090 | BCB2024 | Winning with Distributors: From Your Home Market to Export | Park Street University | Michael Vachon, Soren Hansen, Emily Pennington, Chris Maffeo

Hey, drinks builder. This is Chris Maffeo, and you're listening to the Maffeo Drinks podcast. Today, we are reaching listeners in over 100 countries, and I'm grateful you're one of them. Before we dive in, a quick reminder that while the show is free, our paid Substack subscribers get early access to episodes, full transcripts, and exclusive deep dive newsletters. Check it out at mafiadrinks.substack.com.

Now let's get into today's conversation.

Okay. Let's get the show on the road. Hey, everyone. Welcome to the Park Street University stage. I'm Emily Pennington.

I'm gonna be your moderator today for this session on distribution strategies in the EU market. Today, we're going to talk about the role of distributors in brand building with a focus on Europe. If you're considering entering a new market, distributors provide valuable local market expertise. They establish relationships with retailers, bars, and restaurants. They understand the competitive landscape of the individual European countries, but they can also come with a host of challenges if you aren't matched with the right one.

So today, we're gonna explore the key considerations for brands as they navigate the complexities of the European market. Here with me today are Soren Hansen, the sales director at EU based multi country distributor, Bee Makers. Next to him is Michael Hachon, the co founder of UK based Maverick Drinks Distributor. And then last, we have Chris Mafio, industry veteran, podcast host, and brand building consultant based in Prague. So you know what, guys?

Before we get started, I wanna take a little poll of the audience here. Who is based in The EU? Raise your hand. Okay. Who's based in The UK?

All right, we got a couple. Is anybody based in The US? All right, forget about them. Okay. Let's give the audience a little perspective here on your respective business models and your role beyond my very simple description.

Soren, if you would go first.

Yeah, sure. Nice to meet you guys. So my name is Soren. I work with Beemakers, and we are essentially a direct distribution partner in The EU. We make it possible for brands to sell directly to bars, bottle stores, restaurants, consumers in eight different EU markets so they can build their brand from the bottom up, which is

You stole

your one of your You

stole your line already. Yeah.

Thank you, Sora. And Michael?

Yeah. So Michael Vachon. I'm one of the founders of Mavic Drinks. Mavic Drinks in The UK, we are a distributor, but we also have a wholesale business selling to the trade. We also have a retail business selling to consumers.

So we are actually pretty much a full ecosystem between we also have our own brands, so brand building, distribution, wholesale, and retail. And, yeah, our our portfolio is about half brands we own and half brands we distribute from around the world.

Alright. Chris, you're up.

Hi, I'm Chris. I don't have a distributor per se. I have drinks builder, as I like to call all of us, that whenever we work in finance, marketing, sales, brand owners, brand managers and so on, to build their brands from the bottom up and starting specifically from the on trade and setting the right foundation. And I'm a big fan of looking at the industry as an ecosystem because it's ultimately we all want to drive growth, whether we are importer, wholesaler, distributors, brand owners and so on. So this is a very important way of understanding that the drinks is an ecosystem and we have to work together to build together the brands.

Yeah, sure. Perfect. Soren and Michael, am I understanding correctly, both of your businesses are B2B and D2C, right? So business, business and direct to consumer. Is that right for you, Soren, too?

Yeah. Yeah. So the brands we work with, they have the possibility to sell direct to consumer, but they also have the possibility to sell direct to bottle stores and restaurants and also the monopoly market. Yes, you're correct.

Okay, great. Now some definitions, mostly for the American group. Michael, I'm going to hit on you at this one. Can you talk about the difference between importers, distributors, and brokers? Like, how are those different functions in The EU?

Yeah. So, well, at least I'll start from The UK perspective. We are here's the glossary. So importer, we're literally doing the logistics. We are picking up from your door.

We are bringing it into The UK, customs clearance, everything into physically in our hands, bottles in our hands. That is the function of the importer, and we we do that too. We are also the distributor insofar as we are going out and we are talking to retailers, to bars, to everybody from independents, ecommerce, Amazon, all the way up to national grocers and retailers. So full stack of types of retailers, and we sell to wholesalers who sell to bars. They are the wheels, the trucks who are going out there and delivering your products to the bars, probably on some weekly cadence.

