Top 10 Distribution Tips For Local and Imported Craft Breweries in Australia

10 Tips for Beer Distribution in Australia

Looking to find new distribution partners in Australia for your Craft Brewery?

Wondering if you should open your own Brew Pub retail store or partner with large wholesalers?

David Lipman, founder of Beer & Brewer magazine and Drinks Hub, outlines ten top tips for distributing your craft beer in Australia.

With 3000+ local and imported beers regularly available in Australia and room for only 150 beer SKUs in a bottleshop, or 30 in a pub, does a craft brewery open their own retail venue to guarantee distribution, but lack volume, or go for volume in the wholesale market with lower margin and fierce competition? Beer Distribution in Australia has a lot less barriers to entry in the supply chain compared to the 3-tier system in the USA. However, with a small population and high production costs per carton compared to imported beer, local craft brewers really need to do their business planning prior to start-up to ensure the route to market chosen suits the target retail price, category/style of beer, brand story and cash flow of the business.

Distribution and excise are two of the most underestimated items in the business of brewing by craft breweries. 

1.       Have a quality product and credible brand identity/story/packaging

  • Invest in a consultant brewer or appoint a head brewer for the recipe development
  • Invest in a design agency for the packaging (label, cluster or other, cartons, bottle, decal, tap handles)
  • Invest in research (Roy Morgan and Survey Monkey or media readership/subscriber lists for e.g.) on what consumers are the target audience and sales data (IRi Aztec and the LMAA) on what styles and categories your beers will sit in (i.e. what are the best-selling beers in the regions and categories you are positioning your brand in.)
  • Enter your beers in competitions to prove quality as some retail beer buyers will buy based on gold medals and trophy winners even though consumers will rarely buy craft beer based on awards.  Consumers tend to buy based on occasion, price and the brand story most of the time.
  • Ensure the brand story is authentic, original, credible, and you have brand notoriety in your local market to prove its popularity. The brewer is the rock star and consumers love meeting the brewer while the region the brand is from (or the history or circumstance the brand was established) is important to promote the story. Don’t just focus on selling the brand based on quality and awards.

Heat is a major contributor to aging the beer, particularly in transit from brewery to retailer as it’s expensive to transport beer in cold-freight. Pasteurization heats up the packaged beer for a short period of time, it is not affected by heat in transit as much as an un-pasteurized beer. Craft beer is all about flavour; it’s a selling point to be unfiltered and unpasteurized. Pasteurization is said to remove 30% of flavour, however it all depends on your distribution model and the style of beer.

If you have a brew pub then there is no need for pasteurization as there is no time period from beer being transported from the brewery to the retailer and very little time sitting on a shelf or in a keg. However for the wholesale market, flash or tunnel pasteurization should be considered to control quality rather than let heat affect the beer for extended periods of time. Given beer is very rarely cold-freighted all the way from brewery door to the retailer shelf, the beer is not being consumed as the brewer intended. This is particularly the case for lagers, which are fermented at colder temperatures and affected by heat more than ales. The cardboard smell of heat affected beers is particularly noticeable in lagers that have little aroma or full-flavoured taste to hide behind.

2.       Understand Australian distribution (on- and off-premise), regulations, excise, and parallel importing

When the brewer understands the challenges, pressures, margins and price points of the importer/distributor and retailer, it makes the relationship and sell-in professional and respectful.

There are approximately 14,000 on-premise and 9,000 off-premise licensed outlets nationally. However, there are a lot more licensed venues when you include Restaurants, Clubs and Cafes. In NSW (18,000+) and Vic (20,000+) alone there are 38,000+ non-traditional licensed venues. Restaurants are a great target for craft beer. Given the beer lists are small, it makes the chance of getting picked by the consumer much better. Restaurants are also more willing to pay the listed wholesale price because they can mark the beer up more than bottleshops. Craft beer is all about pairing great beer with great food and restaurants also give the consumer that ultimate experience.

Parallel importing is legal in Australia, meaning an imported beer can be imported via a wholesaler and not the brewery. Retailers can buy direct from breweries and exporters, there is no 3-tier system like the USA.

