236 – How the Distribution Game is Played with Mike Bridges


It’s the topic everyone loves to hear about, but hardly anyone is willing to talk about. And that’s the inside secrets of distribution. Distributors “hold all the chips” so it’s time we find out how deals are made. We sit down with Mike Bridges, who owns Jack’s Liquor Beer Wine in Fremont, Nebraska and was once a rep for Nebraska Wine and Spirits which was later purchased by Republic. He talks about what really happens behind those closed doors, who gets allocations (high volume stores vs small mom and pop shops), and consumer frustrations. There’s a lot of ground to cover in this one.

Show Notes:

  • This week’s Above the Char with Fred Minnick talks about the smoked grain debate.
  • How did you get into bourbon?
  • Tell us about your time in the food and beverage industry.
  • How did you transition into a distributor position?
  • What was the distributor called at that time?
  • How do allocations work?
  • Is there any transparency between the rep and the business?
  • Do they tell you how you can get the allocated items?
  • What motivates a distributor to sell products?
  • How do distributors spend money to get retailers to carry products?
  • Talk about high volume retailers vs mom and pop retailers.
  • Do your distributors take price gouging seriously?
  • How much blame are you putting on the distillers for not getting allocated items? Are they using the distributors to take the blame?
  • Would a distributor advise a brand to raise a price?
  • Do stores ever do favors for distributors in order to get allocated items?
  • What would be a better system?
  • Are allocations really down every year?
  • How has your view changed as a retailer now?

Transcription:

0:00
I’m not bashing the wholesaler so to speak, you know, I consider him like my wife can live with her can live without her. I mean

0:21
what’s up everybody it is Episode 236 of bourbon pursuit. I’m kenny. And we got some news to cover, so let’s get to it. The Kentucky Derby Museum is back with the legend series. It offers three nights of casual in depth conversations with pioneers and titans of the bourbon industry. And each night in the series is hosted by our very own Fred MiniK in each evening features a different bourbon master who handpicks a selection of Bourbons to go and taste or each legend shares his or her expertise and engages with guests through their senses as they taste fine Bourbons and enjoy appetizers as well, on January 23. We’ll have Peggy noe Stevens who was our guest back on episode 198.

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into a fourth on Thursday, January 30. We have none other than Freddy Johnson who we all know and love. And he’s been back on episode 59 in 115. And wrapping it up on February 6 is Connor Driscoll who you heard most recently on episode 231. tickets to each event is $75 or there is a complete package for $200. You can buy your tickets right now by going online to Derby museum.org Woodford Reserve has released its annual expression of the double double oak bourbon. It’s part of its annual series that celebrates master distiller Chris Moore’s his commitment to innovation and craftsmanship. double double oak is the result of finishing fully mature, Woodford Reserve and double oak bourbon for an additional year and a second heavily toasted but lightly charred new oak barrel. The extra year in the barrel creates a bourbon that is distinctly spicier than its original counterpart, known for its sweeter taste and finish. The product is available in limited quantities at Woodford Reserve distillery.

2:00
And select liquor stores around Kentucky coming in at 90.4 proof with a suggested retail price of 4999 for a 375 ml bottle. Oklahoma Attorney General Mike hunter issued an opinion Tuesday that could affect who could potentially obtain a license to sell alcohol and the state. residency requirements for obtaining a retail license for wine and spirits or even though wholesalers license and Oklahoma are likely to be found in violation of the Commerce Clause and the US Constitution. Oklahoma currently has a five year residency requirement for those seeking to obtain a license to sell Wine and Spirits at retail or wholesale level. In other words, a liquor store owner has to approve he or she has been a resident for five years before applying for the retail license. The same goes to wholesalers. Tennessee had this similar requirement of two years residency for some liquor license. And that rule was challenged in the US Supreme Court deemed it unconstitutional back in 2019. So we’ll see where this is gonna play out this weekend.

3:00
celebrates 160 years of early times whiskey. So here’s a quick history lesson. early times was originally produced using the clinical early times method of whiskey making, and this consisted of mashing grain and small tubs and boiling beer and whiskey and copper stills over open fires. This unique method of production continued until 1918. With prohibition, five years barrels of mature early times whiskey sat idle in the distilleries, classic ironclad maturation warehouses, in dire need of whiskey to operate as a bottler and wholesaler during Prohibition owlsley Brown owner of brown Forman acquired early time stocks in 1923, the company’s first ever purchased brand, and it resumed sales under its medicinal whiskey permit. As prohibition came to a close brown Forman geared up to begin distilling early times once again. To keep up with the bourbon brands growth brown Forman acquired the old Kentucky distillery which later became early times distillery providing a brand a home of its own.

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Whiskey popularity grew early times one of the first brands to recognize and capitalize on the mixability of bourbon and cocktail trends, which led to become the number one Kentucky bourbon in America back in 1953. Today the historic plant has now named the brown Forman distillery. But it remains home of early times and stands as the longest continually operating distillery under the same ownership in Kentucky. This year early times is honoring their tradition with a throwback advertisement that once said, The whiskey that made Kentucky whiskeys famous. If you follow bourbon pursuit on any of our social handles, you seen that Ryan and I we took a quick trip to Woodinville whiskey company last week. We took the 6am flight from Louisville to Seattle drove up to Woodinville, which is surrounded by 100 plus wineries and sat down with the co founder Brett Carlyle and got to know more about their story and what they’re producing for an upcoming podcast. Then after that we tasted through some barrels and selected to that will become prestigious

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series, y’all, Ryan and I, we can’t even begin to describe how good their bourbon is. They’re doing everything right with locally sourced grains, a finely tuned still an operation that was under the guidance of the late great Dave pickerel. He goes going into the barrel at 110 proof aging and Rick structures two hours away that mimic the climate of the Midwest, and nothing is getting pulled until it’s the least five years old. And if you’re in the know already, and you’ve tasted it, then you’re probably already a fan. But we are super excited to be able to get these special barrels into the hands of all of you soon and looking forward to an eventual release from Woodinville whiskey as well. Make sure you follow us on social and Patreon for all the latest updates for pursuit series. For today’s show, it’s one of those podcast topics that people love to hear about. It’s the inside Secrets of the trade that usually no one’s willing to talk about. However, we sit down with Mike bridges. He owns Jack’s liquor, beer and wine in Fremont, Nebraska. He was also once a rep for distributor for

6:00
braska wine and spirits, he talks about what really happens behind those closed door deals. Who gets the allocation? Is it the high volume stores? Or is it the small mom and pop shops? And where does most of that consumer frustration really stem from? We cover a lot of ground in this one, I’m sure you’re really going to like it. You know, we like to see what people think of the show as well. Leaving reviews helps new people searching podcasts, find us. And you can help us by going to rate this podcast.com slash bourbon. And you can leave a review for iTunes, Spotify or pod chaser. We always appreciate seeing these as it helps grow the show and find new listeners. All right, now let’s get on with it. You can sit back and relax. Let’s hear what Joe has to say from barrel bourbon. And then you’ve got Fred minich with above the char.

6:46
It’s Joe from barrell bourbon. Tasting whiskey straight from the barrel was truly a life changing moment for me. In 2013. I launched barrel craft spirits so everyone could have the experience of tasting whiskey, a cast strength next time ask your bartender for

6:59
barrell bourbon.

