Liberating the Alcohol Distribution System

LibDib—The Web-Based Distribution Platform

The actual name of the company setting out to address the booze business wholesaler problems is Liberation Distribution (known as LibDib). The Founder/CEO is Cheryl Durzy and I spoke to her at length recently and, let me tell you, her business model could very well be a game changer in how beer, wine, and spirits come to market.

Cheryl has close to 20 years’ experience in the wine industry, managing wholesalers of all sizes, and learned firsthand what a nightmare it is for a small company to get to the shelves of restaurants, bars, and stores. She set out to fix the problem.

I’m very impressed with her web-based platform and think it’s a major positive development for producers (she calls them Makers) and restaurants, bars, and retail shops (RB&R). As Cheryl puts it, “Our goal is to make it easier for small businesses (Makers) to do business with other small businesses (RB&R).

But, as you’re about to learn, it’s much more than that. It’s a boon to the producers, the retailers, the consumer, and, even the current wholesalers.

The Problem

First, the background, as I’m sure nearly all of you know.

The three-tier system of alcohol distribution was set up after Prohibition and consists of producers, distributors, and retailers. Producers can only sell to wholesale distributors who, in turn, can only sell to retailers who sell to consumers.

The system favors wholesalers, especially in view of the consolidation of this tier—which has reduced the number significantly and increased their size. At the same time, it favors the large producers, who have the clout to get attention. Both work closely together for obvious mutual benefit. As I’ve written many times before, “follow the money.” The produce-wholesaler business model is based on volume; the distributor sales rep compensation is based on volume as well. If you were a sales person for a large distributor, which would you focus on—a 3 bottle placement of a craft product or a hand truck of a leading selling brand? Let’s be fair; they are in business to make money,

As a result, small and mid-sized wine, beer, and spirits producers have limited distribution and face many obstacles. Often the large distributors will turn them down or worse, take them on and not pay attention.

Oh, and don’t forget the small RB&R operator who also suffers from the focus on bigness. I follow many bartenders and managers on Facebook and Twitter and there are complaints aplenty about delayed shipments around holidays and long weekends when they can’t get their craft products their customers want. As one prominent Food and Beverage manager told me, “my customers come here for boutique brands that are not mainstream … and getting a timely delivery around the holidays is a nightmare.”

According to Cheryl:

Efforts to change distribution laws have been ineffective, however the market is ripe for disruption. Just as the hotel and transportation industries were disrupted by technology, the alcohol distribution market now has a technology platform that is shaking things up with a new option for small to mid-sized Makers.

The LibDib Solution

If you look at what the platform offers both producers and accounts, I think it’s very impressive. So much so that I have suggested to a number of startup clients of mine that they give this serious consideration.

Currently, LibDib is operating in CA and NY (with more markets on the way) and here’s how it works for producers:

  • A producer enters their information and license online.
  • Product is stored at a producer’s location including their production facility, personal warehouse or third party warehouse, depending on the producer’s choice.
  • It’s delivered by a common carrier, also based on producer’s choice.
  • The charge/fee from LibDib is 15% – 20%, less than what other distributors and wholesalers currently charge.
  • There are no bill backs, no aging inventory, and no buying back product.
  • Producers are free to leave LibDib at will; they will not enforce Franchise Laws. This makes them effective as an “incubator.”
  • They handle the billing, collection, and reporting, which makes them a virtual back office.
  • A producer can invite any account to purchase their product by sending them a link to the LibDib site. (See this video.)
  • And, LibDib is developing a team of platform sales people whose role will be to recruit bars, restaurants and retail stores. These folks can ultimately become brokers and sales people for the brands.

The accounts benefit by being able to buy what they want and when they want it. There are no minimums. There is no middleman, since the accounts can communicate directly with producers through the LibDib platform. Sales materials and POS are current and easily downloadable. Best of all, in my view, an account can provide the experience of unique, local and limited available products, with no hassle.

As a consumer, I’m perfectly happy buying Buffalo Trace or Bulleit Bourbon, but often I want a Koval or Dad’s Hat whiskey and can’t get it. It would be nice to suggest to my retailer or favorite drinking hole, that it’s pretty simple for them to stock less mainstream brands.

Other Potential Winners

When I was at Seagram, new products, no matter the potential, were an annoyance. It meant deflection of assets—people, money, and other resources—that could be applied to mainstream brand growth and, making the annual sales plan. That problem still exists, although companies like Diageo and Pernod Ricard have established venture groups to facilitate traction from a new brand or idea. But, at the same time, wholesalers still have to deflect their resources to address a fledgling brand’s needs. Oh sure, there are dedicated craft and startup resources at the distributor level but not all are equally effective at building brands.

It seems to me that LibDib, with its incubator capability, just might be the answer for the big boys. I know that if I were still at Seagram, I’d definitely give it a shot.

