Distribution, State-specific sales, etc.

[Parkersback]

The thread in which we're trying to figure out where EWBIB is sold has gotten me to thinking, why is it that some bourbons are only sold in certain states?

I'm sure there are a myriad of answers, and I'm sure it's more complex than this, but if I own a liquor store in NY, and I'm talking to my Heaven Hill sales rep and I say, "Hey, I see you have a product called Old Heaven Hill Bottled in Bond 6 Year Old: along with my 10 cases of EWB this month, and the 6 cases of EC12, etc. I'd like two cases of that Old Heaven Hill BIB, I think it might sell..."

Why wouldn't he/she want to sell that to me? How much harder can it be than, "Hey, when you load up the truck, throw two cases of the HHBIB on there."

And if one of the answers is, "There's not enough stock of those regional, specialty bottlings like HHBIB, or EWBIB, etc. to cover the places where it's already sold", then wouldn't Heaven Hill just want to try to make more of that product to meet demand?

This isn't about Heaven Hill, by the way, it goes for any distillery or bottler. I consider myself lucky to be able to buy Weller 12, but I know many of you can't get it in your state, even though I am sure that there are several people on this board who would buy a case a year if they could get it. If those of you who can't get it at your liquor store could just have your store order it, it would benefit the consumer, the store, and the distillery. That makes no sense to me.

What am I missing?

[White Dog]

The thread in which we're trying to figure out where EWBIB is sold has gotten me to thinking, why is it that some bourbons are only sold in certain states?

I'm sure there are a myriad of answers, and I'm sure it's more complex than this, but if I own a liquor store in NY, and I'm talking to my Heaven Hill sales rep and I say, "Hey, I see you have a product called Old Heaven Hill Bottled in Bond 6 Year Old: along with my 10 cases of EWB this month, and the 6 cases of EC12, etc. I'd like two cases of that Old Heaven Hill BIB, I think it might sell..."

Why wouldn't he/she want to sell that to me? How much harder can it be than, "Hey, when you load up the truck, throw two cases of the HHBIB on there."

And if one of the answers is, "There's not enough stock of those regional, specialty bottlings like HHBIB, or EWBIB, etc. to cover the places where it's already sold", then wouldn't Heaven Hill just want to try to make more of that product to meet demand?

This isn't about Heaven Hill, by the way, it goes for any distillery or bottler. I consider myself lucky to be able to buy Weller 12, but I know many of you can't get it in your state, even though I am sure that there are several people on this board who would buy a case a year if they could get it. If those of you who can't get it at your liquor store could just have your store order it, it would benefit the consumer, the store, and the distillery. That makes no sense to me.

What am I missing?

Weller 12 is old Bourbon, so I can understand the difficulties in ramping up production. This is true for any Whiskey, what you distill today won't get sold for some time.

That being said, these complacent, and too few, makers of Bourbon and Rye seem to not care about catering to any market. They've had it too easy, IMHO. It's a good thing there are so few distilleries, as the moves they make baffle me.

In another post Cowdery spoke of Barton being overloaded with stocks of aging Bourbon, yet VOB is only in a handful of states. Why isn't Sazerac expanding that business?

Another problem you have is the wholesalers that these large distillers partner with. They are not nimble and don't really care about the desires of some small retailer, when they only want to take orders for pallets of Jim Beam White.

There is one large retailer in Milwaukee who forces the distributor for Sazerac to bring in Weller 12 and AAA 10star, but it takes this lumbering wholesaler months to actually get the product, all the while the wholesaler brings in shipments of Eagle Rare a few time a month.

And don't get me started on Rye. Some may say that if you look at the numbers there is no Rye shortage. So then why is Turkey101, RittBIB, and Baby Saz on constant allocation?!?:hot: :hot:

Note to Kentucky: make some more f--kin' Rye. And make some 10yr versions for gods sake. I'll be here in 10 years waiting to buy it. (Hopefully)

It's all a bit wacky to me.:skep:

[barturtle]

A lot of the state-by-state stuff is Heaven Hill. Basically the old sales guy (Max?) would fulfill nearly any request that any local distributor came up with. Want that at 90 instead of 86? done. 8yo instead of 6yo? done. None of these products were ever intended to be searched after nationally, as they weren't advertised or promoted by the distillery.

