For many spirits producers, getting their products listed on the portfolio of a distributor is the golden goal for growth - and rightly so. The impact of working with a distributor, for many brands, is very real.
But not all distributors are created equal. There is a myth that size is all that counts; that bigger is better. And whilst it's true that you want the stability and power that comes with a well-established outfit, that size comes with a raft of other factors which merit consideration. The bigger the distributor, the more likely they are to have sizeable in-house portfolios, and that needs to be considered carefully against the position of your range and how you fit into that portfolio.
So, how do you choose? Which is best? There's no straight answer to that. But I can tell you that with a distributor who focuses on largely independent producers - they'll be a true partner in success. Here's why.
Pros and cons
Let's begin with cold hard facts. What are the pros and cons of using an independent distributor versus one of the big-name conglomerates?
To start with the negatives - the independents won't have the bottomless pockets required to elbow out your competitors. The big players have budgets, resources, and supply chains at scale, and these are hard for an independent to compete with like for like. That's why independents must differentiate. With smaller (but still reasonable) budgets, they know how to make that money work harder.
The positives are, of course, numerous. Let's start with agility. Huge companies often come with layers of bureaucracy. A bold idea, once it's been through 10 different decision makers, may not be as daring as it was upon inception. With an independent, agility allows teams to move fast, respond to trends, exercise their appetite for risk, and swim in unchartered waters.
Yes, several independent distributors have gone out of business, here, in Europe, and in Asia, because times have been tough. But in relation to those who are still in business and thriving (and I'm delighted to say that Mangrove is one) you can take that as evidence that they're working smarter and harder for their brands. In essence, the work between an independent distributor and an independent producer is a marriage of equals; both invested in mutual success.
Big vs small
The current economic climate is challenging for most industries right now. And as is the case for all, challenging economies favour bigger players. Economies of scale and the commercial resources of conglomerates will weather the storm whilst independent distributors will have to work to succeed. But much like the proverbial David, with some guts and a bit of smarts, it is possible to succeed in Goliath's shadow.
Large conglomerates have considerable numbers of their own in-house brands to promote, and these brands are often the leading category names. I'd suggest there's got to be a question of whether an independent producer can ever be the priority in a portfolio where they're a minority. Even if an independent distributor has a few of their own in-house brands, if the majority is still independently owned, you can bank on their shared focus and mutual commitment. Yes, you will likely have other brands in your category within the portfolio, but the distributor will know that it's a complimentary fit and prioritise you equally.
Mangrove is precisely the latter. We were acquired by Groupe Bernard Hayot in 2023, and since then we've uniquely had a foot in both camps - the indie and the global. And that, to me, is our biggest strength.
The current state of play
Aside from the challenging economy, there are a few other things affecting distributors.
First of all, on-trade listings are harder to come by for many. The economic climate is affecting hospitality in a big way, and so venues must select their ranges with prices in mind, where previously many venues would focus primarily on the liquid itself. This makes it harder for distributors to compete - so be sure you're choosing one who has the scale and scope of relationships with the on-trade, to benefit you. As an example, we approach our work with our venues with the aim of finding products to suit their customer. So, we already have that in mind when we're exploring where to position your product.
Another change we've been seeing in distribution is some of the larger players cutting back their field sales teams. It used to be that it was hard to compete with hundreds of feet on the ground, but that gap between independents and larger distributors has definitely closed recently. It's worth sussing out what sort of power there is to drive the discovery of your product.
And finally, we're seeing a trend that unhappily took hold in the US, begin to take hold here. Distributors and importers are starting to bypass wholesalers, going directly to accounts to secure listings (mainly because winning listings is getting incredibly hard to come by). At Mangrove - we work with some brilliant wholesalers, and if I were still working in that area, I'd be asking why we're not trying to dissuade distributors from leaving them out!
Your conversation checklist
Primed with insider info as to what's currently affecting spirit distributors, let me leave you with a few considerations for any initial conversations you might be having.
First, check that no one is making any outlandish claims about what they can offer. Yes, opinions will differ, but when we're speaking to a brand, our projections and strategy are all informed by market detail, and decades of numbers. Everyone should be saying roughly the same thing in terms of how much of your product they can sell.
You need to be clear about what you want from a distributor, as this will likely inform which is your best partner. For example, do you want exposure; to test a product; or to gain market share? Whatever the case may be, communicate that clearly and see what case studies are on offer to show the distributor's success in brand building. I think this is especially important if you're an independent producer, looking to work with a larger distributor with their own in-house brands.
Working with a distributor is sure to transform your business - and from my biased perspective, the independents have a whole lot to offer. It's where there's creativity, boldness, and innovation. You'll decide what's right for you, but the overarching takeaway is - don't be fooled into thinking bigger is always better.
Nick Gillett is MD of premium spirit specialist Mangrove UK.