7:01
I’m Fred MinnicK. And this is above the char. If you follow me on Instagram, you may recall this post I put up a few few months ago. It was when I was in California. Somebody had brought me a bottle of war Bringer mesquite, smoked Southwest bourbon finished in a Sherry cask. I was very excited to taste this because anytime I see mosquito on anything, my mouth starts to water. And I think of my childhood days eating all that great mesquite smoked barbecue sopping up that sauce with a piece of white bread. I love mesquite barbecue, so good. But anyway, I digress. I’m not talking about barbecue. I’m talking about whiskey. So I was very excited to taste this stuff. And which bag did I put it in? I put it in my carry on not my check in so TSA was very glad to take the bottle from me. They actually thanked me later and said they would have a good time with it. So

8:01
You’re listening to say, I hope you enjoyed it, but you also kind of suck. So anyway, I get a bottle sent to me from the company because I really wanted to taste this stuff. And I tasted just the other day and I was kind of like nervous about tasting is because I love mesquite so much that I kind of, I’m always I’m always a little nervous when someone plays around with one of my favorite flavors. And sure enough, it kind of hit the mark. I tasted the musky, you really cannot. You can’t. You can’t taste this without getting a big ol mouthful of mesquite and it got me to thinking what are some other products out there that are using smoke techniques for the grains? Well, there’s actually quite a few. One of my favorite is the MB Roland dark fire they use a dark

9:00
Fire technique to smoke their corn. Dark fires a term that they use in Western Kentucky for a procedure in which they kind of like slow smoke the tobacco before they roll it up and in be rolling, which is in Christian County, Kentucky, applied that nice local technique to their whiskey and it shows and they’re fantastic. But here’s the thing. They are so far left or to the right, of what we anticipate bourbon to taste like that. If you put if you put this in a flight of regular Kentucky bourbon, you know this mesquite smoke bourbon or the dark fire bourbon, you’re going to think it’s flawed if you don’t know it’s got a special smoking technique to it. So over the years, we have had all of these incredible debates about whether or not barrel finishes such as angels envy.

10:00
In fact, urban on now, when you have the smoking techniques being applied, we might have to start applying a new debate to the conversation of what his bourbon is bourbon allowed to have smoke applied to the grains. I think that’s a question. We need to start asking because traditionally it has not been applied to grains. Now it’s, it’s applied throughout in scotch and Irish whiskey. But if we start seeing a political of smoke grains enter Kentucky bourbon or other states Bourbons, then what we’re going to find is there’s going to be all kinds of different flavor profiles in Kentucky bourbon, or Missouri bourbon or whatever type of bourbon. You may think that’s good, some traditionals may think it’s not. Either way. I’m open for

11:00
debate. I think it’s a good conversation to have. So hit me up on Twitter, Instagram or Facebook and let me know your opinion as to whether or not smoked bourbon should in fact be bourbon or should it be called something else? So I look forward to your comments and we may even read them on the air in the next episode of bourbon pursuit. And that’s this week’s above the char. Hey, hit me up on that Twitter, Instagram, and Facebook at Fred minich. Until next week, cheers

11:37
Welcome back to that episode of bourbon pursuit the official podcast of bourbon the trio here tonight talking for a really fun subject because this is actually one that we had talked about it for probably Ryan and I, we probably discussed it for maybe over a year to now of trying to find somebody from the I don’t know it’s tough to kind of say like put an adjective to a

12:00
But from the distributor world, and having to come on the show and kind of reveal some dirty secrets, because it’s, it’s something that’s really, really hard to get, you know, nobody for the actual companies seem to want to talk about it. But we kind of backdoored a little bit to actually make it happen. So I’m kind of really excited to get this juicy scoop on what happens and why liquor stores get certain allocations why some don’t do some play favorites. Some, some maybe do some don’t. I don’t know. But I guess we’ll find out. Uh, you know, what do you all think we’re going to get into tonight, Ryan, I’ll hand it over to you.

12:36
Well, I think distributors are an evil empire and an organized mafia.

12:44
But I you know, with that, I don’t exactly know what all goes on what takes place. So it would be I am interested to see what goes on and what takes place and you know, maybe there’s a world we don’t understand and and why. Maybe

13:00
Our negative outlook on distributors is maybe not the correct one but I have a feeling it might be and so yeah, just bring it to you. You’re already like my magic eight ball I already know what it’s gonna say exact I’m trying to give him the benefit of the doubt you know so that’s why we have them on but I know for sure really excited about because like I said we we hit on distributors all the time and especially being in the business now we’ve made them more so well I mean, let’s give some context of the story like so what what is it that that we’re it let’s not say hate right we’re not hate because we have to work with them. It’s it’s a nice Yeah, well, but kind of talk about like, what is the what what’s what’s the what’s really grinding your gears right now with it? I mean, basically, it’s just a pastor in you know, for big brands, I can totally understand because the distributors out there marketing and selling for you, helping push product but like small brands, it’s really just a pastor and it it seems like they’re just getting a piece of pie just because it’s mandated through law.

14:00
And it just doesn’t seem fair right to the people that are actually making the product don’t make as much money as the distributors or percentage as much as distributors or the retailer. And and you know that’s that’s why I don’t like it. Wish we could all be DC Yep, exactly we got a we got a long way to go until that happens. What about you Fred Do you have a Do you have a probably as a more realistic outlook on love or disdain some of my best friends are distributors like very higher up high very high up in the food chain and San Francisco world spirits competition has several fellow judges who are distributors so I know the business very well. And and I know kind of you know that they are the they are the cogs that really make this this world work. And they also have a very powerful lobby and it’s

15:00
It’s incredible. It’s incredible, because, you know, what a lot of Ryan said is is not untrue. And the distributors would say the same thing.

15:14
You know, big, but at the same time, the reason why distributors are they have so much power is they can always go to like, you know, the government and say like we are the We Are the line of legal age drinking, like you don’t have

15:36
people ensuring that accounts aren’t serving,

15:41
you know, serving to minors and the distributors actively, actually kind of, you know, police that so they they have built in a network in the in this country that our government cannot cover and so when

16:00
It when we ever come to talking about getting rid of distributors, they can always raise their hand and say, well, we’re kind of the reason why your 16 year old isn’t getting drunk all the time. And that and that’s the picture they paint. And you know, maybe it’s accurate, I don’t know, but

16:17
they’re very good at protecting themselves. It kind of sounds like the TSA because the TSA is never actually stopped a terrorist attack there a false sense of security in the day, so I don’t know. I mean, so I’ll give you my TSA story. The, in their defense, I was in, I was unlovable, and a guy ahead of me, had a loaded handgun and shin and as he should know, he should I mean, I think the general populace knows you can’t walk in with a handgun today. This is like a 55 year old guy and he’s like, oh, man, I left him in there. No, I thought it was a my check in. Yeah, I don’t know what happened to him. I mean, I I looked but I never saw

17:00
reports about it, but he, but I don’t know what he was going to do with that. But I know that TSA stopped that guy with a loaded handgun from getting into the low level plane. So Well, that’s a first I’ll give you that.

17:15
Alright, so let’s go ahead and introduce our guests tonight. So tonight we are today, whoever whenever you’re listening to this show, we have Mike bridges. Mike is the minority owner and general manager of Jax liquor and wine in Fremont, Nebraska. So Mike, welcome to the show. Thank you. It’s great to be here. Absolutely. So before we kind of dive into this, you know, I kind of want to give people an understanding of you would always like to start off with one question is, how did you get into bourbon

17:42
to the modern age bourbon, I got into it. When a guy named Brett Atlas stumbled into our store, and he’s, he’s a, he’s a he’s a friend of the show. I think we’re all pretty relatively familiar with him.