Finally, wholesalers themselves can benefit from LibDib. It’s a way to test market a new product before taking it on. It can augment and amplify the efforts of craft divisions and personnel. And, it can lift the negative feelings and imagery surrounding how and why large wholesalers overlook small, startup brands.

Like I said, LibDib has the potential to be a real game changer.

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You Don’t Have to be Jewish…

The Whisky Jewbilee Annual Event

For the past five years, Josh Hatton and Jason Johnstone-Yellin have been holding an event involving whisk(e)y tastings, education, and an overall fun evening. On June 15, at Studio 450, they will have their 2017 New York City show. (Other shows are in Chicago and Seattle.)

I’ve been intrigued with this event and set out to learn more about it by contacting Josh and talking to previous attendees and industry insiders.

Let’s start with their simple description from their website:

“The world famous Whisky Jewbilee is a nationwide parade of top-shelf spirits and fine kosher dining for whisky lovers of any faith.

I also learned that the Whisky Jewbilee is considered one of “the world’s top 10 whisky shows,” by The Spirits Business.”

Many of the people I spoke with told me previous shows have had huge turnouts and they consider the event to be top notch.

The Organizers

The Whisky Jewbilee is one of three businesses owned by the Jewish Whisky Company LLC, an umbrella organization that also owns two other companies—Whisky Geek Tours of Scotland and Single Cask Nation. The latter is an independent bottler that describes itself as follows:

Single Cask Nation began as a social fellowship or membership society organized around the right to purchase rare, fine single cask whiskies under the Single Cask Nation label.  More than a mere club, Single Cask Nation represents a unique virtual community in which members share a common affinity for the quality whiskies and other spirits of the world.

The idea is as old as scotch whisky itself. Johnnie Walker, Chivas Brothers and many others began as purveyors selling whisky from various distillers. Single Cask Nation has some interesting offerings. You might want to check it out.

Josh Hatton (L) and Jason Johnstone-Yellin (R)

The event—Jews and Booze

You might not realize it or never thought about the fact that members of the Jewish faith love whisk(e)y. A June 2013 NY times article, had this to say:

“Whiskey has numerous fan bases, but few are more devoted — and arguably less noticed by the press and public — than Jews, particularly observant Jews. Synagogues are increasingly organizing events around whiskey, and whiskey makers are reaching out to the Jewish market.”

In fact, many religious Jews wanted to attend Whisky Fest but could not because it’s held on Friday and Saturday nights. So, Whisky Jewbilee was launched in 2012 (on a Thursday night) with the blessing of the Whisky Fest people. It grew significantly over the years.

Today, the event will cap at 450 attendees and 80 companies/brands will be present with roughly 300 whisk(e)y SKUs (individual brands). But check this out—this is not a drinking event as much as it is a knowledge event and a one to one dialogue between producer and consumer. You won’t find beautiful people from central casting behind the tables or actors mindlessly spewing memorized lines. What you will find are whisky aficionados and well-informed representatives of the distilleries.

By the way, many marketers have told me that kosher consumers are very brand loyal. Perhaps more so than many other market segments.

About that Kosher thing…

I’m far from an expert on Judaica matters but I couldn’t help but wonder about what possibly could be in whisk(e)y that would violate the rules of kosher. So, I spoke with Josh about it and did some research.

What I learned is that there is nothing in whisk(e)y to make it non-kosher. Wine on the other hand, because of its sacramental use, has strict kosher rules. But with a few minor exceptions, nearly all whiskies are okay.

The organizers welcome all whiskies regardless of maturation style. This means that whiskies matured in sherry, port or other wine based casks are perfectly fine and will be present at Whisky Jewbilee. They believe all whisk(e)y to be kosher-by-nature unless the whisk(e)y is flavored. At their event, only the food is under kosher supervision.

The flavored whisky situation has to do with the fact that the flavorings used to augment the whiskey taste might contain non-kosher elements like glycerin. It would take certification to assure observant Jews that the glycerin is a vegetable rather than animal based oil.

But you will find some amazing whiskies there including some of my favorites from Brenne Whisky, Koval Distillery, FEW Spirits, and the best in the world, including—Bowmore, Glen Grant, Four Roses, Michter’s, High West, and many more.

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The organizers of the event have invited me to be there and part 2 of this article will be after June 15. If you attend, please look for me and say hi.

The Chicago Whisky Jewbilee will be on November 9 at Artifact Events. The Seattle show will be some time in February or March.

And, remember, you don’t have to be Jewish to attend. Just enjoy!

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Napa or Sonoma: Which to Visit?

Perhaps Both

A number of friends and readers have asked me about which California Wine Country is most worth a vacation visit. I’ve gotten this question many times and since it persists year after year and this time struck close to home, I figured I ought to look into it further and write about it.

So, I contacted an internet buddy (what we used to call ‘pen pal’ back in the day) and asked him about it. What follows then, is a conversation between me and Mark Davis, the managing partner of Tango Tours.