Tap and Fridge Contracts exist in the on-premise and, with the average number of taps per pub being 8, venues are very limited in what they can put on tap outside the contracted brands. The opportunities for third parties (not in a contract) are guest taps, approaching freehouses with no contracts, or hoping the hoteliers catch on that customers are demanding more variety than what the contracted breweries are offering. The last opportunity hinges on the hotelier having not contracted out 70-100% of their taps, and hoping for 50% or less.

Given tap contracts, alternative routes to market are using growlers or stand-alone draught beer systems which provide the venue another tap point for the bar or event/function room.

Excise is an indirect tax as a fixed cost to draught and bottled beer. It goes up every 6 months by CPI. Its payable in seven days of leaving the brewery or bond store, even though it’s not paid for, for up to 90 days by retailers which can create a cash flow crisis for many craft brewers. There is an excise rebate for local microbreweries, up to $30,000 per annum received in the following financial year. Microbreweries are able to apply with the ATO to pay excise in 30 days rather than seven days. Many distributors or brewers will use a bond store to postpone payment of the excise until the beer is ordered and dispatched from the bonded site to allow maximizing production runs as well as minimize costs per carton and help margins and profitability.

3.       Understand COGS, margins and retail pricing for the category your beer sits in – are you competitive? Do you start contract brewing first or own equipment?

Distributors work off around 30% margins and retailers will buy cartons around a 25% margin while making around 40% on 6-packs and more on single bottle sales.

Repeat business is crucial to run a sustainable business. If your price is too high you run the risk of your beer being ordered once by consumers looking to try it one time before they move back to their regular, more affordable craft beers (known as repertoire drinkers.) However if you have low COGs or low fixed operating costs and are happy with less profit dollars, then higher prices can work if you sell the volumes needed to cover your costs.

The average retail price for a carton of local craft beer (any style, any ABV) in Australia is $64.50, whereas for imported craft beer its 13% higher at $74 per carton (8 litres). As mentioned in a previous article on the AuTT blog, the average ex-excise brewer wholesale price for imported craft beer is $17.50 and local craft beer is more like $35. Being 100% higher, local craft brewers are faced with a lot of competition from imported beer. However with the AUD/USA drastically softening (end of 2014) this will help local craft brewers’ price competitiveness.

Most consumers are purchasing craft beer as 6-packs, mixed 6-packs, or by the bottle. If you are pricing your beer to be sold above these prices then volumes will come down. It’s a matter of summing your COGs, the fixed operating costs you need to recoup, and your distributor and retailer margins to arrive at a retail price that is competitive against the mainstream craft or smaller craft brewers.

To work out excise here is the calculation: You need to find out the excise per litre of alcohol for kegs (>49.5 L) which is 40% less than kegs/bottles (less than 49.5 L).

Formula: Volume in Litres of the package x (Alcohol strength – 1.15) x Per Litre Cost of Alcohol.

E.g. from excise prices in February 2014

·         Carton of 24 x 330mL 4.3% ABV = 7.92 x (4.3-1.15) x $46.30 = $11.55+GST.

·         50 L keg of the same beer 4.3% ABV = 50 x (4.3-1.15) x $32.60 = $51.35+GST.

If price is important then you could contract brew to begin with, then once beer volumes get large enough you can invest in brewing equipment. This option allows the capital to be invested in sales teams, recipe development, packaging, promotion, travel, events, etc, and not sitting in stainless steel.

4.       Decide on the route to market and volumes to be profitable – wholesale or retail?

For the most part, this comes down to how much capital you have or can raise (for items in point 1),  how much profit you wish to make for shareholders, and if you going to work in the business with long hours or hire staff. The retail route is very profitable from a production and sell price perspective, while high costs in rent, staff, loadings, and other overhead such as marketing, is needed to ensure enough daily patronage. From a production point of view, you can make decent returns from producing 100,000 litres a year. On the other hand, if you go the wholesale route, you need to produce around 1-1.5 million litres a year to be sustainable and decide on owning equipment or contract brewing.

5.       Retail Distribution – Fresh beer and recruiting or partnering with a hospitality and marketing team to ensuring daily patronage

As mentioned in point 4, this is the most profitable form of selling craft beer and requires a fraction of the beer to be produced to be sustainable, as long as the venue itself is run efficiently and marketed to the local community. There are approximately 70 brewpub/breweries with hotel operating hours out of the 200 breweries in Australia.