17:55
Before that, it was just drinking it but you don’t only walked up to the counter

18:00
With about 17 different bottles of things. And so I started asking questions and, you know, we had some Elijah Craig 12 year old label both sizes, we hit, you know, 750s 175 we had some before 18 years and different things. And that conversation led to another conversation which, you know, he mentored me on things to look for and things to ask my distributor for.

18:23
Oddly enough things that they wouldn’t volunteer to me, unless I, you know, started asking the questions. When I worked for the distributor, six, seven years before that.

18:33
My biggest experience with bourbon is when Maker’s Mark we couldn’t get 175 or leaders because they ran out of juice and they were low on supply. So that would have been 2007 2008. So it was, it was pretty interesting. But yeah, it’s a it’s been a world of change since basically 2015. You know, that let you say that. I don’t even think Maker’s Mark still makes the 1.7

19:00
Five do they favor? Do they ever come back? I can’t remember they do. Absolutely they do now right that’s the number one the number one skew in like you know five or six party martes no

19:15
big ballers up in there then so I guess kind of let’s okay let’s let’s rewind the clocks a little bit, kind of talk about you know your time working in the the food and beverage industry as well because I know you had mentioned that before we started recording. You know, when I was in Phoenix for the 16 years I was there I was at the Venetian resort all 16 years, and was everything from a banquet server all the way up to director destination services when I left and move back to Nebraska where I’m from so that’s kind of where it was, but those years were all spent in the wine world. So when I came back to Nebraska and got my job within Nebraska wine and spirits, I was considered quote unquote a wine expert and did a lot of

20:00
My own wine dinners for my customers and things like that. And again, other than drinking knob Creek back in the day, and learning what Maker’s Mark was when we didn’t have it to sell and getting yelled at by every account.

20:14
That’s kind of where it was and how it went.

20:19
And then so that was at the Venetian and then kind of talk about your transition into working for the distributor side. You know, oddly enough, I just took a director of food and beverage job at the brand new Hilton in downtown Omaha, when I got a call from an old high school coach of mine who was in the distributor business, and asked if I really had any interest in moving to my back to my hometown, as he had a salesman job that he thought I’d be really good for and good at. And that’s how that started. That’s how that came to be. And that was back in 2006. It’s always about knowing the right people. Very true. Nobody, nobody actually applies for a job anymore. It’s just all inside handshakes. I think that’s how it all goes.

21:00
You know, it’s ironic about that I had applied at three different distributorships before that, and never gotten an interview.

21:07
This will show them exactly right. If I didn’t do Fred’s yard, or no Kenny, they would not be part of bourbon pursuit. So there you go, that

21:18
looks nice this year, by the way.

21:21
Let’s see what happens. You know, he actually sharpen my blade on my mower. Fred, does he do that for you? Fred doesn’t know. You know, I actually don’t mow my yard right now.

21:35
So back to conversation here. So you were working. What was the distributor called at that time? Because I know you had mentioned it. It eventually got either bought out or purchased by a larger one. Yeah, at the time it was Nebraska wine and spirits. And then there was also united distillers which was a separate side. So Nebraska Wine and Spirits was being if you will, and united was brown Forman and then Republic national distributing company came into

22:00
State bought both companies and then you had a Falcon and Eagle division in Nebraska, and are in DC. Gotcha. So just that the Empire just keeps growing for, for Republic then correct? Yep. So let’s, um, you know, I guess let’s let’s kind of dive into the meat of the subject here because this is, this is one of the things that people are always fascinated to know more about. And I mean, let’s just kind of just go blunt and straight into it, like, how do allocations work? Like how do people get something of one thing versus something else?

22:35
You know, it’s gonna sound wrong, but it’s pay to play. And I don’t mean illegally pay to play. It’s I asked that question for year three years ago. How do I get more allocated items? How do I get barrel pics? How do I do this stuff? And basically it was support the brands that those portfolios are part of stack them high in the store, and you know, so we did it and we have an owner, a majority

23:00
owner with with endless funds and we bought and stacked and if you came into our store it would, it would kind of probably surprise you for the for the small sizes, the amount of displays we have and how big they are. I know we’re talking bourbon but it’s not odd. We buy 1200 cases of Windsor Canadian at a time just because it’s so popular in Nebraska. I’ve always got 100 beam on the floor. I’ve got 50 to 80 Maker’s Mark. And then you go to Sam’s rack and everything they they do often 200 fireball, you know everybody’s favorite whiskey on the floor. And that’s how we got to where we are. And it really did you know last year when we got to do an O w a barrel a Blanton’s in a Buffalo Trace all at the same time was kind of, if you will, our arrival and yeah, but we had to really invest in that to get to where we were. Then if you fast forward to where we are now. I’ve got some executives from RTC coming out tomorrow because I don’t feel I’m getting what we deserve.

24:01
was certain things that are coming out.

24:04
And based on allocations, so they’ll tell you that but yet, when things like old fits 13 year spring edition come out, every account gets one bottle. So whether you buy a lot or you don’t I know that’s a different distributor. But it gets very frustrating to display what you do and invest what you do, and then sell it and then get the same one bottle allocation everybody else does or the other 60 people in the state and nobody wants to believe that they come into your store and you tell them, Hey, we got one bottle and it went to our best customer. They will not leave you they’ll sit there and argue with you.

24:41
Is there any like transparency that happens between a rep and the business? Because when I when I think about this, you know, I come from a tech background and there’s a lot of stuff out there about like open data collection like the government does it and you have access to be able to see exactly like what’s happening here.

25:00
There, but is everything sort of like, Hey, my name is Jim, I’m your account, whatever you want, you have to go through me. And you say, Jim, I bought, you know, XYZ cases last year, I want to be able to get a, b and c. And he’s like, that’s just not in my calculator. Like, is there something that like, there’s their level of transparency there? Or is it just completely like, all blocked off because of one person? You know, it’s a little of both. You really, it’s constant, constant constant, you know, badgering of that salesperson who then has to get ahold of his boss, who then has to get ahold of his boss. Just recently, As matter of fact, last week, whistlepig became available in the state of Nebraska. Well, we’ve known it’s been coming for about, I don’t know, six weeks. So I texted my salesperson to say, Hey, I hear whistle pigs in stock. When will it show up? He’s like, No, it’s not. And so I screenshot at an event in Lincoln or in Omaha, Nebraska that was doing a launch party for whistlepig

26:00
Yeah no idea and neither did his boss and so that’s why nobody’s get nobody sharing emails is no that’s why they’re coming out to me with me tomorrow you know because then I throw a fit to say listen I’m not saying that I should get all this allocated whistlepig or I should be the first shot at it I just want to be communicated to because we have customers that walk through that door or text or message me all day long about hey, I see whistle pigs here I’m going to stop out and get some oh sorry we don’t have any and then they again some will understand and others flat out call you a liar that oh yeah you did who who got it Brett who got it George who got it you know and they’ll sit there and try to pick off names about who gets what and why they got it.

26:45
So I think up front like say like so this is how many Is it like you said the walkers whiskey. I don’t even know what she said blended whiskey, and this is how many This is what it’s going to take to get on those how allocation was

27:00
Or did they even give you a number to shoot for? Or like, here’s the plan, you know, to get to those?

