In the third episode of The Pint, Moye White attorneys Billy Jones and Craig Knobbe discuss distribution agreements; when you need them, why they are important, and what to look for in an agreement.
The Pint is a freewheeling discussion of craft beer, craft spirits, and the law. Listen to The Pint on Spotify, iTunes, or anywhere podcasts are available.
Episode 3 Synopsis
So, you’re considering distributing your best-selling beer to retailers. To do so, you will have to abide by Beer Franchise Laws, which vary from state to state. These laws are meant to protect distributors, which may seem odd.
When distribution laws were passed, big brewers were running the industry, and the distributors needed to be protected. Obviously, with the expansion of the craft brewing industry, the tables have turned - an imbalance favoring craft breweries does not exist, and distributors are overprotected.
So, why is it important to have a distribution agreement? Your relationship with your distributor is one of the most important business relationships you’ll have. Having a good distribution contract will protect this relationship.
You’re dealing with someone who is a pro. Don’t assume the distributor is looking out for your interests. You need to know what the contract says and understand your rights. You also need to understand the rights of the distributor. Some examples of rights in a contract include exclusive territories, restrictions on transfer, the procedure relating to termination, and dispute resolution.
So, what should you look for in a distributor? First and most importantly - do your research.
- Who are you going to be working with?
- The person or team you hire will be the face of your brand to the retailers. So, talk to the retailers. What is the reputation of the distributor like? How do they work with retailers?
- Talk to fellow brewers and get their feedback.
- Understand how the distributor behaves and how they work. What attention will they give your brand? How will they promote you? Will you be a small piece of their portfolio?
When you sign a distribution agreement, you are signing on for a long-term relationship. You need to ensure that your interests are aligned and protected.
While you can’t ignore the Beer Franchise Laws, you can set expectations for the relationship. Doing so will help you avoid disputes in the future.
To learn more, tune in to episode three of The Pint. Subscribe now, so you don’t miss future episodes!
What We are Drinking: Station 26 Brewing and 4 Noses Brewing Company