Distribution is everything….

Since I wrote my piece on the top 10 gins that I think independent retailers should be stocking I’ve had a few conversations with  people, some are delighted because they are included – others wonder why I’ve chosen someone else and not them – but all in all it has set the cogs in my head whirring to say something that has sort of been on my mind for a couple of years now.

Until recently when I decided I wanted to change my life I was working for a regional wholesaler and retailer – not the biggest outfit in the country by  any means – but a reasonable size and one that has a high reputation for their spirit offering. We held (and they still hold) regular tasting events, have access to many of the limited editions that become available and are a place that many of the bigger brand holders spend money and time trying to secure listings and sales in. 2/3 of the business were sales to the on trade and 1/3 of sales were split between a small group of 4 shops, a mail order business acquired in early 2013 and Slurp.co.uk.

One of the roles I carried out for this business was buying their specialist spirit range, by that I mean not Gordon’s, Bombay Sapphire or Tanqueray but the things beyond that. I was forever being chased by independent whisky bottlers to buy parcels of their latest releases – I had visits, phone calls, emails, samples and letters sent to me monthly as they chased being the next purchase. That meant I didn’t have to work hard to make sure  I bought something to keep our range interesting – I could look at what was being offered, the prices, taste some examples and make a selection very easily. Those bottlers who didn’t send me details, who didn’t chase me or visit to remind me they existed were never going to get a look in – if I could find the quality, commercial value and and price points that I wanted easily why make life harder than it needed to be.

However when it  comes to small batch gin, the very thing that is exploding in the market right now in 6 years  of buying I can say that I have only been approached by 3 artisan gin producers to list their particular gin. I listed 2 of those and one I rejected for a number of reasons. In almost every other case the initial point of contact came from me hunting for the best things first. I still find it amazing that new gin producers are not investing more time in trying to sell their gin – in some cases it may be that they are already selling as much as they can produce  – and that is fine in the short term – but for reasons that I will explain I don’t think that is long term sustainable.

Gin producers need to do more to sell their product. At the moment gin is hot and buyers are hunting producers down, looking for just the thing – but that may stop and unless producers are adept at sales and have a mechanism is place then they are in a position to eventually fail.

The other thing that is sometimes surprising with gin brands is the ease of purchase – I have approached some gin brands to be told that I need to buy 10 cases of gin from them – WHAT? 60 bottles of a gin that I haven’t yet tested the market with – are you having a laugh? No the single thing that gin producers need to ensure they get right is their distribution and route to market. It needs to be easy for your target customers to get hold of your product in the quantity that they want to buy it in at a price that does not penalise them. This isn’t true of just gin producers but many other spirits too.

There are a number of ways that this can be done – some producers go down the route of aiming to sign up one of the bigger wholesalers – certainly this can drive some volume for you but you do need to be really careful. I have seen artisan distillers do really well with this – whether it stands the test of time over the long term remains to be seen but it ‘could’ be really good – but remember that you need that distributor to be really working hard for your brand. If they sell a number of spirits are they going to give your gin the focus it deserves and wants or it is more a case of a tick in the gin box and move on, or worse still are they going to list more than one gin – in which case you might find you are not even their primary concern.

If you are going to sell through a sole distributor make sure they are promoting your gin at EVERY opportunity. Does every single one of their customers know about your gin, have they all tasted it and been given reasons how it fits into their existing range and why it deserves shelf space? Or do you find that the distributor in question has an extensive range and your gin is going to get lost somewhere in the middle of their list? Remember you are not only building sales with a distributor you also want to be building brand equity – this is essential to future proof yourself. You don’t want all your customers to be buying the gin from this distributor just because it’s ‘easy’ to do it – if the partnership breaks down for whatever reason then you are left with no customers – and the distributor should want to make sure its the case because if they are selling your gin and building brand equity why on earth would you not stay with them? If they are not doing these things then it could well be time to look again at how you are distributing your product. It’s important too that your product fits nicely into their other portfolio. It’s no good being a brand targeting independent retailers and bars if everything else in your distributors portfolio is going to be of little interest to them. Talk to buyers at the sort of businesses you want to be selling to about your options – ask them about the distributor you are currently using, or the one you are about to sign an exclusive arrangement with – they will talk to you and if you’re going wrong will be happy to suggest the sorts of businesses that they will do business with. It also gives you a chance to sell your brand to them and an involved buyer has much more reason to buy.

Be a little wary too of smaller distributors – are they going to be able to back your gin as much as you’d like? Will they have the range and scope of customers necessary to sell the bottles you want to achieve? It might work in the short term but be careful that your product doesn’t outgrow the distribution channel.

The other way to distribute is to keep it in house – this has huge advantages in that you can maintain a higher profit margin per bottle – and control brand equity but you will need to actively sell your product. You can then either price each case of 6 so that you can offer free delivery on a single case (I really don’t think you as an artisan producer want to be asking people to buy in volume) or put a delivery charge per delivery – so giving a small advantage to those companies willing to buy a little bit more gin.

Most importantly make it easy for retailers, wholesalers and ontrade accounts to buy your gin.  

At the moment it could be easy to say yes well Tim, what do you know – we’re doing what we’re doing, we’re selling everything that we can sell so what is the problem? Well ok – well done firstly for selling lots of gin. It may be that a) I have heard of you, b) you make good gin, c) the distribution channels are nice and easy and uncomplicated – that is great. It may be that you haven’t actually tried to sell to me though – that is up to you but then hear this….

There are probably over 400 gins available for a retailer to sell in the UK at the moment. (this is purely a guess but I’m running with it). Gin is currently THE trendy spirit in cocktail bars, pubs, hotels and at home. People are loving it – they are experimenting with the new tonics that are becoming available, they’re enjoying seeing what people are doing with all the new gins.

The gin trend will stop.

5 years ago there were vodka bars opening on London – most of those are now gin bars or closed. 5 years ago there were new vodkas appearing on the UK market all of the time (many from Europe), 5 years ago there were a fraction of the number of gins on the market that there are now, the brands were stronger and premium gin meant over £20 a bottle.

The gin trend will stop.

Gin being popular is part of a cycle of spirit trends led by a resurgence in the London bar scene. Rum has been trendy, Vodka too – either could easily be trendy again, or it could be cognac or whisky that is next – but something will be next.

Gin sales are set to fall sometime.

When the trend moves on what then for the 400 plus gins marketed in the UK? Well to not put too fine a point on it the market will no longer be big enough to sustain every gin producer.

Some gin brands will fail.

The number of brands in the UK will reduce (I think it is set to continue to increase over the next year at least). Those that fail will not be those who have the least startup capital. Those that fail will be those who have failed to differentiate their product, who have allowed others to sell their brand without building its equity, who have not taken an active approach to selling their brand and whose distribution channel is not right for their product.

I do not know what the degree of shrinkage in the market will be – but I am certain that it will come.

 

Advertisements
This entry was posted in Uncategorized and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s