27:06
Or is it just like, spend as much as you can? And we’ll get over that later. We’ll figure it out. Yeah. That you know what, you just nailed it. It’s like, you know, by everything we have to sell, yeah. In the month each month, we’re going to have deals and not listen. I’m not bashing the wholesaler, so to speak, you know, I consider him like, my wife can live with her can live without her. I mean,

27:30
we need them as much as they need us. And that’s the frustrating part. But so yeah, it’s, you know,

27:39
to start, you know, or one of the little story was two years ago, after all the beats that came out and Pappy allocations came out. They came in into November, wanting to know if I would do a buy on 1792 small batch. And I said, well, what’s the deal and that was something like buy 20 cases get a free and I don’t think they thought I was going to say yes, I said, Well, yeah, that’s

28:00
a no brainer.

28:01
Yeah, they had their bosses with them. And all of a sudden he’s like, yeah, you know, getting the computer, I think we can get him another three GTS is, you know, for doing this. And so I looked at him and I just said, that’s what irritates me. You got extra bottles because I bought this now Come on What will you know, what is the deal here? Why wouldn’t that have been distributed according to who buys and who deserves it? A month ago when it got distributed? Why do you have bottles sitting back? You know, they’ll tell you Oh, we had people that didn’t pick up or, you know, named me one retailer that gets allocated three bottles or something like that, that doesn’t pick it up. We’re going to do it every time. So you know, it’s a little bit frustrating. But yeah, that’s to answer your question. There’s no general number other than, hey, just buy and we’ll make sure you get taken care of so we’re getting taken care of is you know, there’s never enough to go around. You know, if I get last year, probably mix and match.

29:00
13 to 14 bottles of Pappy Van Winkle between the 10 year all the way up to the 23 year. Well, those are gone before they even hit the store. Because we sell them to the to our best customers.

29:11
We don’t play favorites, but I’ve had people come in the store and just yell at me as to why I don’t have the lottery for those. Well, I understand that but at the same time, then how do I explain to one of my regular customers that spends $1,000 a month? Oh, yeah, you’re not going to get any because we’re going to we’re going to raffle these off. So people that don’t shop here get them.

29:33
So let’s go back to your distribution days for a minute. Okay, what was your What was your last year as a distributor? 2013 14 Okay, so you wouldn’t you have you experienced a little bit of the boom you experience some of the rise of the craft, the craft brands. This is something I get told by a lot of craft distillers. Now craft is that you know

29:59
People can, can say it’s good, it’s not good. But the fact is, is they get distribution in a lot of these markets.

30:08
And then the bottles just sit in their warehouse. The distributors do nothing to try and promote the brands or get them in a store or To my knowledge, even put them in a catalog to say, Hey, this is why we have an inventory. They’re just sitting in a warehouse and hoping that and those those distillers are hoping that someone finds out about them.

30:32
What what gets a distributor to get off their ass and try and move product for a supplier? The distiller you know, Fred, I think there’s there’s two ways about that. Oftentimes,

30:48
I read all your guys’s publications and listen and so forth. I learned things from you guys, months before our distributor has a clue. So I will like do a screenshot and say hey here

31:00
A particular product that please look out for me put it on my list. I really want this. And all the way up to the top that respond. Never heard of it. Well, yeah, it’s coming. You know, the most recent one was well, or full proof.

31:13
You know, an Elmer t hundred anniversary or the 100 proof that’s coming. There’s things like that that they don’t know about. So to answer your question, a lot of those craft distilleries and craft products, it has to be something that we as retailers have heard about, that we asked about, and then they will, they’ll research or so to speak and then oh, yeah, I do carry that by the way. Unless somebody is really putting the pressure on them to get it out into the market. It has to you have to ask about it. Those salesmen have too many other brands and too many other pods if you will, that they have to hit to get it out the marketplace and you’re right even as a salesman. I’m going to be honest with you. If it was the end of fiscal whether that was June or December for a certain brand, I was going

32:00
After things that I was going to make a bonus on, I was going after, you know, our biggest suppliers on the on the liquor and the wine side to make sure I hit those numbers because that’s what ensured I kept my job. So, so let’s stay Let’s stay on the distributor side. Yes. One question about that because I heard some lingo and there wasn’t familiar with what’s a pod? Yeah, what’s a pod? A pod is a placement. So if Yellowstone which is in Nebraska and I happen to be a big fan of hits the market, they might have certain amount of pods they have to hit and a pod means they have 15 accounts they need to do a placement of which is basically a three bottle placement. If they get a three bottle placement at our store, that particular sales, we got his pod for that brand. The problem is they come into the store with 22 different brands that need placements or pods, and then it becomes a real estate issue within a store.

32:54
Gotcha. Now we’re now we’re starting to talk your language. All right. So when we so let’s take a look

33:00
Look at like,

33:03
like how the distributors spend money with with on premise and off premise. As you know, it’s illegal for them to say, Hey, here’s some cash carry this correct, but they do spend money in stores, what? How are they able to how are they able to slip under the law to give retailers and bars, money to carry products? You know, I don’t think a lot of that goes on in Nebraska anymore. I’m not going to say that it doesn’t because I think there probably are some exceptions and some things that just don’t add up. But it was something that wouldn’t add up. Give me an example. You don’t have to name any names. No, it’s a certain store getting four bottles of let’s say, Buffalo Trace William Lou Weller

34:00
The antique collection and I look across the street going huh? They do about a 10th of the business we do. And all of a sudden they got these bottles and the same time those bottles showed up Look at this huge Southern Comfort display that showed up well Southern Comfort Zone by my sash rack. So they need to go in there and figure out a way to get that Southern Comfort in there. To me to Southern Comfort number What a way to entice them is with some bottles, or I know it’s tapping with with cash or, or goods dealer loaders as they call them.

34:35
That from golf bags all the way to whatever that used to run rampant when I was a salesman I saw that all the time. But to that question, Fred, the

34:47
the how the mom and pop distributors going away and corporate america if you will, the southerners the r&d sees Johnson brothers, that corporate cultures kind of put it into a lot

35:00
That stuff. Again. I’m pretty sure it goes on. I’ve heard stories and I see things but yeah, that that’s kind of how that works.

35:09
Well, you know, you go to certain resort destinations and Dr. Usha will own the entire bar. You know, they’ll own entire liquor stores. You go to Vegas and beemo have an entire hotel. You know, so it’s like these things are not just happening because the the the bar owners and the hotel owners happen to be big fans of those particular products. I mean, something’s happening somewhere. Yeah, there’s somewhere Oh, there there absolutely is, you know, it could come down to to free goods or any of that stuff. You know, the conversation as the retailers I had because we are one of the bigger ones in Nebraska from a volume standpoint.

35:56
You know, if you ever thought about trying to give us money or bias

36:00
You know what, take whatever money you were going to give us and knock the bottle costs down so we can make money.

36:06
It’s never come to that and we never do that. But yeah, I guarantee you, there’s some of that stuff going on. Now my son, my oldest son happens to be at on premise salesman in Omaha. And yeah, there’s times where brown Forman or or beam or people will go into a certain bar or a ballpark or college world series, a certain bar down there. I remember Cruz and Ron took over probably the most popular bar in Omaha. I’m assuming they give them all these umbrellas and all this other good stuff. And yeah, they’ll do that. So. But if if there’s money under the table or things like that, I’m not I can’t 100% say that it happens. I’m sure it does. So your son’s in the business. That means Thanksgiving and Christmas must be kind of heated sometimes. Yeah, the dumb little kid. Thanks craft beers where it’s

36:58
from all of our barrel pics.

36:59
crying out loud. He’s the you know, he’s, we he’s been to Kentucky with us three times. We’re going back again in July. And, you know, every time he shows up for the holidays, he wants to bring some pretty beer.

