Liquor Industry 101 – Dictionary of Liquor / Alcohol Industry Terms

Posted on: June 12th, 2023 by aliciavargo

Common terms of the US Beverage Industry

Terms or “Lingo” can be confusing in the Alcohol Beverage industry and different from what you might have in your market or country. Below is an overview of the common verbiage used in the industry:

Hand Sells-Demo professionals to stand in the aisles and hand sell your brands to consumers, known as a “Dry Demo”.

Wet Demos-Sampling consumers on your brands in a retail store or restaurant

DTC-Direct to consumer-websites that sell direct, another option for your brands

On Premise-Restaurants

Off Premise-Retail Stores

PO-Post Offs-immediate discount given to a distributor on a shipment of goods

SPA-Special Purchase Allowances-given to a distributor to purchase more quantity

DA-Depletion Allowances-given to a distributor, the more they sell, the more dollar support your brand gives a distributor by the case

OND-October, November and December where approx. 70% of the business is done for the calendar year in the US Market

FOB-Freight on Board-your cost per case

Landed or Laid In-your cost+ freight and taxes that a distributor calculates prior to getting to their List Price

List Price- the distributor markup prior to discounting the product to the retailer or restaurant

Margins-typical % of the profit a distributor or on or off-premise account will make

Mark-up- work on % markup instead of% margin, need to clarify before working your strategy.

Shipments-actual total cases shipped

Depletions-how many cases are depleted (sold) per month or year which a distributor should report monthly

JIT-Just in time inventory-the # of cases a distributor will order since they do not want to carry too much inventory

Terms-typically a distributor will ask for 30-90 days terms.  The distributor will ask for extended terms like 45-90 days with a new brand to pay their bill.  The money will be facilitated through an Importer and the Importer will pay the bill to the supplier (you).

Clear and Deliver or Distribute-Clearing Model: distributor not representing a brand with their sales staff, but for clearing and delivering for a supplier, thus taking a smaller margin (example 13-18%) instead of their regular margin of 30%. Distributing: a distributor represents your brand and makes a margin of around 30%.  Their salesforce sells the brand for you, which is expensive for a wholesaler to do.  You can see why a distributor is picky about what they represent.  They only want to represent brands that they know are going to be successful.  The distributor compensates their reps, delivers and many more expenses are involved in distribution.  Then the retailer marks up the brand=30% distributor-30% markup retailer=60% markup. In many instances, a brand has to prove success prior to a distributor wanting to represent them.

DI-Direct Import from your business to the distributor, typically a healthy discount given to the distributor to make more money on the brand.  This typically only works with a brand that is built or has a high rating.

Importation and Compliance-what you will need prior to entering the US Market

Label Approval-TTB- https://www.ttb.gov/offices/alfd.shtml

Padding-increasing your FOB to support the broker on commission, we don’t necessarily recommend this route, use your marketing budget to fund a brand developer

Sourced out supplier rep-a brand developer that works on 1099.  Their business pays their own taxes so your business does not have the cumbersome payroll taxes, employee benefits, or workman’s comp fees.

Brand Ambassador-A demo, hand sell, event person that promotes your brand.  They can also take the form of managing your brand in markets

Influencers: the latest trend of celebrities like Master Mixologists, Bartenders, Journalists, and Media.  Most of these Influencers garner their fame from their social media following on their own Blogs, Facebook, Twitter, Instagram, Linkedin, and Youtube.

Cross Market-cross marketing with an established brand for quick brand recognition.  This typically costs money to do this but can be well worth the spend.

PODS-Points of distribution, how many placements your brand has in stores or restaurants

Organic Marketing-Social Media, clubs, and any type of promotional venue. For example, if you represent a Whiskey brand, one can find cigar shops and Men’s Hair Salons to cross-market and organically market your brand.  If you have a Champagne we will organically market with Bridal Shops. Your Vodka could be floor stacked in a retail store located next to Ginger Beer and promote Moscow Mules.

SEO-Search engine optimization makes it easy for consumers, retailers, and distributors to find your brands. This is a website or brand (word)optimization so if a consumer or retailer types into Google, for example, Whiskey-your brand may come up on the first or second page instead of the 10^th page. Research shows a consumer does not go past a 2^nd or 3^rd page.