Adjusting Your US Distribution Strategy in the Time of COVID-19

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12th January, 2021 by db_staff

The COVID-19 pandemic upended the way global alcohol beverage companies operate and placed an intense strain on the United States’ three-tier system. 

From producers, importers, distributors, retail stores to restaurants, every sector in the wine, spirits, and beer marketplace have been forced to analyze their new realities and look out for any efficiencies in the U.S. supply chain that could yield cost savings while focusing on selling their products. 

Discovering cost-effective solutions with a logistics service provider

The US three-tier system has been present since the post-Prohibition era, and although it has been in place for almost 100 years, it continues to present challenges for producers, distributors (wholesale), and retailers in 2021. Under the three-tier system, a winery, distiller, or importer (tier 1) must sell to a state-licensed distributor (tier 2), who sells to a retail or restaurant licensee (tier 3). This pipeline poses significant logistical and legal roadblocks for alcohol beverage companies, who prefer to spend that time advocating for their brands or seeking distributors’ attention.

Elenteny Imports is innovating the industry’s logistics landscape by offering a modern approach to wine, spirits, beer distribution and helping hundreds of global companies effectively navigate the U.S. three-tier system. When restaurants closed due to COVID-19, Elenteny helped its clients by holding orders in motion, and in some cases, they quickly returned them to the wineries. Once a client made a sale, Elenteny shipped their inventory from the destination and delivered it to their retail customer in the US, eliminating the expense of additional warehousing. Elenteny also found the most efficient shipping routes and handled all the logistics so its clients could focus on relationship building and sales. 

Elenteny also helped with tax-saving solutions through the Craft Beverage Modernization and Tax Reform (CBMA), allowing eligible alcohol beverage importers to claim a lower tax rate on shipments. Brands must find cost-saving solutions throughout the supply chain, in turn allocating additional resources to marketing and sales.

In 2020, alcohol sales surged, particularly with off-premise purchases. Elenteny partnered with Colangelo & Partners (C&P), a New York-based integrated communications agency, working hand-in-hand to inform industry, brand owners, and importers how Elenteny’s services can increase profits along the supply chain. With Elenteny and C&P’s help, brands can fine-tune their logistics and compliance, freeing up resources to shore up demand through marketing communications programs. Keeping the suppliers connected to customers with efficient route-to-market strategies allows alcohol beverage companies to manage risk and uncertainty.

Staying agile as a wine, spirits, or beer brand by scaling or diversifying 

Understanding a brand’s operational needs and adopting the best supply chain strategy enables a company to meet its goals and gain a competitive advantage.

Take a look at the beer industry. Under the current law, breweries are indefinitely locked into their business relationships with distributors unless they can prove to regulators that the distribution company violates its agreement. These restrictions affect small and mid-size breweries who choose to work with large distributors, as they run the risk of limiting their ability to grow sales when a distributor prioritizes the larger brands in its portfolio.   

Do you choose a traditional distributor, or do you partner with a third-party vendor master in the field? FUN Wines, the fastest-growing flavored wine brand in the US, partnered with Elenteny to navigate the three-tier system and manage their back-office operations – compliance, warehousing, fulfillment, account receivable, and local taxes – so that the brand can focus on selling the product to wholesalers and direct to retailers. This modern approach allows FUN Wines to control their inventory and focus on what makes them grow: sourcing and sales.

About Colangelo & Partners

Colangelo & Partners (www.colangelopr.com) is the leading fine wine and spirits-focused PR agency in the U.S. offering five basic services: Press Relations, Social Media / Influencer Marketing, Event Marketing, Trade Relations and Content Marketing. With main offices in New York and San Francisco, Colangelo & Partners has an international team of PR professionals who are technically trained and certified in wine and spirits as well as the disciplines of communications.

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