37:13
So there is a there’s a good question that came in in the chat here from Mike bliss. And it’s kind of talking about the difference in high volume retailers, you know, you’re talking to the total wines and liquor barn to the world versus some value, add specialty retailers that are sort of your your mom and pop your corner shops and stuff like that. Where did the where does the line draw in what distributors do in in what they’re able to allocate? Or how do they decide, oh, well, this this store does insane amounts of business. You know, we don’t even have to sit there and have an argument with them. We’re just going to go and sell a bunch of stuff. You know, sure. They’ve got it. They’ve got to take care or make happy multiple entities. You know, you’ve got on premise you’ve got off premise so yeah, sure bars

38:00
Need a certain allocation as well, you hope that they expose that to more drinkers based off of you know, 20 something pours out of a bottle that’s going to go out to a bar customer whereas we’re selling it by the bottle

38:14
it’s a

38:16
it’s my argument with the wholesalers. It’s my argument it’s my fight to say how does a little bar out in western Nebraska in a town of 300 people get just as many bottles of blood off pack five as I do, I don’t understand that. Especially again, even with that portfolio, I support Rebel Yell and all those brands as well.

38:39
And it gets tiring for me because I have to then throw a fit and have a conversation with people as to what’s going on. I don’t want those people to not get products I understand that they need to build a business. But building a businesses in this this industry bourbon, if you will. You got to spend money as well. It’s no different than any

39:00
else did you invest money in to build your business? So I guess I kind of want you to talk about that a bit more. Because you know, you were talking about, you know, how does this bar in the middle of nowhere with 300 people get the same allocation of something. But honestly, like, how does that happen? Like, is there? I mean, you were on that side at one point like is, is the internal

39:22
workings in here to say, all right, well, let’s say all four of us work for a distributor, we all cover different patches, we all get 25% of the allotment, and we go decide how 25% we’re going to go and do it in our particular market. Like is that is that a typical thing? Like, how does it happen internally, Kenny, don’t say that

39:42
happens. That’s the other frustrating part. They’ll get these allocated items that come into the warehouse, and they’ll say, okay, Division Two, you get five bottles, Division Three, and I’ll go down the line and then they’ll let these guys decide where they go. Well, you can then get up you can say, Well, I have a really good friend that owns

40:00
liquor store, I’m going to make sure he gets a bottle. He doesn’t even buy anything from that portfolio. But he does carry Barton vodka as well. And so they’ll get those certain things where my fight with them has always been, hey, somebody at the top of your company needs to start looking at these Bourbons it is what makes this this liquor industry tick right now and make sure that you’re taking care of people that that one work hard to get it in the right people’s hands, you don’t want to get it into flipper hands and things like that. And yeah, I take a lot of criticism at our store. Because I asked for ideas when people come in to buy stuff I want to know who they are, I want to get to know them and I want to make sure I’m not going to find it on the secondary market. And you know, as I did yesterday, oddly enough with one of our knob Creek barrel pics that just came in,

40:52
you know, in the in the state of Nebraska, if you will, it’s and I know I’m getting a little off off par here off topic, but it’s

41:00
illegal to buy or sell alcohol if you don’t have a license, or you can’t buy it from somebody without a license. So that flipping market or secondary market is is very much against the law in Nebraska. But you know, I want to make sure the people that are buying bourbon and so forth, it’s getting into the people’s hands that want to enjoy it, share it and develop it. So that’s my other fight with the wholesalers to say because there are stores in Omaha that we can all walk into right now and you can pay $199 for a bottle of Elmer t that sitting on the shelf you can pay 199 for a bottle of Blanton’s, you can pay 3000 for Pappy and, and I don’t understand how those people get an allocation when that’s how they put it on their shelves. And the distributors have now said they agree and that they will not get future allocations because of that. We see it all the time here in the local. There’s plenty of stores that Yeah, the right now you can go you can find a bottle of one as well or 107 it will have a

42:00
$99 price tag on it. There’s a few stores in the city that do it. However, it’s not stopping them from getting allocation continual. So I mean, do you mean when you were on that side? I mean, I don’t think gouging or price markups were that big I think in 2014 timeframe, but I mean, are you starting to really think that distributors are taking this serious? I think they are. I think they’re starting to figure it out. Again, this is all new to them too. This is brand new territory for them, you know, they have to understand that retailers like myself and others. What’s most important to us right now is those allocated items and those Bourbons and that diversity and that’s that variety and selection.

42:43
You know, when will it came to Nebraska, all I’m gonna say six months ago.

42:48
Maybe it was a little longer than that. But you had to buy everything they owned before you could get a couple bottles of their family estate stuff. And sure enough, we did we bought all the pot still the nose mill the roads.

43:00
yield Bardstown, pure Kentucky, all that stuff. And I’ve still got it all over our store, still have yet to see any family estate stuff come in. And the Johnson brothers distributor will say, well, we got to take care of, you know, some of our other customers. Well, this is where I will point the finger. Well, those other customers are the ones that buy hundred cases of barefoot wine. And we all know who those customers are. So I don’t do that. And I won’t buy barefoot wine at 100 cases at a time. So I can sell it at $1 higher than the grocery store. But that’s where you’re going to find the family estate stuff in Nebraska.

43:35
So let’s take a look at the suppliers to distillers.

43:41
You keep bringing up these portfolios. And you’re talking about, you know, largely Sazerac. You’ve mentioned a couple others you just mentioned, will it you know, at what,

43:54
how much blame are you putting on the distillers here in this equation? And are you really thinking

44:00
That they might just be using the distributors as kind of like a front man for the bad guy.

44:07
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45:00
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45:19
how much blame are you putting on the distillers here in this equation? And are you really thinking that they might just be using the distributors as kind of like a front man for the bad guy?

45:30
Um, you know, I don’t think so. I honestly, you know, having been out there doing barrel pics now, for the last two and a half years I’ve kind of learned that. You know, the Steelers are pretty hands off. You know this. The distilleries, they’ve got the people that their suppliers that go to market.

45:47
I think some of the distilleries would be pretty amused and amazed at what actually goes on in the marketplace. I don’t think they have the time. It’s like a you know,

45:58
a time or that time to under

46:00
And all that goes on with that. They’re probably like, if you’re taking 25%, you better earn it. I don’t care how you earn it.

46:08
You know, listen, those suppliers put those financial goals to those wholesalers to say, this is what needs to happen. And so then I think the wholesalers do whatever it takes to do it, because they don’t always know what they’re dealing with and what products they have in their portfolio.

46:24
So does it would a distributor like tele brand, say like Buffalo Trace, for example, because we keep using them because they’re so popular, but

46:34
would they tell them or advise them that, hey, you need to raise prices because we need to kind of slow down this demand or what a distillery does that that who decides pricing? I guess, I think that comes from either to, you know, on that particular case that either comes from Buffalo Trace or SAS rack. And I can speak to that that’s most definitely the distilleries they dictate SRP which dictates the wholesale price

47:00
Mt.

47:01
Mike if I’m wrong with this, correct me, but the the wholesaler price is usually half of what the SRP is, and then they mark it up, you know, 15 20% to the retailer and then you guys mark it up whatever is left in the margin about right. I would say that’s pretty close. from what I gather, I don’t think there’s as much margin on that first leg that you mentioned from the to the wholesaler what the wholesaler buys it at, so to speak.

47:34
You know, so that they are that’s a little tricky, if you will.