Craft Beer Distribution in Australia

6.       Wholesale Distribution – Pasteurization and deciding on whether you will have a sales team, use a warehouse/logistics company, or appoint a distributor/retailer

As mentioned in point 4, given the costs of packaging and the fact that excise is 40% higher in bottles (unless you focus on 50L kegs, which is stifled by tap contracts), you need to brew a lot more beer to make the business sustainable.  See point 1 regarding considering pasteurization for the wholesale market, it’s a necessity for export.

There are three clear options in deciding the route to market for wholesale and they depend on your capital raising and how much volume you plan or need to achieve to meet profit targets:

(i)      Have your own sales team

This is the most ideal scenario.  As you have your own employees representing only your brand(s) in a highly competitive market, you know your brand is #1 on the list and #1 priority. The biggest obstacles in being able to use this route are having enough beer sales to support the sales team and a retailer or distributor’s insecurity in ccommitting to such large volumes with no track record, unless you have some serious ATL and BTL marketing budgets. A logical plan would be to start with point (ii) or (iii) then aim to get to have your own sales team in the medium to long term.

(ii)    Use a warehouse/logistics company with brand ambassador(s)

Start-ups with little budget or small overheads, can do the sales themselves, and grow the distribution organically, albeit over a longer period than point (iii) below. The important part of this route is to ensure you have warehouses on the east and west coast (given the sheer size of Australia) to store product close to customers. The reason for both warehouses is so that you can provide customer service with a short turnaround time from order to delivery and you can provide metro freight costs, rather than interstate freight costs. You will need to do the sales yourself, or appoint brand ambassadors/sales reps to generate the orders, for the warehouse/logistics company to pick/pack the orders for you. Consider if you can find bonded stores to warehouse your stock on the east and west coast, to help paying excise later. See point 7 below for a company list.

(iii)   Appoint a distributor/retailer

More and more these days, retailers are time poor and getting bombarded by sales reps from individual brand owners. Retailers will see around 40 reps a week for existing supply, let alone new brands/SKUs. Retailers prefer to talk to distributors who they already deal with that represent a number of brands all handled by the one account manager. This step ensures your brand is sitting in a portfolio that has relationships already in place. There are a number of distributors to choose, such as wine only (where you beer brand is their exclusive beer brand), a drinks distributor, or a dedicated craft beer distributor. It’s important, for any of these, that you ensure your brand doesn’t sit in the portfolio. You need to be continuously communicating with all reps looking after your brand.  Inform them of the product, its USPs, sales data success in other markets, awards, festivals/dinners at which customers can meet the brand team, sales targets, incentives and promotional support (as mentioned in point 9 below).  It’s a matter of asking what they need and what you can afford, to ensure volumes are met so that both you and the distributor are making profit.

Another option is go direct to the retailer as they can act as importer / distributor / retailer. This can be achieved via offering your brand exclusively to the retailer (if they are large enough), certain SKUs exclusive to the retailer, or brewing specific SKUs under an exclusive brand name for the retailer.  The last option gives them a lot of rapport with the beer to sell it, as it’s their own beer and they make more margin.

7.       Warehouse/Logistics Companies in Australia

Elite Logistics NSW www.elitewinelogistics.com.au
Warehousing & Distribution Solutions NSW www.wads.com.au
Locke Logistics Vic www.lockelogistics.com.au

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8.       Distributors in Australia

