Empathy. It’s not something that you read much about in the beer industry, but it is a major reason why companies like Sierra Nevada and Dogfish Head have ascended the to the top of the craft space, according to three veteran sales executives who presented to brewers at last week’s Craft Brewers Conference in Denver, Colo.
“Our wholesalers are very important to all of our businesses and I think we need to realize that and find a way to work with them as the partners that they are,” Tommy Gannon, Sierra Nevada’s director of Eastern U.S. sales said during this “Business Planning 2.0” panel discussion.
Using empathy — the understanding of the other partner’s situation and needs — as the starting point for the panel’s conversation on business planning strategies, Gannon, alongside Dogfish Head’s vice president of sales, Adam Lambert and No-Li Brewhouse partner, John Bryant, shared insight into that ways in which craft brewers can build strong wholesaler relationships and execute market expansions.
“Sierra Nevada doesn’t get checks from retailers,” said Gannon. “Our customer that pays is the wholesaler. That is our biggest customer.”
Having empathy allows craft brewers to make informed wholesaler selections, the panelists said.
“There are going to be a lot of issues on carve-out laws and franchise laws,” said Lambert. “We need to face it that, when we get married to our distributor partners, we are married. We need to understand their world and we need to understand our world.”
For years, craft brewers have bandied about the term “marriage,” at times using it defend their position on special carve-out laws that would allow them to break contracts with their distributors.
But many of those so-called “marriages” wouldn’t end in an ugly divorce if more craft brewers “understood the laws they were stepping into,” said Bryant, who managed sales for Oskar Blues and Deschutes Brewery before joining No-Li.
“On this whole franchise issue, I would encourage everyone to look at it state by state specifically, rather than a group of 50,” he said. “As you drill down to your business, wherever you are distributing, really look at each state specifically and what the laws are.”
Having a clear understanding of each state’s laws will help craft brewers with their expansion considerations and their ability to build strong, long-term partnerships with their wholesalers, the group said.
“Every state has its own laws, its own regulations, tax structure, go-to-market, POS standards, rules, you name it,” said Lambert. “When you are looking into whether you should expand and whether you should or shouldn’t go, you have to take a lot of things into consideration.”
And while every company will take its own unique approach to expansion, Gannon believes that there is a consistent set of criteria that every brewery should consider when entering a new market.
“Take the time to physically get your ass to that person’s market,” said Gannon. “Walk the streets; meet with the distributors.”
Lambert said to take it a step further and suggested creating a survey that would help brewers answer questions about prospective wholesalers.
At Dogfish, Lambert said he surveys every potential wholesaler, asking for their top 250 accounts, how they compensate employees, their organizational structure,portfolios and price books, warehouse temperature controls, even beer festival standards and point-of-sale regulations.
“I think spending the time to do this is super, super critical,” he said. “I can’t impart more on you guys how important it is to sit down with these guys and figure out everything that you need to know to make the right decision.”
Ultimately, making the right distributor selection will help to ensure profitability, Bryant said.
“You got to pick your partner and it is important that your partner picks you not just because you are available,” he said. “This isn’t a swing dance, right? You are going to be there for a while. If you are a revenue horse and you are going to go out with a saddle on your back everyday, create money for your organization and wealth that they can use to be successful and pay bills, you at least want to have the right saddle on your back in that market.”
Editor’s note: The trio also discussed strategies for creating successful marketing plans, keys for accessing national chain accounts, and a variety of other tactics for managing a rapidly-growing business. Stay tuned for part II of this report tomorrow.