47:40
Again, and maybe it’s because I’m biased from a retailer standpoint about how much we mark stuff up. But you know, I just saw somebody got a barrel of Blanton’s here in Nebraska, ours isn’t going to be here for another six weeks and I saw what they posted their bottle price and I’m just like, holy crap, did plans go up again? Or am I just stupid selling it for 55

48:00
dollars a bottle still, you know, also, but our customers, you know, that’s what we want to do so, but yeah, to your to your point. I think that’s really strong at the distillery and that’s why I’ve always respected Sazerac and Buffalo Trace. They’re pretty adamant about trying to catch those people that are abusing that retail markup in their retail stores. Right now, you’re not just saying that so you get a better allocation of Pappy

48:31
damn right. I am.

48:34
Son and he’s just got a sweet talk his son? Yeah.

48:38
I guess the devil’s advocate to like pay to play what do you what would you say to like, you know, the mom and pop stores have been in business forever. And they can’t compete on the pay to play just because they’re in a smaller town or in a smaller market, but they still have customers they want to take care of and get, you know, some allocation and they’ve been getting them for years. And they were kind of you know, there before the

49:00
Before everything kind of happened, well, that that’s just my counter argument to this. No, I agree. You know, because I’ve often thought and role played Hey, what if I went out on my complete own and opened up my own little mom and pop store? You know, I know at that point what I’ve done with the store we have now will Linda No. allocations are what I deserve to this new place. It’s just one bottle at a time. That’s what we did at our store. And I think that’s what any mom and pop has the ability to do. You know, pick and choose your battles if you can’t pick and choose every supplier that’s out there. Go after if it says rack and Buffalo Trace will then really support those brands. And then yeah, you’re going to get bottles at that point. You know, I think the other misconception is, there’s more bottles that come into each market than we realize when you realize how many stores are going those bottles are going out too. So there’s there’s product available to then develop a customer base and develop

50:00
A relationship with some key customers. So I got a kind of a doozy of a question here. You mentioned a little bit a while ago talking about there might be like this favorite scheme that somebody that works a distributor, they have a certain store that they’ll go and hook somebody up because they carry a well, whatever it is, and they can potentially slide into their store. How much do you think of allocated items go to things like I don’t know, if you consider this something like insider trading, where say all of us here we get 25% of a pie. I know that I really want the new Booker’s, whatever it’s going to come out this year, but we’ll just whatever it’s going to be. And what I’m gonna do is I’m going to go to a store that I like, I’m going to say, Hey, I’m going to get you this bottle but this bottles mine.

50:50
You mean the the salesman or their manager coming in saying, hey, you’re going to get this ball allocated to you, but you’re going to sell it to me? Exactly.

51:00
happens all the time. See, that’s the that’s the crazy thing. It’s like, people always talk about access and trying to make a free access to everything. And when you talk about even the I’ve seen it before with my own eyes, it happened with a with a victors bottle. I think it was a 20 or 25 year bourbon. And I know the store that ran through, and it was just kind of like, Oh, it was a favorite from distributor. And they just ran it to the store for somebody to go there and pick it up. Sir. They just had it laying around just for that. I mean it it kind of blows my mind that that there’s this sort of like insider game that you can do, because you have access to all this stuff. And yeah, what how how fair is it that

51:47
you know, bourbon has, you know, a, you know, in order to get your allocation of a bourbon. How in the world is it fair to be

52:00
expected to carry a vodka or a low level gin? Or an unattractive tequila? It seems to me like that. That’s, that’s the most egregious thing of all happening right now is you’re being forced to carry shit, you know, to get the good stuff.

52:19
Fred when you walk into our store, and you take your first step in and right to your left, you’ve got about 90 cases of vodka all into the price of 999 for a half gallon, or a 175. From Fleischmanns departments and school and platinum in summit, well Smirnoff a little higher Pinnacle, you name it, and that’s why they’re there. And yes, we sell a lot of it, don’t get me wrong, but those are brands are there for a reason because there’s other brands we could choose pop off and others, but hey, those are all part of a lot of those who are part of the soundtrack portfolio

52:58
to you

53:00
you’re you’re you’re front loading your store, because you feel like it gives you a better chance for that allocation. Absolutely.

53:09
I agree it’s horseshit.

53:11
To say that what if what if we all just kind of work together because this could be the way to end vodka if you think about it.

53:19
The only reason why stores are carrying vodka then let’s just Yeah, the wagons and you know find a way to put bourbon there and when your vodka revolt

53:30
the biker rebellion, Fred

53:33
I this just

53:36
it just feels scammy to me it’s always felt like

53:43
you know, very 1930s you know a mafioso kind of like we were saying, but how else are they supposed to dictate who gets what what is a better system? Better? I mean, if you think about it, why not just a free market system like okay,

54:00
This is what I want. Like, if people aren’t buying x y&z like you shouldn’t be has to be like forced to be able to carry those like that should. The thing is is nothing triple all the way back to the distiller where like they have to rethink their strategy or they have to rethink their go to market on a particular product because it’s just sitting on the shelves. And if it’s if you get to the point where it’s not moving, then it comes all the way back to the producer. It’s hard, it’s tough, because in those categories, they’re all commodities. They’re, you know, they’re, they’re,

54:32
you know, base price like, and so they have to buy shelf space to compete to kind of get their product out there. It happens in cereal, it happens in groceries and in everything, you know, you buy shelf space to kind of get your product that it’s this is how it is. That is true. When you walk into Barnes and Noble. Those books right there. Those are all purchased that space was purchased by the publisher. That’s true. Yeah, and you know, and I I’ve heard stories, you know, with some of the chain accounts that

55:00
You know, hey, you want this in cap, it’s $800 cash, you want this in cap, it’s $400 cash, if you want, any of the back end caps is $200 cash. Again, that’s never happened to me directly as a salesperson.

55:13
I will tell you that, you know, and these people are no longer there. When I was a salesperson. I often got asked when I would go in and pitch a deal, well, what’s in it for me? And that’s when I would walk away, and nothing against who I used to work for. But, you know, I had the dubious title of the lowest market share and what was the biggest grocery account in Nebraska? Every CL sales meeting, I had to hear about how I did that or had the lowest market share but I wasn’t going to play that game of somebody else more company wanted to do that great Go for it. But you know, I was going to do it the right way.

55:47
But because I was new and scared, but I you know, again, I don’t know the other answer to what you’re saying. Fred is if you know how do you distribute it? They came to me and told me that

56:00
The liquor commission is standard rasca said those allocated items need to go to the people that support that portfolio. So will we I guess you have to define the portfolio. Does that include just the bourbon portfolio? It’s as or accurate, does that include everything in it, if you will? I do know last year I’m sorry, in the end of 2017.

56:22
You had to buy eight cases of Southern Comfort to get a case of Blanton’s.

56:27
Wow. And that’s where I flipped out. And I said wait a second, you know, so, you know, it’s it’s, it’s interesting, and it’s odd. Again, I don’t know that you can blame them again. I think this is all new to the wholesalers to this this crazy game we’re in with with bourbon right now. And

56:48
you know, it’s um, it’s tough, but somebody at those disturbed those distillery somebody at those wholesalers needs to be burning the midnight oil and they’re not doing that to figure out how

57:00
this all works and where these products are going and how they’re being sold. Because the guy from SAS rack right to my face and the guy from Brown Forman that was in the store a couple weeks ago, flat out said they will not support these retailers that are gouging the public. So I’m hoping that assignment, you know, they’re forcing the wholesalers hands to not necessarily just give whoever you know, is on the buddy list allocated items because then like like, we’ve just talked about how do you deal with these mom and pop stores that have been in business for 20 years, 30 years in Nebraska, that have stumbled onto the bourbon world as well you know, how do you not take care of them?

