What should I check before buying a beverage distributor?

A beverage distributor moves other companies’ drinks to stores, restaurants and venues. The business is the set of brand agreements, the accounts it serves and the trucks and coolers that connect them. Because the product is made by someone else, much of what you are buying is a position in a chain. This page covers what to check on the drinks side. The general checks for any food distributor are on what to check before buying a food distribution company.

Brand agreements and territories

Start with the brands. Ask for every distribution agreement and read who the supplier is, which products are covered, and which area the distributor may sell in. Ask whether the territory is exclusive and whether the brand can add another distributor. Also ask how long each agreement runs and how it ends. A distributor whose best-selling brands can walk away easily is a different purchase from one with steady, documented terms. Your lawyer should read the wording.

Service to stores and venues

Ask how often each account is visited, who builds the shelf and cooler displays, and whether the distributor supplies coolers or taps that sit in customers’ premises. Walk a route with a driver or rep. Note which accounts order by habit and which need regular attention. Ask what happens when a delivery is late or a product runs out, and how complaints are recorded.

• Distribution agreements for each brand, with territory and term
• Sales by brand, account and month for several years
• Returns, credits and write-off records
• Vehicle, cooler and equipment lists with who owns each item

Seasonality, returns and old stock

Many drinks sell far more in some seasons than others, so ask for monthly sales history over several years rather than a single total. Then ask about returns: which brands take back damaged or out-of-date product, and who pays when they do not. Look at the warehouse for stock that has aged, and ask how dates are tracked. Pallets, kegs and bottle deposits can also leave money sitting with customers.

Alcohol and other regulated products

If the distributor handles beer, wine or spirits, the licensing, who may sell to whom and whether anything transfers to a buyer are legal questions. Do not assume the answer from a seller or a listing. Ask your lawyer whether alcohol licensing affects the purchase, and ask for copies of every permit the business holds today.