December 10, 2021
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The Three Tier Distribution model is a difficult system to navigate, especially for international brands new to the compliance restrictions and regulations present in each individual state. Finding the right importer whose company profile fit's your brewery's needs is the first step towards getting your beers into retail stores across the USA. This means developing strong sales pitches, support programs and freight networks so that your import partners can establish healthy relationships between your brand and their distribution and retail accounts.
Prepare your presentation before you start pitching and get ready to answer the 7 questions. Here are 4 of the questions:
1: What are the most important steps and sales tools that beer brand owner should take before they begin importing and selling?
2: What are the target price points for your international beer brand?
3. Does the beer brand have any success stories from their country or other export countries that would help the sell-in here in the U.S? How many cases did the brand sell in 2014?
4. Does the brand owner provide the Importer with Annual co-op marketing budgets/brand support for social media, in-store tastings, trade samples, sales incentives, merchandising, dealer loaders and price promotion?
Jon Reynolds gives answers to the 7 questions you are guaranteed to be asked by potential beer importer partners.
The international brand owner should prepare, at the minimum, the following Marketing Presentation of their imported beer brand:
• Marketing Story
Main points of difference vs. the competition already available on the market.
• The Brewery and the Source
Unique place, landmarks, water, minerals, elevation, country's lifestyle, culture, tap room and unique hops and grains
• Brand Portfolio
Sell sheets, photos and packaging/SKU's are very important.
• Distribution Secured
What countries, states and markets, annual sales plus excess capacity are available?
• Brewing Awards Won
Include a full list of Domestic and International Brewing Awards and Competitions.
• Marketing support elements on all Media platforms
Detail your, POS, website, video, social media (Facebook, Twitter, Instagram, Google, and Pinterest, etc.) sampling programs, trade samples, incentives, merchandising/display enhancers, and truck decals.
• Sales support elements
Outline all U.S. sales agents, tasting groups, media agencies, brand managers, and feet-on-street available to support importer.
Samples can be expensive if shipped from overseas, so the brand owner should attempt to get its importer in place before too many samples are sent FEDEX or DHL.
• First, research the market and develop your international brand to target the U.S. market you are expanding into (East Coast, West Coast, Midwest).
• Establish an F.O.B. in your country that covers your full cost of goods and provides a margin for your Brewery.
• Estimated landed costs for containers into the U.S.; should include inland freight to domestic Port, Export Duties, Sea Freight to the US. Port, Import Duties, Federal Excise Taxes, Importer Fees/Margin, Inland Freight to U.S. destination, State Excise Taxes, Distributor Margin (30% normal), Sales Rep Commission and Retailer Margin (25-30% normal).
• This should lead the brand owner to Recommended PTR's/PTC's for each SKU.
• Be honest with the target importer--inform them about any bad experiences or places the international brand may have failed in the U.S. They will find out anyway. It may just be the fact that the prior importer did nothing to get the brand to market.
• If the brand is already sold in a state or two, it can provide a benchmark of what the market potential is for the new states the brand is entering.
• Distributors that are being interviewed like to talk directly to other distributors about the brand and where it is selling and why?
• All importers and their distributors want to be part of a success story.
• The brand owner should compile industry sell-through data (IRI, Nielsen Scan track or Other Retail Tracking/Scan Data) on their beer brand, so they can easily share a "non-biased" source with their customers.
• Providing sales data, sales per point of distribution and market share by Country, by state or retail channel can show how the international beer brand is successfully penetrating other markets.
• Pictures of large displays, special events and/or on-premise samplings can be effective in creating brand awareness and brand image at retail.
• Talk to other beer and wine brands to glean information about who they use in the U.S. They can shed major light on strengths and weaknesses of existing importers. They can also recommend, based on size and scale, who they would approach first.
• Also, checking freight rates to various U.S. ports from domestic ports can potentially reduce your importer's overall landed costs at the U.S. Destination. This could be through the sharing of containers with other neighbouring domestic beer and /or wine brands. The more containers you can project, the lower your per container cost will be to the U.S. Port.
• The 20 ft vs 40 ft container cost should be researched by the brand owner--this could reduce overall landed costs to the U.S. as well.
• Developing volume programs for importers creates attractive pricing strategies for entering the competitive U.S. market--For example on the Importer's first order you could offer "Buy 10 pallets, get one free"--this would provide introductory pricing deals, cut space for end caps and provide margin for the importer to pass along to their distributors for trade samples, incentives and in-store tastings.
• Another idea is to develop an every day "Container Program"--Buy a 40 ft container, get 200 cases free is just another example--this is something that could be ongoing and credits (free goods) could be collected by the Importer to offer to their distributors based on the number of pallets they sign up for.
• Another way is for the Importer to provide a "free freight program." A program like "Buy 10 pallets, get free freight" to the distributor's destination can provide a "landed cost" strategy that the distributor can build into their discounts because they would get this discount every time they order.
Contracts should be signed by both parties to ensure this money gets spent in the proper categories and markets with the most potential.
• Marketing support budgets should be agreed upon with the importer, with distributor input on what works best in each major market (what works well in New York may not work well in Texas or Chicago).
• Marketing budgets should be established on a per case basis or a percentage of revenue basis, so they are easily transferred market-to-market based on the agreed sales estimate with the Importer and their distributors (State budgets work pretty well, but can be drilled down to individual distributors as well.)
• A simple Importer Contract should include, but not be limited to:
1. Territory--All 50 states (or East Coast)
2. Annual Sales Estimate By Brand and SKU
3. F.O.B. Pricing and Discount Structure from Point #6 above
4. Marketing budget--brand owner overage at 100% and 50%/50% co-op with Importers/Distributors
5. Services that the Importer should provide--shipping/logistics in refrigerated reefers, bonded warehousing/inventory management/cooler storage, product quality standards/rotation, invoicing/accounts receivable, Compliance/COLA filings, state licensing, sample requests, pricing strategies, chain store contacts, distributor bill-backs/credits, and work with the optimal U.S. Sales Agent on developing an optimal distributor network
6. Commissions to U.S. Sales Agents and Tasting Agencies
Brew-master Dinners, Trade Shows and Major Chain Store Calls are also very important. The importer should be able to guide the brand owner on what makes the most sense for the brand. NBWA, CBC and GABF are three very important Trade Shows that you should consider showing at when setting up visits to the U.S. Brand owners should also schedule yearly visits to call on important accounts and address any distribution issues that are choking growth.
Good luck and good selling!