57:43
You know, it’s that you bring up a good point to it should be noted that it is illegal. Federal code, you know, does not allow a distiller or supplier to dictate where, where their bottles go. So like

58:00
The best they can do is tell these distributors like we don’t want this we don’t want that they can’t outright say don’t go to Bob store because he’s price gouging. But they can say something like, Hey, we don’t want to see price gouging, you know, but there there there is some, there is some very particular laws that that the distiller must follow the distiller to the wholesaler. Yeah, yeah. So the distiller to the wholesaler like what they can say to dictate where things go. It’s very, you know, if there’s a paper trail there, you know, they always get caught, you see people get, you know, million dollar fines every other year from these, you know, from these larger wholesale companies, because they get entangled in into these like, messes and, and that the, the federal government does, like track wholesalers quite a bit closer, you know, then I think people realize, Oh, yeah, absolutely. They do it.

59:00
I completely agree with that. And I’ve heard it firsthand and actually seen it firsthand.

59:05
You know, an odd story when I right before I left to take this job at this liquor store, and then, you know, through the luck of success become an owner,

59:17
my boss at this particular wholesaler, you know, we got, you know, we started seeing things in our computer like, Oh, I didn’t sell this account this many cases, what’s going on here? I didn’t think much of it just thought it was a computer glitch. And so we’re all in a sales meeting. And we get asked to go down to this boardroom and there’s a State Patrol. And it turns out that our, our boss and our division was taking things and billing them to accounts and and selling it out of his trunk. Oh, nice. Let me tell you what I that you want to talk about that, that moment where you start shaking,

59:56
you know, and then it becomes like

1:00:00
accounts that Wait a second, you know, Mr. salesman in Lincoln, Nebraska, how did you not know that this guy hasn’t bought Jagermeister in five years? You know, where do you think he’s been buying it from? And so it became quite interesting. And I’m thinking, you know, we’re the ones that turned this guy in because we started seeing things on our computer. So yeah, I’m assuming there’s plenty of ways to get in and around these rules for wholesalers. And again, Canada, you’re one of the original points there is zero transparency. I can’t ask the wholesaler Can you tell me how much Buffalo Trace antique came into the state? And when I can ask them how much birthday bourbon came into the state and what accounts Got it? All I know is I got one bottle. Yeah. So it is one good thing about the controlled states is that you can you know, because it’s all tax related and public record. You can see exactly where all those bottles went in Pennsylvania, there’s mysteriously five bottles that

1:01:00
disappear every year when they get their allocation to the county when they all go to state senators. Yeah.

1:01:08
So we’ve we’ve now established the fact that there is no map and it’s just all kind of like just a crazy process. There’s no process there’s there’s literally there’s nothing I think we’ve established that at this point. But here’s here’s the funny thing that I always find. I mean, it doesn’t matter you you ask any store owner in when it comes to fall release season and I’m sure that Mike you hear the same exact thing is and you’re going to say it every single year to his allocations are down this year. It’s I mean, literally, I’ve heard that same exact line for the past five years in a row how our allocations always down every single year. You know, I don’t know that. I’m going to tell you I was very happy with my Pappy allocation this year, this past year in 2018. What was extremely upset about my Buffalo Trace antique collection, so I don’t know if they decided to, to cut me on one and give me more. The other thing

1:02:00
That would keep me quiet and keep me happy if you will.

1:02:04
But yeah, I can tell you I got one bottle of birthday bourbon this year I’ve always gotten to and not that that’s a lot, especially when I hear and see other markets and what they get.

1:02:14
And so I flat out asked the the brown Forman guy two weeks ago when he was in the store, you know, hey, I’d be glad to do a jack daniels barrel. Again, I’d be happy to do a Woodford Reserve and an old forester barrel at the store because I know we can sell him. Is that going to get me any more birthday bourbon, he flat out looked at me said no, because the state of Nebraska is only getting so much. You know, you know, then at that point, we have to make a decision, but at least he was honest. And he was he seemed to be pretty clear about you know, he doesn’t really like I think Fred said he doesn’t control where those bottles go once they come into the state of Nebraska, as far as what account gets them. Yep, absolutely. So to kind of wrap this up, you know, and this has been a fantastic conversation and you know, Mike, I really love the passion that you have here. You can tell that you

1:03:00
You’ve got a lot of a lot to talk about in this but you know, since you’ve gone from, I don’t know one dark side to the other maybe you’re seeing the light I don’t know which which is the better end here. But now that you’re on the other end how’s your view changed to be now dealing with the people that you once worth of a salesperson

1:03:21
you know, somebody sent me a I don’t know what you call them a GIF or whatever those things are

1:03:27
a Forrest Gump running You know, when in a movie when he takes off down the lane and it’s out on the road and takes off. And I literally said, that’s me at the end of the month when I see the sales people come in.

1:03:39
They all got some deal, that’s the best that’s ever been and, you know, and and but again, my perception is I’ve learned how to control it and learn how to understand it. And you know, with all this innovation from all these different flavors, you know,

1:03:55
that there’s only so much real estate in a store and even the big stores, you know,

1:04:00
There’s only so much they can put down and carry on their shelves before they run out of room. And so something has to give. So I just kind of look at basically what’s the value for that particular product that comes in into one of Fred’s points earlier, I kind of look for those craft distilleries. I’m just looking for a variety of whiskey that I think tastes good. I don’t want to sell something to you or anybody else that you’re going to take home and whether you pay $30 or $100, and be like, Oh my gosh, I’ve had Buffalo Trace. And this is horrible compared to that.

1:04:35
It’s a shame that you have to do your own research as a store owner, because these craft distilleries are paying these distributors to push their brands for them. And that you know, they’re not you as a store owner going out of your way to get those people involved in a chance on the dance.

1:04:51
And it just sucks because like, what is the point of a distributor for a brand that’s, you know, a craft brand because it’s just a pastor and it doesn’t

1:05:00
Seemed like they’re doing a service for them. And also, would you like to iterate what they’re usually costing on top of of the cost? What do you mean? Well, Ryan, we mean we go we know what how many points that distributors take on top of it. You want to kind of talk about that? Yeah. And it’s, you know, you’re paying, you know, for us to do distribution here, we’re paying 25% margin, not 25% markup, so it’s 25% margin on the fob costs that we’re sending to them. And then on top of that, the retailer’s taking 25% margin. On top of that, we go through all this hard work to go pick the whiskies decide throne, go through all the risks, the legal stuff, all the taxes, all this stuff, and the end user is getting the most margin, and the distributors are two versus the end. So as a craft brand, you know, we’re like, well, what’s the point? You know, so, what is the point?

1:05:54
That’s why I just right.

1:05:57
But you know what, that’s the benefit of being a retailer.

1:06:00
To a degree is building brands, you know, we have an advantage over some, maybe some of the bigger stores because we can talk to our customers and we can say, Hey, I know you’ve never heard of old elk or Wyoming whiskey or certain brands that it may be craft that hey, you need to try this. I see you got your bottle of Buffalo Trace in your baliga rare but while you’re getting most to add this on and compare and go home and do a blind tasting, and you’d be surprised and you You all know this, how quickly you can build a brand that way and make it popular. But to your point, you’re right, these these wholesalers sometimes don’t even know what they have in their portfolio. Correct. I Gosh, when I started asking about armony X for the store. They looked at what is that?

1:06:47
You know, it’s a What’s that? And these are the people selling it. So yeah, it’s tough, huh? Absolutely. So I guess to kind of wrap this up, you know, Fred and Ryan did we

1:07:00
We come away with our original hypothesis.

