The supply chains are like the blood in the human body. They connect different parts of the market with others, they transport capital and commodities to different parts. That’s why wholesale distribution is extremely important in today’s economy. That’s true for the food and beverage industry as well. Mass-produced and craft beer distributors are the intermediaries that help breweries transport their products to their clients - restaurants, bars, stores, and other businesses. In this article, we’ll explain what it means to be a beer distributor as well as some of the advantages and disadvantages of working with one.
What Is a Beer Distributor?
Beer distributors operate on an international, national, or statewide level. Their primary role is to purchase beer products from breweries and distribute them to retailers. The majority of breweries in the US work with distributors. However, some of the large market players offer logistics as well and don’t rely on intermediaries.
The main operations included in a beer distributor company are:
- Purchasing. Negotiate with breweries and purchase their products. Factors such as volume, quality, and demand are taken into account when negotiating the price.
- Inventory management. Beer distributors need to rely on professional warehouse inventory management software as they stock many types of craft beers with different expiration dates and rates.
- Warehousing. Beer needs to be stored under specific conditions. Intermediaries need to have quality storage solutions.
- Delivery. Shipping beer and other beverages has a lot of challenges. That’s why breweries often outsource logistics to third parties like beer distributors.
- Sales and beer marketing. One of the reasons why most breweries work with middlemen is the fact that this helps increase their sales. Working with distributors is an additional marketing channel for breweries as intermediaries can advertise their products to businesses.
Key takeaway: Being a beer distributor can be a profitable business. The main factors for success include the number of breweries and clients you manage to secure as well as competitive advantages compared to other distributors.
How to Become a Beer Distributor?
According to the Brewers Association, there were 957 craft breweries in California by the end of 2022. That means there is a big niche for craft beer distributors to find their place in this market. Additionally, according to statistics, there were close to 10,000 craft breweries in the US by the end of 2022. And the fact that the craft beer revolution continues means more people are researching how to start a brewery. This means that the demand for logistics, warehousing, and inventory management services in the beer industry will only grow. If you want to know how to become a beer distributor, let’s dive deeper and check some of the main steps.
Research the Industry
You need to know all the latest trends and the future projections of the beer industry. Then, you need to research local regulations and specific requirements for running a beer distribution company. Also, think of ways how you’ll be competitive compared to current wholesalers.
Create a Comprehensive Business Plan for a Beer Distributor Company
It should outline the goals of your future business, targeted markets, and distribution strategies. Additionally, a professional business plan must include financial projections, marketing channels, and a variety of other specifics. The business plan will be one of the most important parts of securing your funding.
Obtain Licenses and Permits
To get financing, you should put some time and effort into answering the requirements to operate a beer distribution business.
Secure Funding
Determining the needed financial resources is crucial. Some of them can be personal savings, partnerships, loans, and other investors.
Connect with Breweries
To act as an intermediary between beer producers and stores or restaurants, you need to secure agreements with the former. That way you will have a catalog of different beer options to offer to bars, pubs, restaurants, and other businesses that need beer delivered to their doorstep.
Warehousing and Inventory
Before you start stocking beer products and delivering them, you need to store them. Refrigeration units, storage racks, and delivery vehicles are just some of the equipment needed for running a beer distributor company.
Find the Right Clients
You can start small and grow your business from there. Large beer distributors might prefer not to work with small stores and businesses. Examples of companies that sell beer include restaurants, liquor stores, and supermarkets. Make sure not to focus as much on the price but on the value you can give compared to competitors.
Adapt and Scale
After you establish successful partnerships with some breweries and businesses that need a beer distributor, you can think of growing your business. Invest time and money into creating automated processes. That way, even if your business grows fast, it won’t become chaotic.
Work with Beer Distributors or Directly with Breweries?
Pros of working with beer distributors:
- Wide selection of breweries. Businesses that wish to have an extensive craft beer menu should strongly consider working with distributors.
- Established supply chain. The whole business of beer distributors is related to supplying. That’s why they have established supply channels.
- Efficiency. Distributors handle some of the administrative parts of the process. Things like automation, invoicing, ordering, and payment can save restaurants and other businesses time.
- Know-how, expertise, and guidance. Working with a wholesaler means you get seasonal offerings, extensive knowledge of the beer industry, and guidance on some of the market trends and new releases.
- Marketing support. This might include marketing materials, information about promotional events, and assistance with promoting a business’s beer menu.
- Regulatory support. Breweries might not fully understand the regulations in different states, but it’s a must for beer distributors.
Reasons to work directly with breweries:
- Fresh and unique beers. By working directly with beer producers, you can get unique beers earlier.
- Better quality control. Distributors might not be as concerned about quality control as breweries.
- Customization options. You can get customized beers and even bottles and cans with your brand on them.
- Better pricing. Breweries can maximize profits if they work directly with restaurants and other businesses. That’s why you might get better pricing if you agree to large quantities.
- Support for local businesses. More and more people prefer to consume locally-produced products. By working directly with local breweries, you can improve customer experience by assuring your clients that the beer they’re drinking directly helps a local business.
Frequently Asked Questions about Wholesale Beer Distributors
Whether you’re a restaurant manager looking for a reliable beer distributor or you’re planning to become the link between breweries and other businesses, the following questions and answers might be of assistance.
What Are the Latest Trends in the Craft Beer Market?
The craft beer revolution has changed the landscape of the beer industry. The latest trends in the field include more eCommerce sales, growth in key regions such as China, and more on-premise consumption. Additionally, there are lots of new business opportunities such as beer delivery subscription boxes. You can explore dropshipping ideas related to craft beer as well.
Which Are the Top Beer Distributors in the US?
Among the major players in this business niche are Anheuser-Busch, Reyes Beverage Group, Silver Eagle Distributors, and Ben E. Keith Beverages. There are many local and smaller beer distributor companies as well. For some breweries, it is more beneficial to partner with local wholesale beer distributors as they can offer preferable terms.
How Many Beer Distributors Are in the United States?
According to data from the National Beer Wholesalers Association, there are more than 3,000 beer distribution facilities and businesses across the US. Some of them serve only single states, while others offer nationwide service. Around 140,000 people are employed by beer distributor companies in the US.
How Do Wholesale Beer Distributors Make Money?
Wholesale beer distributors make money by purchasing beer at a lower price from breweries and selling it at a higher price to retailers. Their profit margins depend on the cost of beer, operational expenses, and the pricing agreements with retailers and breweries.
What Licenses Are Required to Operate as a Wholesale Beer Distributor?
To operate as a wholesale beer distributor, you need a federal basic permit from the TTB and various state-specific licenses, which typically include a wholesaler's permit. Additional permits may be required depending on your location and the specifics of your operations, such as transportation and storage permits.
How Do Wholesale Beer Distributors Support Local Breweries?
Wholesale beer distributors support local breweries by providing broader market access and distribution channels, helping them reach more retailers and consumers. They also assist in marketing and promoting local beer brands and handle logistics, allowing breweries to focus on production.