We do increasingly more of that ourselves, but we also have 60 partners who we sell to who are they don't have brands of their own. They have every brand. They've got thousands of products, but their responsibility as a wholesaler is to deliver to the bar, deliver to the on trade.

Mhmm.

So they are a core part of our our world in The UK, but, really, they are a single function. Wholesaler sells to on trade, whereby we build those brands in the on trade. We are knocking on those bar doors, building the demand, and working very closely with the brands themselves to grow those brands in The UK. In Europe, we do have brokers who are probably one step above that, which are they are looking to find distributors in different markets for your brands. They often have a portfolio of brands.

I was just talking to one charter brands downstairs, but they are not really responsible for brand building. They're really responsible for finding new route to market and then passing over to those distributors.

Okay. Is that Alright. I think that's clear. Thank you.

I think one one thing, Emily, that I would add to build on what you were saying, Michael, is that I like to frame it as in Portugal horizontal, so they take care of the full nation in whether it's UK or or any European market. So it could be Germany, France, or whatever. And then wholesalers go vertical, I like to call it, because they deep dive into the city because a lot of wholesalers, if it's generic, it could serve many regions in that country, but usually they do London or they do East London. They're very narrow focus. And to look at it from their perspective, I always call it like they've they've got no other city to go to.

So they need to take care of their bars more than their brands because they can change a brand, they cannot change a bar. So it's it's the other it's the it's the other side of the coin versus an importer that manages more the relationship with the brand owners. And it could be that the importer may have a sales team around 10 people nationwide that builds the demand, and then the wholesaler may have another 10 or 20 in that city, in Paris, 20 people, while an importer would have, in France, 10 people going around.

Yeah. We we hire by channel. So we have somebody for on groceries, somebody for entrees, somebody for ecommerce, somebody for independent retail, somebody for wholesale. And to your point, we've got about 60 wholesalers around the country in The UK where we manage exclusively for The UK. So we are an exclusive importer.

There's nobody else importing those products but us Okay. In the

So with all these different parties touching and contributing to the brand building, how does setting pricing work in different markets? Soren, can we start with the EU?

Yeah.

So one of the challenges that we work with a lot of craft emerging brands. One of the challenges that we see is the taxation. So, for example, if you look at a 70 centilitre, 40 ABV bottle, the taxation, the alcohol tax on that product in Germany is €3.6 In Sweden, it's over €30.13 euros So that difference makes it super challenging for the brands to set pricing that aligns cross borders, which I don't know what you guys think. But some brands, when they're growing and they get bigger, you also have expectations, right? You know what the pricing is of the brand in one market, it can't be the double of the price in another market, right?

Yeah. And though The UK is no longer in the EU, when we see pricing in markets other markets which are is drastically lower than it is in The UK, we know product will come in through wholesalers, retailers. There's we still get a lot of gray gray market stock if it is a lot cheaper in, say, Spain or Greece or Germany. It it still makes its way to The UK. So I would say even definitely know the value chain in each market.

But I would probably keep the as far as, again, the top line pricing relatively the same. Otherwise, I mean, especially in The EU, you get product moving all over.

Chris, do you have brands that you work with and advise on pricing?

Yeah. What I would add on to to this is also about setting expectations on what's your sales target, because actually all this movement within the EU is driven by if I got a crazy target and I cannot sort it out in my country, then I'll send it somewhere else. So it's also understanding what can the market take without setting objectives that are top down, because then it becomes a never ending game of every country sending it to the other one, just trying to catch up with their targets.

Yeah. So, Soren, when you have a new brand that wants to come into the EU for the first time, and you guys work in a handful of markets, right, what is the first step that you would advise them to do on pricing? Can they work with you to set it?

Yeah, yeah, yeah. We help brands with the pricing as well. Obviously we're a tech company, right? So we've built a platform that automates everything from setting the pricing to handling the back office and logistics. So we do help with pricing.

For us, it's about having a discussion with brands about what's their ambition, what's their targets, because often there's often a misalignment with the way they price themselves, contrary to what their targets and ambitions are.