1:07:04
Yes, it’s confirmed.

1:07:07
I agree. I concur with a nod getting, I think it’s just so complex. It’s, you know, I think that I think he just, there’s probably good people in the distribute and there’s bad people. And, you know, the shame is that you can’t be good in the incentivize world because whatever you incentivize people are going to respond to, and that’s the problem with everything in sales. And so, yeah, it’s just, it’s just the way it is. I think that was my biggest takeaway from this conversation. You know, I’d always I’d always focused in previous thought or writings about, you know, where the distributor sits, and always focus kind of more on the bigger picture. But, you know, the mic really broke it down for me, you know, to the individual, having to, you know, push a briefcase

1:08:00
roster town and open it up and have some samples in there. You know, that person is trying to put food on the table. And to be honest with you, they they probably don’t give two shits about our opinion on bourbon. And they certainly don’t give a flying fart about what I think about vodka. And there’s probably a good chance they’re not reading anything we’re writing or posting. So, you know, these are people who are just making a living and it a lot of this may just come down to

1:08:27
these incentive programs that you called out as well, Ryan, and that’s not it’s not anything that really had ever caught my attention. But if you if you grow that, you know, in one system, and then you grow that across the various states, and you see what we have here, and

1:08:47
these people are just trying to make livings, these companies are trying to keep these portfolios and we don’t have a better way of ensuring that the consumer wins in this scenario.

1:09:01
Well, we’ll see what the legalized mafia or mob here has in store for the next few years. Because, I mean, I look at it and we always say that disruption is a good thing in any industry. And hopefully, it might come to be that one day and, you know, for Amazon is your disrupter, this industry. Jeff Bezos has spent so much money in researching

1:09:25
this industry. And he’s got, he’s got feelers out everywhere. And I gotta tell you, he’s going to be the person who can and will crack distribution, no bourbon via drone. We’ll see one of these days. It’s gonna be interesting. You’re right, Fred, I really agree that I don’t think we’ve begun to see the impact of what all this is going to have on one retailers and that’s all the way from mom and pops all the way up to the cost goes in the world. Amazon really disrupt things and they’re still going to be up

1:10:00
place for people that just want to walk out their front door and go grab a bottle of basil Hayden and head home. But the other part of it is, yeah, that’s you got to be ahead of the curve. And that’s why I like you guys. I read everything you guys talk about

1:10:17
the curve, but there is something about with going to a liquor store and talking to the owner and having that experience of getting the bottle and holding your hand and taking it home. You know, there is there’s that but it’s also nice the convenience of I just show up one day and there’s my bottle. Let’s crack it open. So right. Yeah, it’s, it’d be nice to have both, you know, for that, uh, yeah. be interesting to see what happens. Mike, I got one last question for you because you brought it up. And I’ve know I’ve heard other retailers talk about it. What are your thoughts on Costco?

1:10:49
You know, I’ve had my,

1:10:52
my run ins.

1:10:55
You know, they’re the wholesalers at the mercy of a big big, big company and

1:11:00
Costco says they want something they’re going to get it.

1:11:03
And the biggest thing was when none of us could get eh Taylor barrel proof Costco had cases upon cases of it sitting on their shelf in the wholesalers flat out said, we screwed up, we put it in open inventory and a real clever salesman went out build it to his to Costco. I find that very hard to believe but, you know, hats off to the salesman, but, you know, but again, I had to sit there and fight for them to run up to the State of South Dakota and get two cases and get it back to me.

1:11:36
So, I’ve got a similar story to that.

1:11:40
Back when they were doing Van Winkle barrel pics which it’s been a while Wow, the last the last like Van Winkle barrel pick the distributor accidentally put into the into the Costco system and so like some random Costco store, got

1:11:59
cases

1:12:00
out of some guys, Van Winkle barrel pick,

1:12:04
like, what do we do with this?

1:12:07
You can’t sell this. But $1 above margin and will come out of

1:12:14
it happens. Absolutely. So Mike, I want to say thank you again for joining tonight, as I’d mentioned, it’s good to see the passion that you have behind this. And and not only that is having the experience and knowledge that you’re able to share with with our listener base, because I find it very intriguing to kind of know exactly what happens. I’m glad that a lot of our thoughts were confirmed that there is no there is no magic spreadsheet. There’s no formulas that figure this out. It’s just

1:12:42
a few people and some emails that get passed around. And that’s that’s how the magic happens. So I want to say thank you again for for coming on the show tonight. And also give me an opportunity to give a last shout out where people can go to your store and check it out and get in contact with you. Absolutely no, that’s that’s fine. I appreciate it. Hey, listen.

1:13:00
We work hard to bring these barrel pics. And if you guys see our barrel pics when we go out we’ve got Brett Atlas, Jason Goldberg, we’ve got a team of people that go with us. And that’s why it’s, it’s, it’s to make sure if you get a bottle of a barrel pick that it’s a good bottle, we want you to taste good bourbon, we read what Fred writes alive. And when people come in and in 100 McKenna right now we can’t get our hands on a bottle, we want to steer him in something that hopefully Fred and others will be proud of. And I don’t mean that personally. But the people that write, hey, we want to make sure they get something with a similar mash bill with a similar quality. And you know, that’s what we’re about. So that’s, again, my passion is in that and I will fight the wholesalers. And I do and I’ve gone to distilleries directly to to get answers. All they do is then yell at the wholesaler make them come see me but again, sometimes you have to do that. And it’s Mike, I wish you on the store next to me and you would fight for me, you know

1:14:00
No, it’s true. It seems like like people like you owners like you make me feel good about like that there’s still going to be a place for brick and mortar, you know that, that people you’re fighting for your customers and it’s not just a commodity to you, you know, it’s a passion and, and something that you’re, you know, you’re really fighting for your customers. So I definitely appreciate that. Hey, last little tip, you know what we do at our store, I put highly allocated items every once in a while right in the middle of the Canadian section right in the middle of

1:14:29
on the bottom shelf, you know how long they will sit there and nobody will see them? Right on the stack of incentivize bottles, right?

1:14:36
It’s kind of funny, and I don’t mean that but those people that come in the door that Hey, how are you? Can we help you know, they automatically have determined they know more than you and they will look around and I’ve got whiskey and four different locations as far as American Bourbons go just because of space. And then right down there on the bottom shelf next to Barton Canadian, you’ll find some Weller products at times and

1:15:00
By golly, unless I walk somebody over there, nobody’s ever found them yet.

1:15:05
There you go. Again, what’s the address?

1:15:09
Fremont, Nebraska. There we go. So make sure you check out Mike over at Jack’s liquor and wine in Fremont, Nebraska. You know, like I said, this is fantastic. Thank you again for coming on the show tonight. And go ahead and check out his store. But also at the same time, make sure you’re following Fred on those social media channels, the curation desk on YouTube, follow bourbon pursuit as well. And then, you know, one of the things that we have talked about is one of the ways that we help bring a little bit extra to our community is we let Patreon folks be able to watch these live as they happen and actually ask questions. So thank you to our community. And if you want to learn more about it, go to patreon.com slash bourbon pursuit. So with that, fellas, thank you again for joining us and we’ll see everybody next week.

Transcribed by https://otter.ai

One thought on “236 – How the Distribution Game is Played with Mike Bridges

  1. As a small business owner I can totally agree with every issue brought up regarding allocations. I also like the very end where you bring up Amazon. They are lurking and will change the industry.

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