– Joshua, the supercomputer from War Games
It’s really hard to make profit in distribution.
In fact, our data shows only 5-10% of breweries run profitable distribution programs. Worse yet, the average distro net profit in 2024 was an estimated -54%. Yikes.
Translation: Most people aren’t winning in distro. Not by a long shot. And the only reason that’s not more obvious, is because the taproom is (usually) profitable enough to cover up the losses.
So what… pack our bags and go home?
Not quite.
Instead: we need to be much more careful about how we price and sell wholesale beer. In other words, we need to change the game in our favor.
One way to do that (without blowing up your whole program) is to change the SKUs you present for sale. Because your accounts can only buy what shows up on the price list to begin with. So if…
Your most profitable beers show up more often.
Your least profitable beers disappear.
You can slowly but surely stack the deck towards profit.
As it turns out, prioritizing your portfolio is one of the Distro Profit Plays we run the most. For example, take a brewery with $800k worth of distribution revenue across 6 product SKUs.
Now remove their lowest-margin SKUs and backfill that volume with higher-margin SKUs, and you’ve unlocked $67k in profit without any changes to pricing or margins.
Reality check: this won’t happen in one fell swoop. But it will happen over time if you start making incremental changes. Sprinkle in some additional re-pricing and product replacements and we can usually drive that number higher, faster.
And in the distro game, we’ll need every percentage point we can get if we want to win.
Want to run this play with your own distribution business? Download the Distro Profit Plays PDF and hop on a call for a free profit session with the SBS team!