What are some common mistakes you see in that area? Is that it? Just misalignment and what they think the price should be in?

Oh, yeah. Yeah. Yeah. Definitely. Definitely.

That's a big mistake. Another one that we see is that they take charge of how to set the pricing and also how to build a brand. They expect the distributors and the importers to do that. And I think personally, I think that is wrong. I think the brands should drive that.

They should be involved in the pricing, but of course, also take charge of the brand building. Yeah.

Okay. All right. I'm going to pin that because we're going to come back to it. But I'm going to segue into talking about just the observations and assessments this year in your respective markets as it pertains to the alcohol industry, right? So what categories are doing well?

Which ones are hurting? You know, what traits do you see across brands that are doing well in your markets? So overall assessments.

Yeah. So you cover a

lot of markets.

Yeah. Yeah. We have a lot of markets. But overall, what I've seen, which is really interesting, is that first when we started B Makers, we did work a lot with emerging brands. Now we see going direct and building the brands from the bottom up is actually becoming an interest for some of the bigger players in the industry as well.

They are looking for alternative ways of growing their brand, whether that might be doing e commerce or doing direct sales into hotels, restaurants and bars. So that has been really interesting to experience because we haven't seen that the previous years, but they're definitely showcasing interest.

Okay.

I mean, not to be all doom and gloom about The UK, especially when you've placed such a nice picture of the EU. But in The UK, it is very much a case of a currently, I'd say, perfect storm. You know, we've got people who are generally, the the trends are towards drinking less, and at the same time, we have a cost of living crisis. So people are spending less and drinking less. And I talk to the bars, the bars say, you know, we are empty on a Friday because we don't get the same work trade.

People aren't in the office on Fridays anymore. They're usually working midweek. So the working patterns have changed. That's affected the entree. And people are staying for less time and spending less when they do.

And this is from hotel bars to trendy entree bars. I mean, I'm hearing it kind of across the board. The customers are looking for more experiential things. So restaurants are often doing some restaurants are doing very well, but bar standalone bars are struggling a bit. And at the same time on on retail, you know, we we are seeing bigger discounts from the bigger brands we've ever seen.

I mean, we're seeing what might be 15% off is now 30% off. You know, we're seeing really steep discounts. I think I saw Lagavulin 16 the other week for £50. That's about £30 off.

Did you buy it?

I didn't buy it. I've got I've got more than enough whiskey at home. I don't I don't need another bottle. But suffice to say, you know, when the big brands are leading by doing steep discounts, it's making it only harder for the small independent brands who can't accept that kind of margin loss. So I think these things are cyclical.

I think we will bounce back. I'm hearing positive things from a lot of people I speak to about second half of this year, but first half was really tough in DK.

Yeah. Chris, what are you hearing from there?

I mean,

I would

I would add, building on what you were saying about retail or about building front and bottom up, is that sometimes big brands think that helicopter money will fix everything. They will do ATL advertising, stick it up, and it will sell, but it doesn't work like that anymore. There's so many brands out there and so on. I work with big and small brands, and the way of working for me is the same. You have to win the outlets and you have to consolidate the foundation.

Some brands that I see that they are doing maybe like plus 15% versus last year, but they're in red numbers because the target was like 40%. So are you really suffering or are you suffering on your dreams kind of thing? And this is a wake up call for many brands because sometimes they just rush into retail, for example, without having built the foundation in the entree than in the other channels like e commerce and so on. And they think that just because they have a contact with big retailers, I mean, course, the buyer is going to say yes because they've got other big brands, but then it's not going to rotate and it's going to collect dust on the shelf. So is it the right time to be listed in that store yet?

Maybe you have to wait two years and you have to manage management to actually slow down a little bit because otherwise you end up doing this 30%, 40% off, is ridiculous. And then people are always gonna buy only on offer because they know it's gonna happen. I live in Prague and in Czech Republic, there's 85% promo pressure on in the industry, and it's crazy. Basically, if you see it full price, we'll just wait one month. I mean, you're not in a rush.

You know?

