WORKING WITH DISTRIBUTORS
At some point in the life of your champagne brand, probably sooner than you imagine, you will want to work with a distributor who can get your brand into new outlets, increase brand awareness and drive sales.
However, a distributor who is effective and successful will be approached by dozens of brands also presenting their product and looking for a distribution partner. The competition will be intense so your objective is to make it as easy as possible for the distributor to say Yes to you.
In part 1 below are a few guidelines about how to present your brand and in the second part of the article you’ll find a few suggestions about how to work effectively with a distributor once you have secured an agreement.
Part 1 - Pitching
Timing
In almost all countries the end of the year is the key period for sales and distributors will start planning for that crucial period many months in advance. Springtime is therefore a good time to present your brand to distributors. By summer it will be too late because they will have already made their decisions about which brands they want in their portfolio, and it will be too late to change that until the following year brings a new round of discussions.
Reasons why
You may be absolutely convinced that every aspect of your brand is outstanding and that it will be easy for a distributor to sell, but you will need to put yourself in the shoes of the distributor and understand what he or she is looking for.
Why are you contacting the distributor?
Do your research about each distributor and explain why would your brand be a good fit for them.
Does the distributor already have a champagne in the existing portfolio?
If so, why would they want another champagne?
Does your brand address a different market segment, does it fit into a different price bracket, what will make it attractive to the distributor?
If the distributor does not have a champagne in the existing portfolio, why should they take on your brand?
Is there an opportunity that has ben overlooked?
What is that opportunity and how big an opportunity is it?
Bring something to the table
It will be easier to persuade a distributor of the merits of your brand if you have already secured some listings, so start by prospecting in your local area and approaching bars, restaurants and retailers to get some initial sales.
If you can show the distributor a list of existing accounts that will immediately bring in revenue for them, that will lend weight to your claims that there is a market for your brand.
Training
Always offer to train the distributor’s sales force about your product.
When a salesperson visits an outlet, he or she may only have a very few minutes to speak with the customer. It is vital therefore that the salesperson can speak concisely and confidently about your brand in the short time available.
You need to make sure that every salesperson knows two or three key points about your brand that will capture the customers attention. To do that the sales force needs to be trained.
Motivation
Every salesperson likes to be recognised and rewarded for their efforts.
Consider offering some incentive for the most successful salesperson of the month, or some similar programme.
Know your numbers
When all is said and done, no matter how good the product, if the distributor cannot make an attractive profit from selling it, the product will fail.
You will need to present cost prices, suggested retail prices and expected margins for the distributor.
Part 2 – Details of an agreement and ongoing collaboration
Distribution agreements are legal undertakings and once entered into, it can be difficult and very costly to withdraw from them. Therefore, great care should be taken to study the content of the agreement, and it is advisable to seek advice from a qualified legal expert before signing any agreement.
Some points worth particular attention are:
The length of the agreement
It is prudent to have an initial trial period, say 1 year, at the end of which results can be assessed and, if necessary, the agreement ended without additional cost.
It’s a good idea to discuss and agree sales targets for the trial period, which if not met, would give legitimate reason to terminate the agreement.
Avoid giving to the distributor the exclusive right to distribute your brand, unless the duration of the agreement is fixed and the means of exiting the agreement are made clear before you sign the agreement.
Your work is not finished when you have signed an agreement with a distributor. Close and regular communication between you and the distributor is needed in the months and years ahead.
Review sales regularly with the distributor. Better still, ask for a monthly depletion report from the distributor. This information not only helps you see how sales are growing, it will also signal any potential problems that need attention before they become serious.
If sales drop significantly to the point where the distributor loses confidence in your brand, the distributor may be tempted to sell off any remaining stock at bargain prices which does no good at all to the image of your brand. This type of situation is to be avoided and one way to do this is to keep a constant eye on depletions.
Just as important, the monthly depletion reports allow you to monitor stock levels and plan new orders from France.
Distributors may not be willing to give you a list of all the individual outlets where they sell your brand because they may be concerned that one day you may wish to end the distribution agreement and transfer the business to another distributor.
This reluctance is understandable because in such an event, the list of customers would be of immense value to a new distributor and all the work that had been done to build up that list would be lost by the former distributor.
In summary,
- do your homework before approaching a distributor
- remember that your relationship with a distributor is a partnership and you must provide support other than the product itself
- stay in frequent contact with the distributor and stay in control of the fate of your brand
All the best