All these only ended up in the state sales books of the state they were requested for. Best I can tell you need to get each product listed in each state to sell it in that state (even non-control states) for tax purposes. If it's not in the state sales book, I don't think you can get it. The Kentucky Beverage Journal lists every product, every size of that product, the wholesale price and who the distributor is.

[barturtle]

And don't get me started on Rye. Some may say that if you look at the numbers there is no Rye shortage. So then why is Turkey101, RittBIB, and Baby Saz on constant allocation?!?:hot: :hot:

Note to Kentucky: make some more f--kin' Rye. And make some 10yr versions for gods sake. I'll be here in 10 years waiting to buy it. (Hopefully)

I've been beating on that issue for 15 years. I remember when I used to have to drive from Louisville to St. Louis or Chicago to get Rittenhouse! Wasn't even available in KY at all! Turkey rye was only carried by half the stores. You wanted rye you were getting OO or Beam. Pikesville just showed up locally about 3 years ago.

I remember being given a tour of BT by Elmer and asking about rye and Saz18 and him telling me how they were coming out with a new rye soon...it was nearly 4 years before "soon" hit the shelves.

I've brought up rye with every distiller I can grab the ear of for 5 minutes and have been at it for 15 years.

[cowdery]

Where did I say Barton is "overloaded with stocks of aging Bourbon"?

This isn't complicated. Retailers can only get what the distributors carry. The distributors are closely regulated by the states and in several cases are state agencies themselves. In many cases the state charges a listing fee, a flat amount for every product you sell. In other states the number of listings per producer is limited.

So, depending on the state, there may be many reasons why distributors don't find it profitable to list everything a consumer or retailer might want. I know of retailers who have paid the listing fee themselves to get something not normally carried.

Producers generally are happy to sell anything anywhere. The choke point is the distributors.

It's also true that people here get enthusiastic about something but that probably doesn't represent enough of a market to go to the trouble and expense of national distribution.

If you do want to take a product to national distribution but have to build up product inventory to do it, that apparently takes about 10 years, based on the evidence of Four Roses and Buffalo Trace.

[mosugoji64]

A lot of the state-by-state stuff is Heaven Hill. Basically the old sales guy (Max?) would fulfill nearly any request that any local distributor came up with. Want that at 90 instead of 86? done. 8yo instead of 6yo? done. None of these products were ever intended to be searched after nationally, as they weren't advertised or promoted by the distillery.

All these only ended up in the state sales books of the state they were requested for. Best I can tell you need to get each product listed in each state to sell it in that state (even non-control states) for tax purposes. If it's not in the state sales book, I don't think you can get it. The Kentucky Beverage Journal lists every product, every size of that product, the wholesale price and who the distributor is.

I completely understand that, but I don't understand why they would put something on the product website (namely EW greem and white label) that is only sold in a handful of states.

[White Dog]

Where did I say Barton is "overloaded with stocks of aging Bourbon"?

This isn't complicated. Retailers can only get what the distributors carry. The distributors are closely regulated by the states and in several cases are state agencies themselves. In many cases the state charges a listing fee, a flat amount for every product you sell. In other states the number of listings per producer is limited.

So, depending on the state, there may be many reasons why distributors don't find it profitable to list everything a consumer or retailer might want. I know of retailers who have paid the listing fee themselves to get something not normally carried.

Producers generally are happy to sell anything anywhere. The choke point is the distributors.

It's also true that people here get enthusiastic about something but that probably doesn't represent enough of a market to go to the trouble and expense of national distribution.

If you do want to take a product to national distribution but have to build up product inventory to do it, that apparently takes about 10 years, based on the evidence of Four Roses and Buffalo Trace.

http://www.straightbourbon.com/forums/showthread.php?t=15848&page=2

Okay, you said that the previous owner(Constellation) had overproduced, and that "warehouses are nearly full." My point was that how can they over-produce when much of their products are not widely distributed? That would seem like a problem with the sales department, rather than production.