But I I am an optimist, and I I I should I wanna make it very clear that I think there is still a lot of opportunity even in The UK. And the brands, to your point, Chris, the brands that really invest the time in the bars right now that are struggling and the retailers that are getting in there and doing the samplings every day and actually being present, those buyers will not forget when things do turn back around. So I think this is a really good time to be showing the time and attention to the really, really key accounts for your brands.

Soren, are there any particular markets since we have already established you guys work in a few of them? Are there any particular markets that are kind of bright spots or doing well?

Yes, I Scandinavia is doing quite well. But for us, it's we're not necessarily looking at and judging judging categories and markets. We are more looking at whether the brands exactly as you say, if they're going out there and if they invest, they can they can make it work in Germany, but they can also make it work in Sweden. Right? It's the same thing.

They need to get out there in front of the customers. They need to they need to connect with people. They need to spend time and resources on building up the brand. And that is regardless of which market they're in and also regardless of which product category they are in. Also the so called declared debt categories, right?

Sure.

Okay. All right.

I would also add, no matter who does that as well, because if you cannot be in that market, you have to allocate whether it's an A and P budget, advertising promotion or any other sort of budget, however you call the marketing spend, to make that happen. So it could be a brand ambassador in that city, it could be an extra support to a wholesaler, to an importer, a distributor. You have to have someone because there's no shortcuts. I mean, someone has to do it. Someone has to go to that park, and you have to choose who's going, who's got the time to do it.

But if you don't have time, you must have the money to to have someone else. It's like we're doing chores. That's all. Either you clean yourself or you have a cleaner, but somebody has to clean it.

Yeah. Okay. Okay. Before we get too deep into brand building strategy, let me start with let's talk about how you get a distributor in a new market in in The EU. So what do you think let's, you know, pretend I have a a brand or vodka, and I wanna go into The EU or UK.

You know, what is your best advice for how to identify the right distributor for your brand?

I'll jump in. I mean, there's no silver bullet here,

of course.

So but there are a number of factors I would probably consider as a top line for which distributor to choose. So first of all, you wanna be in a portfolio of kind of like minded brands. You wanna have a probably that wouldn't have something on the portal that directly conflicts with what you do, sharing the focus of that team. I think you also wanna think about the channel strategy. What what are the what are the strengths of this distributor?

Are they really strong in on trade? I mean, I I would say Maverick Drinks has a unique expertise in ecom. I think we're we're we are a digitally led distributor. We partly because we own an e commerce business, so we we we know that channel very well. And if that suits your brand strategy, then great.

What I think is and I'm going back to the mistakes, is we have a lot of brands that say, well, you know the market. You tell us how to build it. And that turns us off really quickly from our brand. More than basically anything else, we want them to come to us saying, Look, we have deliberately chosen to go into The UK because of these reasons. The market is up 10% year on year.

There are no brands quite like ours. We have a unique opportunity for a our our customer base are really have have a strong presence in The UK. Like, give me something to hang on to that says you have decided on The UK and is deliberate rather than, well, I'd just like to get another market. Mhmm. Or because The UK is such a flagship market, they say they they feel like they need to be in it.

Nobody needs to be in any market. You should want to be in those markets and choose them deliberately.

Sure.

Well, it's the same thing we hear a lot. I mean, there's many companies, many brands out there that are like, yeah, we want to get into The UK because it's the next natural step. Right? But why? I mean, they haven't a lot of them haven't done the research.

And the reality is there's a lot of smaller markets that could be a better fit. 100%.

And especially when you're small, because we're talking like brands that are doing like a few 100 cases or few thousand cases. So it doesn't matter if the market is going to want a big size of the pie because you can have a can have a muffin at this stage, you know, wait to grow. And also, would say to start from the other way around, I would say the logistic is top down, but the brand building is bottom up. Understand what's your target occasion, understand where those bars are, and even fly in, talk to them, and who do you buy from? These wholesalers.

Start to understand how it works. What's the wholesaler? What's the import? If you start to get, like, a few people that's starting to mention Maverick drinks, all of a sudden, it'll start to be that Maverick drink probably has already access to these bars that I want to get to, which are not the best bars like fifty Best necessarily. They are the best bars for your brand for that occasion, and then you build the line backwards starting from the end, and you then you end up with Michael.