Photo Credit: Brocken Inaglory via Tango Tours

Tango Tours

Mark has been running the company since 2014 after 20 years in the travel industry. He was also in the Tango Trading Company which specialized in wines of Argentina. Tango Tours is a luxury travel company that offers exclusive culinary and wine experiences in Argentina, Chile and Napa Valley. Who better to ask than someone whose business is tourism and hospitality.

When I first posed the question of which one to visit in California, Mark pointed out that he loves both then went on to say, “If you have to choose between the two, the decision should be based on your preferences. The two have very distinct features, and you may prefer the qualities of one over the other.”

This interview is aimed at just that—the basic differences between Napa and Sonoma Valley so that you can make an informed decision.

Let’s start with some basic differences. What are they?

“Napa” may refer to the City of Napa or Napa County. “Napa Valley,” however, is the wine grape-growing region, which is an American Viticulture Area (AVA). When we make reference to “Napa Valley,” we mean the Napa Valley AVA, which includes 16 sub-AVAs, and over 400 wineries.

Likewise, “Sonoma” or Sonoma County may refer to the City of Sonoma, Healdsburg or Santa Rosa. Sonoma County includes 17 AVAs, including the Sonoma Valley AVA.

How are the wineries different?

Sonoma and Napa Valley have nearly the same number of wineries. However, the ones in Napa are a lot closer together than those in Sonoma, which are spread out throughout the region.

Napa Valley wineries exude the glitz and glamor of the American wine scene. The names of some Napa wineries even come up when talking about the best wineries in the world. At the famous, “Judgment of Paris” in 1976, two Napa Valley wines were rated the best in their respective categories, beating out their French counterparts.

Wine tastings can be pretty expensive in Napa, with the costs going up if the wines are served with food.

Sonoma Valley wineries, on the other hand, are much more laid-back and relaxed. Also, expect fewer crowds, and the prices to be much lower in Sonoma. The tasting fees tend to decrease as you get farther from the main roads.

And the wines themselves? How are they different?

Napa Valley mainly focuses on the production of different varieties of Cabernet Sauvignon and Bordeaux varietals, Chardonnay and Sauvignon Blanc. Of course Cabs and Chardonnays can be found in Sonoma Valley. But Sonoma Valley, on the other hand, produces everything from Charbono (also known as Douce noir) to Gewürztraminer, and from Pinot Noir to Zinfandel. So, if Cabs and Chardonnays are your thing, you may want to try a Napa Valley wine tour. But if you want a more varied wine tasting experience, head to Sonoma.

What about food?

Napa Valley has the highest per capita concentration of Michelin Starred restaurants of any wine-producing region in the world. Napa Valley focuses more on fine dining, with a large number of restaurants offering refined exotic dishes.

Yountville, a town in Napa, provides the biggest culinary punch of the region. In the city of Napa you can visit Oxbow Market, which is a covered market hall, to pick up some snacks, like freshly baked bread and cheese or herbs and olive oil. Or if you would like to have a picnic at a winery, try the Oakville Grocery or Dean & Deluca for sandwiches and prepared foods.

The culinary scene in Sonoma is quite different. However, it has its own unique standards in terms of food. The Shed in Sonoma Valley is the counterpart of Napa’s Oxbow Market. Sonoma also has a Michelin Starred restaurant in Forestville, which gives Yountville’s finest restaurants some tough competition.

However, while Napa is all about fine dining and celebrity chefs, Sonoma offers a simpler experience having most of the dishes prepared from seasonal ingredients.

Aside from eating and drinking, which are my two favorite pastimes, are there differences in what to see or do?

When it comes to activities, Napa Valley is far ahead of Sonoma. But that doesn’t mean you will find nothing to do in Sonoma other than wine tasting.

In Napa, there is the famous Wine Train that takes you on a ride around some of the County’s wineries and town centers. You can also go for a hot air balloon ride, or paddle in the Napa River.

Also, the Golden Haven Spa offers healing mud baths for visitors. The wine blending lessons at Conn Creek Vineyards, or the cooking classes at Whitehall Lane are also popular with visitors. As is shopping on the main street of St. Helena in Napa.

Sonoma also offers a number of outdoor activities, like navigating the county’s waterways in kayaks, attend cooking parties, zip line or hiking through the Armstrong Redwoods Reserve. You can also spend a day at Safari West seeing African animals.

Despite these attractions, Sonoma is a lot quieter than Napa, which is always buzzing with activities.

If you want your wine tasting experience to be a grand adventure, and you’re ready to spend more, take a trip to Napa Valley.

If you’re looking for a more relaxed time, plan a trip to Sonoma. Also, since it is less expensive, you can spend more days in Sonoma Valley.

Thank you, Mark. You can reach Tango Tours here.

For more information about the differences between the two, you might want to visit Wine Folly.

Image Source: By traveldudes via Tango Tours
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