Type Distributor/Logistics Company State Web site
Beer Artisans of Amber NSW www.artisansofamber.com
Beer Beer Importers & Distributors National www.bidbeer.com
Beer Experienceit / Birra Italiana NSW www.birraitaliana.com.au
Beer Hops and More NSW bradflowers@hotmail.com
Beer Nordic Beverages (Balmain) NSW http://nordicbevs.com/
Beer Micro Beer Club NT www.microbeerclub.com.au
Beer Australian Trade Partners Qld www.australiantradepartners.com.au
Beer Calibre Craft Beer Trading Co Qld www.calibrebeer.com
Beer Europacific Liquor Pty Ltd Qld www.europacificliquor.com.au
Beer Fluid Boutique Liquor Qld www.fluidboutiqueliquor.com.au
Beer Decant Beer SA http://decantbeer.com/
Beer Palais Imports SA www.palaisimports.com.au
Beer Beer Importers & Distributors Vic www.bidbeer.com
Beer Better Beer Imports Vic www.betterbeerimports.com
Beer Boutique Beverage Distributors Vic www.boutiquebev.com.au
Beer Kaya Group for Efes Pilsener Vic www.kayagr.com
Beer Northdown, Craft Beer Movement Vic www.northdown.com.au
Beer Trumer Australia Pty Ltd Vic www.trumer-australia.com
Beer Beverage Australia Pty Ltd WA www.beverageaustralia.com.au
Beer PDH Imports WA phdimports@bigpond.com
Beer Trumer Australia WA www.trumer-australia.com
Beer/Cider DrinkWorks NSW www.drinkworks.com.au
Beer/Cider Phoenix Beers WA www.phoenixbeers.com.au
Beer/Cider The Beer & Cider Company WA www.beerandcider.com.au
BWS Bevchain National www.bevchain.com.au
BWS Bacardi Lion NSW ww.bacardilion.com
BWS Beach Ave Wholesalers NSW www.baw.com.au
BWS D’Aquin Group (NILWA) NSW www.daquinogroup.com.au
BWS Diageo Australia NSW www.diageo.com.au
BWS G H Cole & Son NSW www.nilwa.com.au
BWS Granduer Brew NSW www.grandeurbrew.com.au
BWS Kollaras NSW www.kollarasgroup.com
BWS LION Co NSW www.lionco.com.au
BWS Peter Doyle Cellars NSW www.nilwa.com.au
BWS Pure Beverages Pty Ltd NSW www.purebeverages.com.au
BWS Suntory (Aust) Pty Ltd NSW www.suntory.com.au
BWS Liquid Specialty Beverages Qld www.liquidsb.com.au
BWS Rivercity Wholesale Liquor Qld www.rivercity.com.au
BWS Empire Liquor SA www.empireliquor.com.au
BWS VOK Beverages SA www.vok.com.au
BWS Polkadot Liquor Tas www.polkadotliquor.com
BWS BDS Marketing Vic www.bdsmarketing.com.au
BWS Beach Ave Wholesalers Vic www.baw.com.au
BWS Enoteca Sileno Vic www.enoteca.com.au
BWS HT Beverages Vic www.htbeverages.com.au
BWS FM Liquor WA www.fmliquor.com.au
BWS Liquid Mix WA www.liquidmixwa.com.au
BWS Food Combined Wines and Foods NSW www.combinedwines.com.au
BWS Food Blackwood Lane Vic www.blackwoodlane.com
BWS Food Festival City Food & Liquor Vic www.festivalcitywines.com.au
Chinese BWS Food ETTASON Pty Ltd NSW www.ettason.com.au
Distributor ALM Liquor National www.almliquor.com.au
Distributor Hotel Liquor Wholesalers National www.bottlemart.com.au
Distributor ILG Co-operative Ltd NSW www.ilg.com.au
Distributor Paramount Liquor Vic www.paramountliquor.com.au
Distributor Premium Beverages Vic www.premiumbeverages.com.au
Distributor S & P Liquor NSW peterpizanis@optusnet.com.au
European BWS Urban Beverage Imports NSW www.urbanpurveyor.com/urban_imports
Hospitality Stirling Global Services NSW www.gohospitality.com.au
Japanese BWS Food Japan Food Corp NSW www.jfcaustralia.com.au
Logistics/Warehousing Elite Logistics NSW www.elitewinelogistics.com.au
Logistics/Warehousing Warehousing & Distribution Solutions NSW www.wads.com.au
Logistics/Warehousing Locke Logistics Vic www.lockelogistics.com.au
On-premise NILWA National www.nilwa.com.au
IBEV GLOBAL P/L Vic www.ibev.com.au
RTS The Daiquiri Group Qld www.daiquirigroup.com
Spanish wine/cider/beer Broadway Liquor NSW www.broadwayliquor.com.au
Whisky barmania! NSW www.barmania.com.au
Wine Red & White National www.redandwhite.com.au
Wine Bacchus Wine Merchant NSW www.bacchuswinemerchant.com.au
Wine Vintners NSW www.vintnersmerchants.com.au
Wine Off the Vine Wine Merchants SA www.offthevinewines.com
Wine Samuel Smith & Son (Yalumba Wine Company) SA www.samsmith.com
Wine Vintners Vic www.vintnersmerchants.com.au
Wine Dave Mullen Wine Agency WA
Wine Lionel Samson WA www.lionelsamsonandson.com.au
Wine/Beer Wines of Chile Pty Ltd NSW www.winesofchile.com.au
Wine/Beer Arquilla NSW/Vic www.arquilla.com
Wine/Beer Arquilla Vic www.arquilla.com
Oz North Food & Liquor Wholesalers Pty Ltd NT www.ozfcws.com.au
G&S Wasseige – Belgian Imports QLD
Australasian Imports Pty Ltd SA www.aimportg.com.au