But you don't pick up the phone and call Michael without having never been to London or Manchester. Correct me if I'm wrong.

No. I mean, if you're if you're a spritz if you're a spritz brand, maybe don't go to a market that's like, it rains 80% of the year. Like Yeah. You know, just because The UK is such a flagship market, go back to occasion and actually, why is The UK a good fit? And, well, probably isn't if you're all about sunshine and good weather days.

Yeah. No, I just wanted to add that one thing that we always advise and tell our brands is to figure out what you can deliver to your distributors and importer. What do you have to offer? Because a lot of brands, they will do exactly that, right? They will send a presentation and then wait for a reply.

But that's not going to happen. And especially not these days. But the brands we work with that are doing super well, they spend time in the market. They make sure to go out there and get in front of the customers. And with us, they can sell into the customers.

They can sell into the bars and the bottle stores. And if they do that and they come back with actual customers already buying and engaging with the products, the discussions with Merrick Drinks and other distributors are just going to be easier.

So we've talked about that you guys advise not sort of like expanding beyond, you know, need or demand or not thinking about it. I'm curious to know if you see like during a challenging market kind of knee jerk reactions to people who think, oh, this market's not doing well. Like, I need to expand it to another one. Do you see that more during a challenging economic time?

I'd I'd say we actually see a little bit of the opposite. We're seeing a lot of people who are we're getting more pitches through because they're looking so it we're we're getting the people who are looking to knee jerk reaction gotta get more markets. So we're getting a lot of pitches that are just half assed pitches that don't really make any sense. They just want to ship another pallet because maybe some of the market is doing well. So we're seeing I'm I'm not seeing the brands who are running towards other markets, but I'm I'm I'm getting the other end.

I'm getting the brands who come to us with who with no real sense of why they wanna go in The UK. But any distributor, any palette I can send, just send another one, get the numbers back up.

Yeah. Yeah. And I I would say also I see a lot of brands. The first thing they mentioned is distributed in 22 markets, 15 markets, 35 markets. But then in the end, like when we talk about how much they sell, it's peanuts anyway.

You spread your set too thin across all these markets. So I'm always a big fan of winning the home turf first. No matter how tough it is, it's a thin line between what you consider winning, but at least be relevant somewhere and so that you can actually go to other markets. But it's very easy often, especially UK brands because The UK market is so tough that automatically they ship it out. But then if you are from Leicester or Birmingham and nobody has ever heard your brand in those cities, what do you put in the selling pitch for a country like Germany or any other markets?

Yeah, for sure. I mean, that makes sense. And I think a good segue and that's a good segue into talking about, like, best ways to just support your markets or new markets that you go into. What are are some of, like, the basic things that you recommend for a brand coming into your market that is not based there already?

Yes. So for us, with our model, the brands are in the driving seat. They are the ones that are in charge of building it and making it grow. And I think there's also a misconception about this, right? Because a lot of brands, they think the distributors and importers are in the driving seat for building the brand and the growth.

But with us, they need to take full charge. So they need to make sure to do the research, figure out who are their target customers. They need to get to know them, and they need to come out and make sure to put the liquid in front of the buyers. So we expect the brands that we work with to come with a plan and have done some research before they actually enter a new market without having to know happen to know why. Sure.

I mean, the founder coming to visit once a year just isn't gonna really cut it for us. We we really encourage the brands to hire somebody on the ground, whether that is somebody who sits within our sales team or is more on trade focused. It it depends on the brand, what what what their strategy is. But the brands that are doing the best for us have all hired their own people as well in The UK, even sometimes two or three people in The UK because it is such a tight market. Sure.

I would also say locate the budget on whether you do it personally or with external resources and third parties, but also a way to look at the expansion for me, it's also like understanding the weak signals. So first of all, you can do a lot already from the distance because Instagram, Google Maps, you know, nowadays guides, and you can already see a lot of stuff before you actually fly in. And then also trying to understand that when you connect to people online, whether it's bartenders, bar owners, and so on, you start to understand. Maybe you get a request on Instagram, oh, you're not in Berlin. How can I get you?

