Expert: Eric Hofer - 11/16/2006

Question
I want to become a distributor for a beer from MS and Id like to market and sell it in AL How must I do this?

Answer
Hello,

Interstate Beer Distribution is outside of my direct expertise, but I can see some initial steps on which I'd enquire.

1) You need to know about the laws, both for the 2 states involved; and federal law as you are trading between states.  Alcohol has special rules such that product might be kept in a bonded warehouse; and interstate trade also brings up some queries.  For this, consult a lawyer.  

2) Beer doesn't necessarily transport well; review with the brewer his rules for his current transport and storage.  He'll have rules about heat, humidity, exposure to light.

3) Determine how you're going to finance this endeavour.  You might be able to get the brewer to offer product on consignment (in the hopes that you'll get his product sold in a new market).  

3.1) Model the capital costs; given the shelf time, etc., I'd do a week by week model - e.g. week 1, buy the product, week 2, transport and taxes upfront, week 3 in market, etc.  And then by week 16, take x amount back to destroy (and what will you be able to claw back from the taxes, etc.)

4) Look at pre-selling your initial distribution.  Determine some major outlets that can swallow (forgive the pun), around 40% of your shipment.  

You'll need to think about how you plan to ship and store.  Are you going to "pre-sell" the product (and then deliver), or will you just drive up with the product and sell off the back of the truck (can you even do this with Beer? ask a lawyer).  Will you set up a distribution point in AL?  And send out trucks from there?

Are these bottles recycled?  How are you going to collect and return such to Mississippi?

Give me your thoughts on the above, and we can continue.