What should I check before buying a drink brand?

A drink brand that sells through distributors and retail shelves is not a web store with a product. Others stand between the maker and the shopper, and each has its own terms. Most of what you are buying is a set of relationships and commitments, so your checks follow the paperwork and the stock more than the flavour.

Distributors and territories

Ask for every distributor agreement. Look at which areas each covers, whether any is exclusive, how it can end, and whether it needs consent when the brand changes hands. Ask how orders arrive and how often. Speak to a distributor, with the seller’s permission, about how the brand is doing and what they expect from a new owner. Their answers show you more than a summary does.

The co-packer and the packaging

Most drink brands rely on a co-packer. Ask about minimum run sizes, lead times, how the price is set and what happens if either side stops. Find out who owns the cans, bottles, labels and any moulds or tooling, and where they are stored. Surplus packaging printed with the old details can be a cost to a buyer, so ask what is on hand.

Stock and dating

Drinks carry dates. Ask for a count of finished stock by product and date, where it sits and who holds it. Ask how many units fall within a set number of days of their date, and ask your accountant how that stock should be treated in the deal. Ask about returns, damaged goods and anything held at a distributor’s warehouse.

Retailer commitments

Retailers may have been promised discounts, displays or support. Ask for a list of every promotion, listing fee or allowance the brand has agreed to, and what is still owed. Then ask your lawyer which commitments become yours. This differs from buying a distribution company, which is covered in what to check before buying a food distribution company.