9.       Promotion and Marketing

Support the distributor/retailer with social media, events, eNewsletter, marketing dollars, PR, point of sale, merchandise, in-store tastings, meet the brewer, dinners, festivals, samples, Buy 10 get 1 free, etc.

Join and support the industry associations (the retail association members are your prospective customers and helps you understand their challenges and opportunities). Some industry associations are: ALSA, CBIA, ARCBA, AHA, LMAA. Also see the retail associations for their member lists for retailer banner groups and retailers to target as sales prospects.

10.   Growing Pains/Customer Service – What contingencies are in place to cope with excess demand?

When the great thing happens of demand exceeding supply, what plans do you have for access to more capital for more fermenters and bright beer tanks. Rather than buying equipment, you could contract brew your excess demand. Don’t forget to go over all considerations for ensuring you don’t miss out on any sales and you can provide good customer service to existing and future customers.


 

By David Lipman, Founder Beer & Brewer Magazine and Drinks Hub.

Drinks_Hub

David Lipman Bio:

David’s passion for beer began in 2002 as a Cellarman at The Whitehorse on Parson’s Green and The Porterhouse Covent Garden, two institutions for great local and imported beer in London. In 2007 David founded Beer & Brewer magazine and www.beerandbrewer.com, and finished up as Publisher/Editor in May 2014. David has published as Editor-in-Chief five books on beer, including Ultimate Beer Guide Australia & NZ (2011), Craft Beer Trade Buyers Guide (2012), Breweries of Australia: A History 2nd Edn (2012), Best 100 Beers Australia (2013) and Beer Buyers’ Guide Australia & NZ (2013) www.beerbuyersguide.com.au. David has also published booklets on beer & food matching for Beer & Brewer magazine and BBQ School. David has launched three beer events including Beer & Brewer Expo (2009, Melbourne), Beer & Brewer Awards (2010, Sydney) and Beer & Brewer Conference (2012, Melbourne). These days David continues his passion hosting corporate tastings (including at the Sydney Opera House and Taste Festivals Australia). David has also just launched Drinks Hub, an exporter of Australian premium drinks, including craft beer, cider, spirits.

Wine Importers In Australia

List of some of the leading Wine Importers in Australia
Wine Importers In Australia
1)
Eurocentric Wine

Eurocentric is a wine importer based in Victoria and has a portfolio of european wines. The goal of Eurocentric Wine Imports is to bring Australian drinkers great wine from Europe and European-styled wines from other regions such as New Zealand and South Africa in as good condition as if you drank them at the winery.

The company is run by Neville Yates, a former career journalist who succumbed to his passion, embracing a combination of his loves — wine, people and travel.

He meets the winemakers in the vineyards and in the cellars, tastes at the source, negotiates good deals, chooses reliable refrigerated transport and delivers to Australia great wines at a reasonable cost through the retailers, restaurants and wine bars you know and trust. Retail sales are available through this website.

2)
World Wine Estates

World Wine Estates (WWE) is a wine importer and distributor in Australia that was established in 1988 as the import and wholesale arm of the Ultimo Wine Centre, Sydney’s famous premier wine retailer. WWE specialised in imported wines, especially French. The current owner and director, James Johnston, joined WWE in 1999. In 2005 by a mutual amicable agreement, WWE became a separate company to Ultimo Wine Centre.

Since 2005, James Johnston has continued to grow World Wine Estates and has added premium Australian and New Zealand agencies to its portfolio whilst maintaining the specialist French wine focus. All our wines are carefully chosen to ensure that we offer our customers high quality wines to suit every type of business: bars, pubs, restaurants, retailers…

World Wine Estates’ sales team and distribution now extends from New South Wales into Victoria, SA, ACT, WA and Queensland.

