Cutting Out the Middleman: Self-Distribution for PA Beer, Wine, and Spirits

No More Middle Man: Finding Efficiency Through Self-Distribution in Pennsylvania

The alcohol industry is rife with middlemen and consolidation, making it nearly impossible for independent alcohol producers to maintain healthy margins and grow their Pennsylvania-based businesses. However, self-distribution offers a opportunity to bypass traditional channels and reclaim profit margins.

For example, the Pennsylvania Liquor Control Board (PLCB) typically applies a 30% markup on products sold in state-operated Fine Wine & Good Spirits stores. This margin applies to most alcoholic products, including wine and spirits. Additionally, other fees and taxes inflate the final retail price, such as:

• Handling and freight costs: These vary depending on the product's origin.
• State taxes: Pennsylvania imposes an 18% "Johnstown Flood Tax" on liquor, added to the retail price.
• Excise taxes: Federal excise taxes apply, depending on the product's classification.

These factors collectively contribute to the final price a consumer pays, which can often be double what the manufacturer originally sold the product for.

Beer Distribution Pricing Breakdown

In beer distribution, the markup varies depending on the distributor and market. Generally, beer distributors apply a 20% to 30% markup on the wholesale price when selling to retailers such as bars, restaurants, and liquor stores.

A typical breakdown of beer distribution pricing looks like this:

1. Producer to Distributor: Breweries sell their products to distributors at a price that includes production costs and a profit margin.
2. Distributor Markup: Distributors typically add a 20% to 30% markup to cover their operating costs, such as warehousing, transportation, and sales.
3. Retailer Markup: Retailers then apply an additional markup, usually around 25% to 50%, depending on the market and type of establishment.

For example:

• A case of beer sold by a brewery to a distributor for $20 might be marked up to $25–$26 by the distributor.
• The retailer might then price it at $32–$40 for consumers.

Distributors often control the availability of products by limiting the channels through which they pass. In many cases, brands are blocked from gaining wider availability due to restrictive contracts. Brands that enter traditional distribution channels often surrender control over pricing and the freedom to decide where and to whom they sell.

The Advantages of Self-Distribution in Pennsylvania

Fortunately, Pennsylvania law allows most in-state producers of beer, wine, and spirits to distribute directly to consumers, bypassing the middleman. Through this self-distribution model, producers can sell directly to their customers at lower prices, retaining more of their margin than in traditional distribution models.

Benefits of Self-Distribution:

• Lower Costs: Producers avoid the significant markups imposed by middlemen and state-controlled outlets.
• Pricing Control: Producers can set their own pricing, improving their profitability.
• Direct Customer Relationships: Self-distribution allows for a closer connection with retailers and consumers, fostering brand loyalty and improving customer feedback.

However, self-distribution is not without its challenges. Pennsylvania brands still need to manage logistics, delivery, sales support, customer service, communication, and financial transactions—areas traditionally handled by distributors.

Bevrock: Overcoming the Challenges of Self-Distribution

At Bevrock, we address these challenges for self-distributing brands to help them capitalize on on-premise (wholesale) trade.

Many Hands Make Light Work: The Power of Community in Self-Distribution

A community of self-distributors working together can significantly enhance efficiency and brand visibility. That sounds revolutionary, right? But how?

A Centralized Online Ordering Platform

A centralized platform simplifies the sales process and gives buyers a modern, convenient portal to place orders for one or multiple brands. Many buyers don’t have the time or bandwidth to deal with numerous self-distributing brands. A single platform makes buying easier, helping self-distributors compete more effectively.

Streamlined Communication and Service

A centralized platform also provides a single point of contact for service issues, updates, and requests across multiple brands. Training new purchasing leads on a single platform is far easier than juggling multiple contacts for different brands. For example:

• Calling Jimmy for this beer,
• Texting Joe for this liquor, and
• Emailing Sam for this wine.

What happens if a contact is outdated or doesn’t respond? Likely, it results in a lost sale.

Logistics Flexibility

With self-distribution, producers have the choice to either manage their own delivery or pay for a third-party provider. This flexibility allows them to select the best rate for each sale. Pennsylvania has multiple bonded and licensed alcohol delivery companies willing to offer discounted group rates. A single self-distributor may not have the volume to negotiate discounts, but a community of self-distributors can—and delivery companies will compete for their business.

Promoting New Category Sales

Centralizing buyers can also drive new category sales and encourage competition with traditional distribution models. Once buyers are exposed to the platform and ordering method, they tend to expand their purchases beyond the original product they were introduced to. For instance, a buyer who purchases Brand X gin on Bevrock may, over time, add beer and other products to their orders.

Bevrock: Empowering Pennsylvania's Self-Distributing Brands

At Bevrock, we’ve created a platform where Pennsylvania's self-distributing alcohol brands can come together as a community. We don’t interfere with your margins. We don’t apply markups or charge commissions. We don’t lock brands into long-term contracts, and we don’t dictate pricing or delivery costs.

What we offer is a subscription-based platform that allows you to list your products and provide customer service. It’s up to each brand to use this tool to give their customers options, market their brand, and strengthen their margins.

Join Bevrock and Be Part of the Revolution

Self-distribution doesn’t have to be a solo journey. Join Bevrock, preserve your margins, and most importantly, tell your friends. A community is how independent brands can thrive and revolutionize the alcohol distribution industry. Together, we can reshape the future of craft alcohol distribution and keep the power where it belongs—with the producers.

FAQs

1. How does the Pennsylvania Liquor Control Board (PLCB) markup affect alcohol prices? The PLCB typically applies a 30% markup on most wine and spirits sold in Fine Wine & Good Spirits stores, adding to other state and federal taxes.

2. What is self-distribution, and how does it benefit Pennsylvania alcohol producers? Self-distribution allows producers to bypass traditional distributors and sell directly to retailers and consumers, providing more control over pricing and profits.

3. What challenges do self-distributing alcohol brands face in Pennsylvania? Brands must manage logistics, deliveries, sales support, and customer service, which are typically handled by distributors. However, platforms like Bevrock help address these challenges.

4. How does Bevrock help self-distributing brands in Pennsylvania? Bevrock offers a centralized platform where self-distributors can manage orders, streamline communication, and access competitive delivery rates, all without interfering with their margins.

5. Can a centralized platform like Bevrock promote new sales categories? Yes, centralizing buyers often leads to expanded purchases across categories. For example, a customer initially ordering gin may add beer or other products over time.