[White Dog]

I've been beating on that issue for 15 years. I remember when I used to have to drive from Louisville to St. Louis or Chicago to get Rittenhouse! Wasn't even available in KY at all! Turkey rye was only carried by half the stores. You wanted rye you were getting OO or Beam. Pikesville just showed up locally about 3 years ago.

I remember being given a tour of BT by Elmer and asking about rye and Saz18 and him telling me how they were coming out with a new rye soon...it was nearly 4 years before "soon" hit the shelves.

I've brought up rye with every distiller I can grab the ear of for 5 minutes and have been at it for 15 years.

So why do you think they have a problem with Rye? Are they fearful of the bubble bursting(which it won't), or are they subliminally fearful of Rye once again becoming the number one Whiskey in America, as it was before the dark days of prohibition? Maybe, deep down, they know that Rye is just that good.

And in keeping with conspiracies, maybe Beam makes such bad Rye to make White Label taste good by comparison.:slappin:

[mrviognier]

Speaking as someone who's produced alcoholic beverages and has sold them in all 50 states, and who now is a senior manager for a distributor, I'll throw in my two cents.

While it's true that many states charge a fee to register your brand so as to conduct business in that state, the overwhelming majority charge fees that are not at all cost-prohibitive for a producer. And true, for many states, their charge is a per label (product) fee...but, again, it's a fairly small fee, and not at all prohibitive to business.

And while I'm not entirely a fan of the three-tier system, the choke point - at least with regards to the question posed in this post - is NOT the distributor. The issue here is availability from the supplier.

I am the State distributor for Heaven Hill, but am not able to order every item they produce...and believe me, I beg for some of them. I also sell the Sazerac portfolio, and just last week I asked our rep if I could order a few cases of AAA. "Nope, sorry, we don't sell it in Minnesota" was his response...despite the fact that I sell AA, BATC, RHF, Hancock's, Van Winkle, etc.

It really goes back to the issue of limited production, an established market for certain products, and a desire on the part of the producer to not over-commit the distribution of a product unless (or until) a consistent, adequate supply can be guaranteed. Wholesalers are in the business of making money...which means stocking the products that the customer wants, be it 500 cases or 5. We're not going to say "no" to business...unless we can't get the goods from the producer.

[cowdery]

http://www.straightbourbon.com/forums/showthread.php?t=15848&page=2

Okay, you said that the previous owner(Constellation) had overproduced, and that "warehouses are nearly full." My point was that how can they over-produce when much of their products are not widely distributed? That would seem like a problem with the sales department, rather than production.

[White Dog]

Speaking as someone who's produced alcoholic beverages and has sold them in all 50 states, and who now is a senior manager for a distributor, I'll throw in my two cents.

While it's true that many states charge a fee to register your brand so as to conduct business in that state, the overwhelming majority charge fees that are not at all cost-prohibitive for a producer. And true, for many states, their charge is a per label (product) fee...but, again, it's a fairly small fee, and not at all prohibitive to business.

And while I'm not entirely a fan of the three-tier system, the choke point - at least with regards to the question posed in this post - is NOT the distributor. The issue here is availability from the supplier.

I am the State distributor for Heaven Hill, but am not able to order every item they produce...and believe me, I beg for some of them. I also sell the Sazerac portfolio, and just last week I asked our rep if I could order a few cases of AAA. "Nope, sorry, we don't sell it in Minnesota" was his response...despite the fact that I sell AA, BATC, RHF, Hancock's, Van Winkle, etc.

It really goes back to the issue of limited production, an established market for certain products, and a desire on the part of the producer to not over-commit the distribution of a product unless (or until) a consistent, adequate supply can be guaranteed. Wholesalers are in the business of making money...which means stocking the products that the customer wants, be it 500 cases or 5. We're not going to say "no" to business...unless we can't get the goods from the producer.

[cowdery]

Speaking as someone who's produced alcoholic beverages and has sold them in all 50 states, and who now is a senior manager for a distributor, I'll throw in my two cents.

While it's true that many states charge a fee to register your brand so as to conduct business in that state, the overwhelming majority charge fees that are not at all cost-prohibitive for a producer. And true, for many states, their charge is a per label (product) fee...but, again, it's a fairly small fee, and not at all prohibitive to business.

