AboutEric Hofer Expertise Over 27 years experience, with 17 in international FMCG in back office operations and in field sales and data collection, including design, development and deployment of Handhelds, Marketing Equipment (Service, Tracking and Return on Investment), reporting and Vending management. Have participated on the launch of operations in new markets, and re-engineered the back office in several countries.
Experience Designed and led the development and deployment internal ERP system for Pepsi used in On-Premise/Vending in 13 markets.
Designed 2 handheld systems, the latest is now deployed in 4 markets internationally.
Re-engineered the back office functions (settlements, despatch, invoicing, credit control, etc) for over 20 snack, confectionary and beverage operators.
Developing software: Progress, VB, Access, C, Sybase, SA
Organizations Innovative-Selling Solutions
Publications BudapestSun
Education/Credentials State University of New York - BA Economics
NYU - Courant - Graduate work - Computing
Past/Present clients PepsiAmericas
PepsiCola International
PepsiCola Company
British Steel
British Telecom
Britvic (Pepsi's bottler in the UK)
AT&T
BellSouth
Mars Overseas Bottling
Pepsi France
Matutano (Frito-Lay Spain)
Frito-Lay
Pepsi Foods International
Chase Manhattan Bank
Kidder Peabody
National Power
SmithKline Beecham
Mars Overseas Bottling (Pepsi Azerbaijan)
A&P Bottling (Pepsi Serbia & Montenegro)
Iberia Bottlers (Pepsi Georgia)
Question Hello. I am interested in opening a beer distributor in PA. I am also interested in selling other non-alcoholic beverages at this location. Can you give me some insight on how I go about starting this business as well as the estimated start-up cost? Thanks.
Answer Nelson,
I'm sitting in central Europe and am more in FMCG - specifically soft drinks, snacks, cigarettes, etc. and AM NOT an expert on the laws of Pennsylvania (I suspect that's what you mean by PA), so I cannot help you on that account - other than what I've already written about the sites I was able to find for others also enquiring.
You ask though about setting up a distributor, here I can be of some help - though I cannot estimate the costs for your locale.
While I can give you ideas on the cost drivers, you must build your own financial model. If you cannot do this, then reconsider this vocation as it's a pre-req. The drivers you should consider are:-
- warehousing - the facilities, insurance, equipment (eg. forklift or pallet movers), deposit items (pallets, crates), utilities, bonding (for alcohol)
- back office - accounting staff, routing & despatch, settlements, order taking
- sales reps - pre-sell, route-sell, tele-sales; commission base vs salary (and the proportion)
- logistics - trucks (usually at least 50K per vehicle), fuel, maintenance, systems, staffing
- stock on floor
- days to pay (how many days your suppliers will give)
- customer credit (how many days you give)
- cost of capital (if you have to borrow to get working capital)
- promotional plans - how you plan to market, what you intend to give-away, etc.
- external support - accounting fees, municipal taxes, etc.
Additionally, you need a strategy as to how you're going to develop your client base. I would expect that most of the brands you're thinking of distributing are already covered in the "easy" areas in which to distribute, leaving you the marginal territories (see "The Underground Economist" by Hartford for a discussion on such); meaning you'll have to build business along the marginal periphery. It's for this reason that you see others "buying into" existing distribution businesses.
Distributing product is a capital intensive. Even if you deal on consignment, you generally need to assure those granting you credit that you can make good if you cannot offload your inventory. To compare, we have a startup (3 years in) client not too far away (we provide her with her order processing and general business consultancy). She's got 2 pre-sellers and 3 trucks (based around Prague); her main client is a major manufacturer that cannot afford to work the marginal territories - and she makes the bulk of her money delivering their product augmented with about 5000 other skus.
Now her floor inventory alone ties up over a 1M (million) USD; her other operating costs are staff, salaries, vehicle repair, etc. Locally this must be running her about 25K per month + taxes and I'd guess her monthly nut must be over 40K (and she's not even in the US where people earn triple of what they do here).
(BTW, she's really good in Excel!)
As I said, her unique selling proposition is to deliver for the 1 major (adding other products) to marginal outlets. Without this relationship, she would never have got too far. This brings me back to how you plan to build your business. Can you give me some ideas as to what you can offer that differs from what is already in the market? Are you already in the business? Do you have relationships to leverage?