And those start to be interesting signals for you to actually say, maybe Berlin could be something interesting. And then maybe you can have a solution, for example, like BeeMakers to say, actually, I I do small entry. I just ship some cases there. I just go to a few bars. I don't need a distributor yet.

I just move my first steps in that market. And then when the fruits are there, I will start talking to a wholesaler, to a distributor, to an importer.

We actually have a one brand, Kiro Whisky, from Finland, and I say the founder coming over, you know, once once a year. The founder moved to The UK for a year. They hired somebody in marketing and sales on the ground and built a team and base in The UK. And it, I mean, it it really showed in the numbers. So yeah.

Yeah. So that begs the question for me. Let's talk timeline. Let's talk timeline. Right?

I know this is gonna vary by brand. Right? But I wanna know the kind of level set expectations on what kind of timeline can you expect to actually start seeing traction, and how long should you just be patient, you know, while you're building a brand?

Us, at least, I'd say it's at least six months to probably more like twelve, eighteen. I think six months is just literally laying the groundwork, getting pricing established. Like, we really is especially we're taking over from somebody else, there's a lot of work that just goes into preparing to actually go out and do the sales.

Mhmm.

Plus things are cyclical. So buyer cycles, there may only be two windows a year. A big bar group may only do their range review once a year. So I would say six months to just get a baseline of what we think we can do, and it's probably twelve to eighteen months before really actually getting real traction.

And when you have a timeline in actual time, months and years, or at least, like, frame it as a mindset. I like to call it one bottle, one case, one pallet. It's like the three kind of like mindset. It's not that you're selling one box or one case, but it's a mindset kind of thing. And then there's a thin line.

It's not now I enter the one case stage. It's a mindset thing. The one box, you start moving your steps with your feet, then you start in the second phase, you start to be, for example, with Michael. And then in the third stage you start to talk to retailers, for example, and then you start to export to other markets. But at least you frame it because it can be very overwhelming, especially for a small brands to actually say, oh, where do I go?

And start grasping opportunities and then all of a sudden you don't even notice and you are stocked in a retailer on discount while you were in five bars in the first city. So there's also an element of patience. Of course, it depends on the runway that the brand owner has. But at the same time, there are some steps that they have to do and you cannot fast track things.

One thing I would like to add is that a lot of brands we see that I mean, they're quite overwhelmed, right? Because we do have a lot of markets that we work with, but selling in their home market is often, you know, it's quite simple. They go out and do some tastings and they'll sell to them, right? We see brands now that are doing an omnichannel strategy so that they'll sit in their home market, they will reach out to bars, restaurants, bottle stores via Instagram, via calls, etcetera, and then send samples to them and do digital tastings and get the first listings going through that. And we have actually had some brands that have landed some super good national listings just from Instagram.

So I also think that times where you have to be present as a brand owner and a sales guy, those times where you have to be present every week, it's not necessary anymore. You can start as a smaller brand. You can start by doing it from this distance and visit once in a while to do the physical tastings and get in front of them.

If I can say one thing about the Bean Makers So I'm relatively new to their platform, so bear with me if I get anything wrong. But I think what your platform enables for people to be able to get into so many more markets and seed into the markets is really exciting for a distributor like us to look at and go, they can already build a good base there. If they wanted to go to a full distribution model, we have a lot more proof based on the work that they would have done through Bean Makers. Now, I'm not saying that's the necessary path, but certainly, one of the things we look for in brands is that there's actually already some traction in The UK. That's very appealing to us.

So I could see a platform like Beanmakers being a perfect way to seed into some of these markets, show there's the traction. And then if you want to go into a full distribution model, then that might be an option. Or it might just be going really well. You may you stay with bead makers.

Well, it's it's definitely I mean, some of some of our brands, they they do receive they do receive requests from distributors and importers, and that is because they have built a foundation. They have a good customer base and they have e a commerce business going on already, and that's just a good foundation for guys like you to build on.

It's probably the single most exciting thing to us about brand is that they've already got opportunities that makes our job easy. Right? Yeah. If they've already built something, it's easier for us to scale a brand than to build a brand, and certainly at the way we build our business. So if there are two or 3,000 case brands, it's easier for us to get it to a 10,000 case brand than it is for us to go from zero to 3,000.