And while I'm not entirely a fan of the three-tier system, the choke point - at least with regards to the question posed in this post - is NOT the distributor. The issue here is availability from the supplier.

I am the State distributor for Heaven Hill, but am not able to order every item they produce...and believe me, I beg for some of them. I also sell the Sazerac portfolio, and just last week I asked our rep if I could order a few cases of AAA. "Nope, sorry, we don't sell it in Minnesota" was his response...despite the fact that I sell AA, BATC, RHF, Hancock's, Van Winkle, etc.

It really goes back to the issue of limited production, an established market for certain products, and a desire on the part of the producer to not over-commit the distribution of a product unless (or until) a consistent, adequate supply can be guaranteed. Wholesalers are in the business of making money...which means stocking the products that the customer wants, be it 500 cases or 5. We're not going to say "no" to business...unless we can't get the goods from the producer.

[mosugoji64]

Speaking as someone who's produced alcoholic beverages and has sold them in all 50 states, and who now is a senior manager for a distributor, I'll throw in my two cents.

While it's true that many states charge a fee to register your brand so as to conduct business in that state, the overwhelming majority charge fees that are not at all cost-prohibitive for a producer. And true, for many states, their charge is a per label (product) fee...but, again, it's a fairly small fee, and not at all prohibitive to business.

And while I'm not entirely a fan of the three-tier system, the choke point - at least with regards to the question posed in this post - is NOT the distributor. The issue here is availability from the supplier.

I am the State distributor for Heaven Hill, but am not able to order every item they produce...and believe me, I beg for some of them. I also sell the Sazerac portfolio, and just last week I asked our rep if I could order a few cases of AAA. "Nope, sorry, we don't sell it in Minnesota" was his response...despite the fact that I sell AA, BATC, RHF, Hancock's, Van Winkle, etc.

It really goes back to the issue of limited production, an established market for certain products, and a desire on the part of the producer to not over-commit the distribution of a product unless (or until) a consistent, adequate supply can be guaranteed. Wholesalers are in the business of making money...which means stocking the products that the customer wants, be it 500 cases or 5. We're not going to say "no" to business...unless we can't get the goods from the producer.

[White Dog]

That was 2.5 years ago. The situation has largely been corrected.

As for your proposed solution to a previous owner's over-production. Presumably your sales department is selling as much as it can. So the solution to excess inventory is not "sell more." The solution to excess inventory is "make less." You can try to sell more but you risk undercutting your profit structure by flooding the market and depressing prices. No, I don't care what business you're talking about, you reduce inventory by making less, on the theory that when you find yourself in a hole, the first thing to do is stop digging.

[mrviognier]

Mat, I too am in the distribution business. I personally know of a large Wisconsin wholesaler who has repeatedly refused to bring in solid case purchases for individual retailers. These are not import cases that need to be brought in on containers, these are individual cases that are either in Jersey or Northern California warehouses, where bringing in a case is easy. The wholesaler's response is that they won't do the paperwork for such products. This same wholesaler sells Diageo, FWIW.

The point is, many arrogant wholesalers will say no to certain business.

[mrviognier]

Since you know the business so well, Mat, why do you suppose the producers -- who presumably want to satisfy the customer as much as you do -- won't sell to you?

[cowdery]

Chuck, one thing I gather from your writings is that you seem to think the Kentucky producers understand where the market is going.

They do their best to anticipate it and I don't know of anyone who does it better.

Jeff Conder, of Beam, said something very insightful to me once. We were talking about production planning and while he agreed that they have to project a decade or more into the future, the main thing they try to do is get the next five years right. If they can get the next five years right -- don't overproduce but don't under-produce either -- the rest will take care of itself. They evaluate and adjust several times a year. Mainly they are looking at distributor orders which, in themselves, represent probably the next business quarter.

Rye is a good example. It has grown and all of the rye producers have increased production, but it has grown from a very small base and is still very small in terms of overall volume. The distiller who was making rye for two days each season is now making it for four. That's a doubling of production, which is a lot, but it still represents four days out of maybe 150, so still a drop in the proverbial old oak bucket.