Always have distribution w/ Cheryl Durzy, LibDib

Having struggled to manage and maintain distribution for her family winery, Cheryl Durzy, CEO of LibDib, decided to start her own distributor. In comes LibDib, a tech-enabled distributor that lets any alcohol producer have distribution in most of the key US markets. Cheryl provides background on the US 3-tier system, the role of a distributor, and how LibDib is helping producers get distribution, enable wine sales, and become a tech platform for other distributors.

Detailed Show Notes:

US 3-Tier System

Put in after prohibition to keep one tier from owning alcohol distribution
Tiers - producer, distributor, retailer

US distribution heavily consolidated into 3 large ones, lots of smaller specialty distributors vs. many distributors in the 70s/80s

Distributor function

Helps consolidate suppliers for trade accounts; accounts don’t have resources to manage each supplier separately (e.g., invoices, checks)
Pay taxes, do compliance
Logistics (heavy, fragile product)
Customer service (mistakes, breakage, returns, samples)
Sometimes act as a winery’s salesforce

Getting a distributor

2024 - distributors are shedding brands vs. taking on new ones
Typically - look for fit w/in a distributor’s portfolio, pick someone with a good reputation
Distributors will ask - what will be your investment in the market? How often will you be here? Do you have feet on the street?

LibDib - enables wineries to sell themselves, a tech-enabled distributor

Started as a wholesaler in 2017 (CA, NY), enables distributor for any producer
The platform enables rich content and e-commerce
Has license in 9 states, enabled through RNDC in 6 states (e.g., Texas)
~1,500 suppliers w/ active accounts, ~700 wineries w/ ~450 actively selling
Originally focused on spirits, wineries have increased by ~50% in the last few years
Uses FedEx to send wine, integrated API to track status, negotiated good rates <50% of DTC rates; have cold chain, ice pack options for hot temperatures
New markets launching late 2024 / early 2025

LibDib use cases

Get wine to specific accounts in a market
Enable wine brokers in other states
Importers sell directly to accounts
Ship special projects from large wineries that distributors don’t want to touch

Pros/cons of LibDib

Pro - always have distribution, good communications/customer service, good technology experience for producers and trade accounts
Cons - no salesforce, need to be a little tech-savvy

Business model

Markup of 14-18% on sales (vs. 30-35% for most distributors) + producer pays for shipping
Subscription service (Gold, Silver, Plus) - get lower markups and services (e.g., portfolio management, VIP chain assistance, advertising on platform)
~250 subscriptions (of 1,500), mainly on Gold for chain services

RNDC partnership - OnDemand division