And also on understanding the right place because it could be hybrid solutions, you know, like it could be you go with B makers into the market and then Michael picks it up, brings it to more customers. Or also like what you were saying is trying to understand who's adding certain value because sometimes I see a lot of brand owners doing the mistake that they blame the systems. It's the importer's fault. No, the importer says it's the wholesaler's fault. No, it's the bar fault.

It's not about faults. We're all in it together. It's a drinks ecosystem. And let's have the way that brings us more results, whatever that logistic pathway is.

Yeah, fully agree. I think it's a mindset or like more brands need to adopt, like no one owes you anything, right? You have to earn it. Okay. Well, while we're talking about brand building and creating demand and we are at a trade show, let's talk event activation, best practices, you know, how much, you know, resources to put into that, you know, when you're young.

So we see quite a lot of brands that are willing to spend €10,000 on a stand, but not willing to prepare. So if you do that, if you are coming here and spending those money, I think the brands should be prepared with meetings. They should spend some days here before, visit customers, visit bars, getting to know the ecosystem in the city, because it can be a little frustrating for me to see the brands that they're just pouring out money and they're not preparing with contacts and meetings. It's weird. I don't know why they do this, but the excuses are we are busy with production or we don't have the time.

It's definitely important. Also the brands that we see are doing the best. I mean, they are super prepared. They already know who to talk to. They have the Bartegos lined up.

So, be prepared.

Okay. In the larger ecosystem of, you know, brand building and allocating your resources, for a small brand, where do you think is the most bang for your buck? Is it like digital marketing, trade shows, ecommerce, tastings?

It's tough to say because it really does depend on the brand. So and I know that sounds like a total cop out answer, but, you know, we we've got some brands that are backed by celebrities, and I I know that's a very en vogue thing. The brands du jour are all celebrity backed. But for them, ecommerce is great because they've got a big platform. Investing in an ecommerce platform, The reach can be literally millions.

And so we we say, everyone knows you. Let's put you out in front of as many eyeballs as we can. It's probably less on the, say, liquid on lips or sampling because we want the celebrities, you know, they want we want them to drive the sales as much as possible. So where other brands, I would say for most of brands we work with, it is much more get as many people to try it as possible. So it does depend on the brand.

Yeah. That makes sense.

I would I would also add, try to consolidate, build distribution growth while building rotation. I'm always a big fan of the one case in one bar is better than six bottles in in each six bars because then you move and you consolidate what you've done and then you grow slowly. Also understand that, for example, if you do an event in a bar where you have a listing or where you want to get a listing and you will have a listing because otherwise all those liquid on lips thing that you activated 300 people that night, then they're gonna go back the next week and ask you for your product and your product doesn't exist. So sometimes I see a lot of things like let's activate a Stockholm Fashion Week or whatever, but okay, are you listed in the retail? Because if you activate the Fashion Week, then if people can go to retail to buy it, that's something.

But otherwise, all these people are gonna run around the city and you are listed in five bars, they will never find it. So grow I don't wanna say slowly because, I mean, we also we all want to grow, but fix the fundamentals before trying to shoot to the moon kind of thing.

Yeah. That makes great sense. I don't have my phone on me. What time is it? How much time we have?

Forty five?

Okay. Okay. We're making good time. I want to make sure that I get a chance to let the audience ask any questions that you might have about distribution and partners. So I have can we grab a microphone?

We have some hands up here. I'm all ready. Thank you, Amit. Oh, turn it on. Yeah.

Okay. Perfect. So a lot of as a small brand, we speak to a lot of distributors, and they then ask for budgets. Would you recommend giving budgets or say, let's invest the budgets ourselves and get boots on the ground or get our own structure? Because some say like, oh, we need 20,000 to reach this market, but then it seems like the distributor is gonna do all the work.

Is how does that normally work?

The hard truth is both. So we really do, you know, we really do value the people on the ground. I I I think it's one of the best ways to spend your money. But there there are realities of some of the commercial deals we will do that we that that there's not enough margin for us. Like, we we we can't support, you know, on the distributor margin is we're we're not swimming in cash here.

