Expert: Eric Hofer - 9/15/2009

Question
Hi. I am from PA also but have been living in Alaska for the past three years. What steps and licenses must i get to open a beer distributor in Alaska? And Once i do How do I start orderind product?

Answer
Hello,

The steps will likely be the same in Alaska as in Pennsylvania.  

There'll be a state agency that regulates and licenses; as far as I could see - from a limited scan, there's not much regulation.

http://www.legis.state.ak.us/cgi-bin/folioisa.dll/stattx05/query=*/doc/%7Bt291%7...

I suggest contacting your lawyer in that state for more info.

As to the steps to go into business:-
- determine your market, pricing, etc.
- test that you'll have outlets to serve
- determine cost of goods, warehousing, etc.
- determine your costs to serve (e.g. sales rep, vehicles, back office, routing, etc.)
- model the costs

Another point for general info is www.beertown.org.

Given the geography, I'd imagine that cost to serve will be higher than in more densely populated areas; and given the demand and what I would expect to be a small market, you'll have intense competition from the few local distributors who will have age-old relationships with the few outlets that exist.

Hence, it'll depend upon your indigenous connections and some guaranteed deals to get your business going.

Your other challenge will be that many manufacturers give exclusive term deals for geographies.  These'll be the products already established in the market and with presence, (e.g. "marketed," advertised, etc.).  You shouldn't assume that you'll be able to prise these away from the established distributors.

If you then decide to look for un-marketed brands, then there'll likely be an expectation that you cover part of the marketing spend.

Unfortunately a few scant paragraphs isn't going to give you the insights or experience needed to go into business successfully.  And given the capital involved, you want a high probability of success (imagine, for a moment, yo'll have to hold 1000s of cases of beer, have vehicles, staff, warehousing, systems and working cash to pay bills....)

I expect given the climate, density and relationships, you'll need more ideas on how business is transacted in that part of the country, where the opportunities are, what products are not available and in demand (and why); how to develop and manage your sales and logistics teams.  Etc.

Its worth studying up on Alaska and beer distribution in general.  Get to know who the competitors are, how they developed, the brands they cover etc.  

When it comes to putting together the back office systems, see www.salessuite.net as they can help with the administrative stuff; and can offer consultancy to model the business.

I'd like to know more about your rationale, given the competition and per capita, for thinking that there's an opportunity in Alaska.  With that, I might be able to go further.