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  1. #1
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    Is there a good reason for distributors to exist?

    This may be a little too meta, but one of the posts in the "Why?" thread got me thinking.

    Is there a good reason for distributors to exist? I guess I can understand a bit that they served as a taxation "choke" point as there were a lot of producers and a lot of retailers, but with the way business is done today do they serve any purpose other than a middle man?

    Do you think there would be any differences in the bourbon being produced if distillers could work directly with retailers, and perhaps directly with consumers?

    Note: I realize being in Georgia I have basically nothing to complain about than some of you guys in controlled states, and other places with crappy distributors. But curiosity got the better of me

  2. #2
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    Re: Is there a good reason for distributors to exist?

    Is there a reason for distributors to exist? 1000% YES. Working for a retailer, it would be a nightmare for us to deal with each and every producer, week in and week out. If I had to call the distillery every time I wanted to order a case of Wild Turkey or Eagle Rare, it wouldn't be worth it. We'd carry fewer brands, simply to minimize the hassle. Our store actually orders some products directly from local wineries (NYS allows this) and it takes more manpower for us (and the wineries) to work this way. Most NY wineries do not self-distribute because it's far easier to leave deliveries to one entity rather than drive all over the state for a few cases here and there.

  3. #3
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    Re: Is there a good reason for distributors to exist?

    Quote Originally Posted by TheOakMonster View Post
    Is there a reason for distributors to exist? 1000% YES. Working for a retailer, it would be a nightmare for us to deal with each and every producer, week in and week out. If I had to call the distillery every time I wanted to order a case of Wild Turkey or Eagle Rare, it wouldn't be worth it. We'd carry fewer brands, simply to minimize the hassle. Our store actually orders some products directly from local wineries (NYS allows this) and it takes more manpower for us (and the wineries) to work this way. Most NY wineries do not self-distribute because it's far easier to leave deliveries to one entity rather than drive all over the state for a few cases here and there.
    Ny for you. Cmon its helping retailers? How about us enthusiasts and supporters. Glad we can make it easier on you to provide what is easiest for you to make one phone call per day. Yeah everything isnt clicks on the internet noawadays. Thanks for confirming the power structure in controlled states.

  4. #4
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    Re: Is there a good reason for distributors to exist?

    Quote Originally Posted by jmj_203 View Post
    Ny for you. Cmon its helping retailers? How about us enthusiasts and supporters. Glad we can make it easier on you to provide what is easiest for you to make one phone call per day. Yeah everything isnt clicks on the internet noawadays. Thanks for confirming the power structure in controlled states.
    Reality is, our store would carry far fewer products and producers without the efficiency of distributors. We wouldn't even bother carrying KBD products or similar small producers because we couldn't meet minimum order requirements from a direct supplier.

  5. #5
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    Re: Is there a good reason for distributors to exist?

    I see no good reason why there couldn't be a dual system where distributors continued to offer their services but the distilleries were also allowed to make direct sales if they wished.
    We're Bourbon Geeks, it's who we are, it's what we do.

  6. #6
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    Re: Is there a good reason for distributors to exist?

    I really like the smaller distributors. They tend to have knowledgeable sales reps that know their products, etc.

    On the other hand I really can't say much positive about the big distributors... one of them in particular.

  7. #7
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    Re: Is there a good reason for distributors to exist?

    Quote Originally Posted by squire View Post
    I see no good reason why there couldn't be a dual system where distributors continued to offer their services but the distilleries were also allowed to make direct sales if they wished.
    Agreed. If the requirement to use distributors was removed, your large producers (say, Sazerac, Pernod, Campari, Suntory/Beam) might establish warehouses, staff, trucking, and salesmen in each state and abandon their distributors while smaller producers continue to rely on distributors. But, what's the real benefit? I doubt, Pappy Van Winkle or AAA10 will be more readily available nationwide. Yes, distributors decide, in part, what products to carry from a producer, but the producer also chooses to not make all products available in all markets. Will prices decrease? That's no clear, since the producers are now required to invest money to fulfill functions distributors once covered.

  8. #8
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    Re: Is there a good reason for distributors to exist?

    Taxation and uneven distribution issues aside, from the producer's standpoint, I'd think the distributor offers the obvious benefit of more predictable revenue and working capital management - being able to move your inventory on some regular and more or less predictable schedule brings efficiencies to those operations.
    Mark

  9. #9
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    Re: Is there a good reason for distributors to exist?

    Quote Originally Posted by jmj_203 View Post
    Ny for you. Cmon its helping retailers? How about us enthusiasts and supporters. Glad we can make it easier on you to provide what is easiest for you to make one phone call per day. Yeah everything isnt clicks on the internet noawadays. Thanks for confirming the power structure in controlled states.
    The distributors do help the enthusiasts, a lot. Ordering directly from the manufacturer requires a lot of work and expense logistically. Each purchase order has costs for both the supplier and the customer. There is the administrative portion of just placing and keeping track of each order. Then each order needs to be shipped, received, and paid for. Even if a retailer had the capability to handle this, it would result in greater expense for them, which gets passed down to the consumer. It would become very difficult to justify ordering from any manufacturer that only sells a few products. Shipping costs alone would force most retailers to only order from manufactures that can bundle several different lines. It would be a nightmare for any small manufacturer to maintain accounts with thousands of retailers across the nation, and you would end up with localized and uneven distribution territories.

    Eliminating distributors would be a death blow to small manufacturer and retailers. Retailers would need to be part of larger chains that can share some of the administrative and logistics costs. Most producers are already owned by some sort of conglomerate, but it would become impossible for any startups not backed by one of them. Retailers and producers would both need to be owned by larger companies that have corporate offices that essentially function as distributors. Now the power is even more consolidated among a select few, and you end up with monopolies. There could be some benefits, but history tells us this is usually bad for the consumer.

    Your statement "its not all clicks on the internet nowadays!", conflicts with your idea of eliminating distributors. Quick and easy one click ordering is the only way small manufacturers could hope to make any sales. Even though every retail store has hired an additional person to place orders, they still wont have time to actually call each manufacturer. Everything would have to be highly automated.

    I am all for for a dual channel system, but eliminating distributors would cause costs to skyrocket and selection and availability to plummet. That would be a sad day for enthusiasts. It would probably drive me to stop drinking.
    "Unless it survived a tornado, weathered a snow storm in Scotland, and then spent a year on boat before returning home, I'm not really interested."

  10. #10
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    Re: Is there a good reason for distributors to exist?

    I can honestly say I have never met a particularly knowledgable or interested rep for a distributor. Their ONLY focus is on how many cases of Crown or WT101 or Vodka or Fireball they can move in a quarter. Some slight lip service is paid to special releases and specialty bottles but for the most part they really could care less about KBD or High West or any of their smaller accounts. Interestingly few seem to drink much beyond a vodka cocktail or an occasional Bourbon and water on ice. They don't seem to know much beyond the fiction the producers PR department is spewing and they are not helpful to retailers or interested consumers unless the retailer buys A LOT of Vodka, Fireball, Turkey 101 or whatever. They will however pony up for an expense paid trip to KY for favored retailers who buy a lot of their product so said retailer can pick barrels from their producers. Something that private groups manage to do on their own quite well.
    They just get in the way and make everything more expensive.
    There is no reason why a manufacturer couldn't out source distribution in much the same way they sell to distributors now but also have a retail or wholesale stream they managed on their own.

 

 

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