You know? I was saying to Chris earlier, you know, on a on a bottle of gin, we probably would need to sell 10,000 bottles to pay for one junior salesperson on our team. So the margins are not that big for for distributors. So for us to go in and say getting a listing in a national retailer or an even in a a single bar but that does a lot of volume, there's probably a commercial reality that is gonna need to be supported and that we just simply can't fund that out of our pocket. So it it's probably both.

Sorry.

I would even add to Michael's point. It's not much about what you do, it's how you do it because you could have a resource and imagine me in the market and then I'm hired and then I don't have clear rules of engagement with Michael, it's a waste of time. But it could be that you hired me through him, I'm on his company's payroll, or I'm through an external agency, which is going to probably, you know, a markup on it, or maybe it's a freelance. Oh, there's Chris, this cool guy in London that walks around bars and help you, Michael. Very often it gets lost in translation because so it's not about the money because maybe the money got wasted, or it's not about the person because it could actually be the exact same person with the wrong rule of engagement.

And I've worked in many markets and I've seen it so many times that, for example, if Michael hires him, then all of a sudden, actually, you're you're cool. You're work on other brands as well. Or vice versa. It doesn't that person, the guy or girl doesn't blend in because Michael's organization is kinda like shielding the the team. So it's also the nuances are important.

And we have definitely hired people in our team on behalf of the brands. So it's a it's a very common model for us where we'll go out, we'll do the hiring, we'll do the interviewing. The brands definitely have final say, but we are we are employing them within our business.

Okay. Other questions? Raise your hand.

We Hey have one

guys, I was just curious, how does the direct to consumer markets model work? You know, for example, if you connect brands straight to the consumer, how do you get paid? Like, does what are the numbers? Yeah.

So our model is is commission based. So whenever the brand has a sale, that could be consumer, it could be the monopolies, it could be to restaurant or bar, What we do is that we take care of all the back office, we ship the products, and once the product has been delivered, we take the order value, deduct the taxes, report those to the different tax agencies in Sweden, Germany, etcetera, and then we pay out to the brands. But we take a smaller margin than of course, we take a smaller margin than the distributors and importers because the brands also need to have room for sales and marketing activities. And they're in charge of the brand building.

Awesome. Thank you. I think I just didn't understand earlier on that you control the process. So, yeah, makes sense now.

All right. Anybody? Any other questions? All right. Well, then I'm going to ask one or two more to close out here.

Really, I just want to get to sort of what are your most important takeaways for this process of establishing a distribution relationship and getting it right.

Shall I start? I would say in a nutshell, it's focused on the sell out. I always say sell the first bottle with the second one in mind. If you know that person is not going to sell out, don't sell it to them. If you know that person is not going to work on it, whether it's a distributor or an importer, whoever it is, am I going to help them sell it out?

Because the sellout drives the sell back in. But otherwise, you're just like stuffing them up and nobody wants to have dusty boxes wherever that warehouse is. It's an importer, It's it's in a bonding warehouse. It's in a cellar, in a pub. Whatever that is, know, like, nobody wants to have these dusty bottles that you curse,

you know, at the end

of the day.

Yeah. For sure.

I'll I'll jump in. So, I mean, I should start start by saying we're open for business. I mean, like, we we are always open to new brands. We we we've taken on new brands every year. There is a, I wouldn't say, a hard and fast criteria to what we're looking for.

But come to us and say prepared. Come to us and you've done the homework. Why is The UK relevant for your brand? Why is it gonna be relevant for us? Why does The UK market need this thing when we have thousands and tens of thousands of other brands?

Why does The UK market need yours, and what are you going to do to help support and build it? Come to us with a really good plan. We'll always take a meeting.

Okay. I like it. Soren?

Yeah. I I I'd say I mentioned it before, but don't expect importers and distributors to build the brand for you. Take charge. You're the one in the driver's seat. So take charge and make sure you keep investing and that the distributors and importers you work with, they understand and see the value in your brand.

Keep delivering value to them.

All right. Wonderful. Well, we'll wrap it up there, guys. If there's no more questions, thank you so much for your expertise and wealth of knowledge. We appreciate it.

Thank you.

Give them a round of applause.

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