Being a craft spirits distillery owner requires one to wear many hats. Though the hat of distiller is often the most popular one and the one that got you into the business in the first place the one that often matters most is the sales hat. As another distiller once told me if there are no sales, there is no business.
The Sales & Marketing Hat
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Since I started Stillwagon Distillery 4 years ago or so, I have discovered a majority of the work is in sales and marketing, not producing my spirits. There are no new drinkers being created and there is a limited amount of shelf space. Along with this there are new distilleries opening each week, and distributors are overwhelmed by the number of producers, and many are underwhelmed by the quality of many of those products.
Why should a distributor pick up my product over another?
I have been a bit spoiled here in Oregon. To get on the shelf as an Oregon craft spirits producer, you simply need to convince an agent (liquor store owner) to bring your product in (easy-peasy, not.)
The strategy I have chosen is to create a customer base before I approach a distributor. I do lots of tastings, events, and visit local bars and restaurants to kick start the interest level of the public in my product. I’m creating the customer base ahead of time so the retailer has a reason to stock my product. If I present the store owner with a potential sale, they are far more likely to at least listen and try the product in the store.
Another route I have taken is talking to entrepreneurs looking for an opportunity. In certain states it is relatively easy to set up shop as a distributor. Get a warehouse, licensing, and start talking to potential clients. We will be entering two states this year by that means.
Custom made Stillwagon Distillery barrel display case at local steak house and bar.
David vs. Goliath
Talking to the big distributors is where the disparity in industry and the new producers in the wave of distillery openings is the most apparent. If you cannot supply their entire client list with your product and provide a million dollar marketing budget then they are often not interested no matter the quality of your product. I have always found where there is an obstacle, there is an opportunity.
Limited Time Exclusivity Pitch
I talk to a lot of people on a regular basis, all asking how do they get our products in their state. Many are surprised that the distributors and retailers are hesitant if not determined to not pick us up. This gives me an opportunity. Exclusivity is a draw for many people, customers and entrepreneurs. The idea of carrying small batch, high quality, unique spirits that no one else has is attractive. By finding the smaller distributor, granting them exclusivity for a period of time, is a great opportunity for both parties. Getting our products into the boutique retailers and upscale restaurants is a boon for being discovered. Giving the mixologists something new to experiment with is another great opportunity for exposure.
The big distributors that seize the opportunity to carry some of the new, limited, but very unique products will also find their other product sales will benefit. The big distillery, low dollar products will always sell. They are established and work for the well in every bar. Products in the price range of mine are a fraction of overall sales in the industry. But if you’re packaged goods store is the source for those new, exciting, and unique products AND carry the rest, then one stop shopping is always much simpler for the consumer and restaurant owner.
70% of New Businesses Fail
The craft spirits industry is young. The industry is in constant change. For many, change can be painful. For some, change can be the end of the line.
You often hear that 70% of small businesses fail. According to data from the Small Business Administration – SBA about half of all new establishments survive five years or more and about one-third survives 10 years or more. As one would expect, the probability of survival increases with a firm’s age. As you can see from this chart, survival rates for new businesses have changed little over time.
Could distilleries be next?
Failure doesn’t mean they aren’t making great spirits it could mean they aren’t spending enough time with their sales and marketing hat on. Only time will tell. For those that are, why miss out on the chance to experience it? For those of us that do make it, there becomes a larger list of crafts spirits choices for the public. Variety is the spice of life. We can all raise a glass to that!
Rick Stillwagon is the owner and operator of Stillwagon Distillery in Coos Bay, Oregon.
Don’t Be Afraid of Failure – Just Ask for Help
For some, picking up the phone to talk to people is easy. For others, it’s a chore. If you need a little inspiration, here’s a vintage 1994 interview with master communicator Steve Jobs.
Most people never pick up the phone and call, most people never ask and that’s what separates sometimes the people that do things from the people that just dream about them. You’ve got to act, and you’ve got to be willing to fail. You’ve got to be willing to crash and burn. You know, with people on the phone, with starting a company, with whatever. If you’re afraid of failing, you won’t get very far.
~ Steve Jobs, Co-Founder Apple Computer