3)
Echelon Wine Partners
Echelon proudly presents a portfolio of dynamic and innovative wines from some of the world’s finest wine producing regions. Every wine in the portfolio is modern in approach and expresses its origin.

4)
Trembath & Taylor
Established in 1994, the original principals of Trembath and Taylor, Michael Trembath and Virginia Taylor, were joined by Matt Paul in 2005. Each of the shareholders has extensive wine industry knowledge and experience.

Trembath & Taylor’s head office is in South Melbourne, Victoria, and Matt Irwin manages New South Wales from Sydney. Every year sees the group spending a combined three months in Italy enjoying local culture, visiting our wineries, tasting new releases, travelling and seeking out new wines. Trembath & Taylor has agents in Western Australia (Dave Mullen Wine Agency), South Australia (Muster Wine Co.), Northern Territory (Thomas Chin), Queensland (Cuttings) and  Tasmania (Wine Profile).

5)
Negociants Australia

Negociants Australia has been an importer of the world’s finest wines since 1984 and we are proud to represent outstanding family owned wineries from Australia and abroad. Our dedicated and knowledgeable team of wine professionals is committed to the highest levels of customer service and quality representation of the wines that we are honoured to distribute. It is this combination of portfolio and people that makes Negociants Australia one of this country’s leading fine wine merchants.

6)
Halle aux Vins
Halle aux Vins is a wine importer in Australia of botique french wines.

Halle aux Vins is committed to broadening horizons for French boutique winemakers, connecting them with Australian wine aficionados; captivating and inspiring Australian consumers, restaurateurs and sommeliers with an ever more distinctive and alluring range.  Galvanised by the dynamism and creativity of the Australian food and wine industry, Halle aux Vins makes an annual pilgrimage to France, unravelling fascinating stories about its partner vignerons, garnering fresh inspiration and uncovering original drops.

7)
Arquilla
Arquilla is one of Australia’s leading importers of Italian food and wine, representing a number of internationally renowned brands. Just click to discover some of the finest food and wine Italy has to offer.

8)
Andrew Guard Wine Imports
Andrew Guard Wine Imports is a specialist importer and merchant of fine wine and spirits. It is owned and operated by Andrew and Kirsten Guard. We are based in Sydney, Australia and have many years experience in the wine, restaurant and retail trade. The vignerons we represent are amongst the best in the world, producing very fine wines with minimal intervention that are reflective of their origins.

9)
Domaine Wine Shippers
Domaine Wine Shippers (D.W.S.) was started in 1977 by Gary and Yvonne Steel. In these early years of inception,the company, based out of Victoria, was known as the Importer of Champagne BILLECART-SALMON and of other premium quality French wine; primarily from the great Domaine’s of Burgundy. Today D.W.S. represents over 25 Australian Vineyards and many wines from France. We are responsible for distributing Champagne BILLECART- SALMON as well as being the sole Australian Importer of Domaine’s from Burgundy; such as Domaine de VOGUE, Domaine Armand ROUSSEAU, Domaine RAVENEAU, Domaine BLAIN-GAGNARD and Domaine BOUCHARD Pere et Fils.

10)
Global Fine Wines
Global Fine Wines was established in 2003 as a premium wine importer and distributor.  Today we represent the produce from acclaimed family winemakers and vignerons in Australia, New  Zealand, Italy and France.  All meticulously manage their vineyards and winemaking processes to capture the true terroir  expression in their wines

They represent wines from Australia, New Zealand, Italy, and France.  All offer individuality, rarity, and above all fine quality and character. We do hope your browsing experience proves interesting, useful and enjoyable.

11)
Nelson Wine Company
Nelson Wine company are Wholesale Distributors of Premium Australian and International Fine Wines with an enviable portfolio of quality producers from all the major wine growing regions of Australia and a small international selection of key producers from France, New-Zealand, Italy, Spain and Germany.

If you are looking to expand your distribution in Australia, get involved in ‘Australia Trade Tasting‘ and show case your brand to hundreds of Australian Importers and Distributors.

Wine Importers In Australia

Meet Wine Importers In Australia