by Chris Crowell || Craft Brewing Business
The three-tier system was established after the repeal of Prohibition in 1933 and hasn’t changed a ton since. We don’t need to list a bunch of stuff that is way better today than it was in 1933 because the list is literally everything except the newsie industry. Does this mean distribution is in need of an upgrade? Well, since the wholesalers have mostly consolidated at the same time that beer producers have been fruitful and multiplied, one could argue that indeed it does.
Outside of more craft-focused distributors, is a radical disruption possible? A new tech savvy startup thinks so. Here is its story.
This organization is calling itself Liberation Distribution (LibDib), and it is offering what it calls the first three-tier compliant web-based platform. With LibDib, any maker of specialty wine, craft spirits and micro brews can set up distribution.
“Distributor and producer consolidation has created a closed market where the little guys cannot get their product into distribution, and accounts are being squeezed to purchase beer, wine and craft spirits from the very largest suppliers,” said LibDib Founder and CEO, Cheryl Durzy, a 20-year wine industry veteran. “While managing my family’s brand I became incredibly frustrated by the lack of options available today. All brands deserve a route to market, and LibDib creates an opportunity where makers and buyers can work directly together. LibDib is distribution done differently and distribution that’s open to everyone, not just a select few.”
How does this work?
The LibDib web-based platform automatically handles the invoicing, payment processing, collections and taxes, allowing both makers and retailers to do business in a more open, efficient and cost-effective way. The company has been beta testing with a select group of makers and on- and off-premise accounts over the past few months.
“The alcohol distribution market hasn’t changed for more than 80 years and is ripe for innovation,” said LibDib CTO, Richard Brashears, a twenty-year technology industry veteran who specializes in defining and developing complex software. “Just as the hotel and transportation industries have evolved with two-sided web and mobile platforms, LibDib has used technology to change the distribution process and make it easier, more cost effective and more efficient than ever before.”
What else does it offer?
LibDib’s pitch isn’t all based on tech convenience. The company also lists these business practices:
- Charging a lower margin for makers with most transactions at 15 percent.
- Processing payments in 30 days or less and providing on-demand sales reports.
- Giving makers as much freedom from Franchise Laws as legally allowable, enabling them to leave at-will and at no cost.
- Giving restaurants, bars and retailers a large and varied selection of boutique products from which to choose.
- Enabling direct communication within the platform between makers and accounts.
- Creating a level playing field for everyone with no unfair incentives or price breaks.
- No aging inventory sitting at the wholesaler warehouses.
- Eliminating the middle man and any potential for a sales representative to strong-arm the sales process.
- Allowing RB&Rs to buy only what they want, when they want it. No minimums.
- Giving access to unique, local and limited availability wines, craft spirits and beers.
- Sales materials and POS are always up to date and accessible online.
What am I missing?
You likely noticed two big omissions: The actual distribution and details on accounts. Brewers will need to handle the actual shipping, and the restaurant and bar accounts that will be actively using this platform and placing orders are just not there yet. But they aren’t there yet because this platform didn’t exist until now. A classic “what came first, the pitcher or the keg?” situation. So, who knows what the future holds on that front. Right now, the markets being pitched are California and New York (to come in a few months).
Intrigued? Give it a whirl
It all starts at LibDib.com. Craft brewers can head there and input their products of choice into the system. After uploading licenses and basic information, the maker defines product selection, calculates the listed wholesale price and defines where to distribute.
Transactions on the LibDib platform will go live in California on April 5, 2017, allowing restaurants, bars and retailers in the state to order from makers of any size and from any location, whether down the street or from across the globe. Anyone interested in the LibDib platform can create an account and sign up starting today.
Our two cents
This obscure line from Dale Gribble on King of the Hill comes to mind: “I am skeptical that you could, yet intrigued that you may.” Despite the bad blood caused by stuff like franchise law and Big Beer favoritism, there is a lot of institutional knowledge within that old timey beer distribution industry, and, with the good ones at least, a lot of on-the-scene work that needs to be done to help beers rotate, stay in favor, sell and grow amid the insane amount of choices on the shelf. There is for sure an interesting concept here — leveraging technology to gain efficiencies and tear down barriers to entry — but there are some logistical hurdles that might be tough to overcome.