development, Breakthru Beverage Group
Adam Schuman, Spirits Portfolio Director, Skurnik Wines & Spirit
Mark Harmann, National Sales Director, Independent Distributor Network