From 1961 to 1989 the Berlin Wall cut off and divided West Berlin from East Berlin. In November of 1989 it came down and reunited a city, a county and perhaps Europe. Why it was there and what it stood for is not this article, what it was symbolic of has meaning today.
Today, Phase II of Liberation Distribution launched. This is the second phase for reunited brands and retailers. This is the phase where orphaned brands can now find their homes on shelves without having to scale the wall or mire in the that middle area known as the “death strip” That area where you are with a distributor you don’t like or doesn’t sell you as a priority. That is really a slow, painful march towards out of business.
Since prohibition the three-tier system has cut off brands from homes, cut off producers from buyers and cut off customers from new experiences.
I am IN NO WAY implying that the fall of the Berlin Wall is the same as Liberation Distribution or others. I am simply drawing the comparison that now there can be freedom to move about. Freedom to have choice in what you buy, what you sell and how successful you can be.
I have long written about the three-tier and the chokehold it has on the fair trade of brands. I spoke yesterday at the American Distilling Institute conference in Baltimore. I spoke to a capacity room of producers that want a fair chance. Producers that want to fight but need the proper gloves to do battle. I spoke to brands that want a shot at meeting their retail partner. I spoke to retailers that need more, new brands, not commodity brands on the shelf to increase their gross margin. The room was hopefully optimistic that the liquor version of the Berlin Wall was beginning to fall.
The Big 5 distributors take often 25-30% to basically only deliver your goods. By their own admission they won’t build your brand. They won’t support you in market with samples and tastings. The young sales person that comes to your account has no incentive to sell YOUR brand, unless your brand is Bacardi or Yellow Tail, or the like. Unless your brand sells 200,000 cases yearly. Unless you are a top 200 brand in the USA you must go it alone. You must put a man on the street, have boots on the ground and support your own sales effort.
As a retailer both on and off premise, you must find your own special inventory and hope that there is a local distributor that carries it or wants to carry it. You are a one armed boxer.
Now you don’t have to scale their wall, you can walk right through it with other methods of distribution. Now, that brand that have been your passion for umpteen years can find a home that has nothing to do with your Uncle Steve’s Thanksgiving table. Your brands can be sold at retail and retailers from all over can sell your brands. Love connections can be made, and by love I mean more goods, better selection and points of differentiation from Big Box stores.
This is more about options for producers, makers, retailers and brands than it is a take down or commentary on Three Tier. If you have read me before you know all too well my feelings on free trade, DTC and getting your orphaned brand to consumers. For those of us that are not a top 200 brand, 83% of us that is, this is a needed brick by brick removal of the old way. A sledgehammer for retailers and brands to increase gross margin, re-balance inventory and make more money.
Everyone has a place to sell and buy in this business but if you cannot scale the wall you need to tear it down.
Thank you Liberation Distribution and others like you for taking a shot at tearing down this wall.