It takes a lot to get a craft beer, cider, or wine business off the ground. Even after years (or generations) of operation, you may find yourself in a market that’s growing more and more competitive by the day. With that in mind, having a solid sales strategy in place is vital.
Before you can come up with a unique plan for your business, you need a comprehensive understanding of beer and wine distribution channels. What are your options? And how do you decide on the best course of action with limited resources? (Hint: Keep reading.)
The Four Alcohol Distribution Channels
For independent alcohol producers (e.g. wineries, cideries, craft breweries), there are generally four ways to get finished goods from the production floor into consumers’ hands:
- Taproom or tasting room
- Ecommerce, club, or subscription
- Wholesale distribution
Let’s dive into each of these beer and wine sales channels.
Taproom or Tasting Room
For most independent beer, wine, and cider producers, the tasting room is their biggest source of revenue. However, there are some folks who choose a different business model at first (think: making beer through contract brewing or making wine at a custom crush facility). Whether operating a tasting room makes sense for your business depends on your goals — do you just want to package your product and get it in as many stores as possible? Or do you enjoy creating a more comprehensive on-site experience? Taprooms and tasting rooms have high profit margins, but that’s because most businesses operating them already have buildings they use to produce their beverages. If you’ve gone the contract brewing or custom crush route, you’ll need to think long and hard about whether you have the financial resources to invest in your own facility and a full taproom staff.
Ecommerce & Club
Ecommerce sales skyrocketed in 2020, and although the initial spike eventually plateaued, all signs indicate a sustained elevation through 2021 and beyond. If you’re not reaching out to consumers online, your competitors probably are. And we mean everyone from the brewery down the street to the major global brands in the grocery store. A key way to build your contact list for ecommerce and club sales is to thoughtfully ask tasting room customers for their contact information when they have a good on-site experience. If you’re a retail- or distribution-only brand, you’ll have to work a lot harder to bring in new online customers. We recommend formulating a robust digital marketing strategy to reach your target audience. No matter your business model, focus on building a subscription or club program that adds real value, whether that’s convenience, product variety, early access, or exclusive perks. You’ll boost brand loyalty and ensure repeat purchases from existing customers.
If your state allows self-distribution, it can be a great option once you’ve built a strong foundation in the tasting room. Often with craft breweries, customers get hooked on one of your flagship beers and start asking how they can drink it at home. If you’re not packaging beer yet, your brain might start racing with the possibilities of buying a canning line and building a sales team to get your brews out in the world. Just remember: self-distribution can have high upfront labor and equipment costs (not to mention the need for warehouse space), so you should think it through before diving in. However, if you’re in it for the long haul, a smart self-distribution strategy can set your business up for success into the future.
In some U.S. states, self-distribution isn’t an option. The three-tier system, whereby producers are required to go through a distributor for all retail sales, is heavily entrenched in many state’s alcohol regulations. Even in areas where self-distribution is permitted, some breweries and wineries opt to distribute through a wholesaler instead. Why? Wholesale distributors have years of experience (and connections) in the alcoholic beverage market, which can make it easier to get into retailers — especially outside of your local market. On the other hand, using a third party to distribute removes an element of control over how your products are marketed and sold, and being a relatively small producer compared to the “big guys” can put you at a disadvantage when competing for shelf space. You’ll also experience lower profit margins since a portion of your sales go to the distributors. But you’ll avoid the hefty investment (of time, energy, and money) required to build your own sales department.
Crafting a Beer & Wine Sales Strategy
If you have both self-distribution and wholesale distribution available to you, which do you choose and how does that affect the rest of your business? How can you increase taproom or tasting room sales? What goes into a successful subscription program?
There are about a million questions to consider when it comes to building a comprehensive plan for beer and wine sales and distribution. It’s a lot to wrap your head around, so we made a resource that can help you think through the different aspects of the wine or beer distribution process and decide on your business’s way forward. This guide will give you valuable, action-oriented advice on the best practices for each channel to help you maximize profit margins and scale your business.
Download The Ultimate Sales Guide for Independent Alcohol Producers now and get started on your journey to selling more.