The Hard Truth No One Wanted To Tell You (But I’m Telling You Now)

The Reality of Liquor Sale and Distribution

Author

Samuel Anderson
September 08, 2025

When new suppliers enter the U.S. liquor market, they’re often told that landing a distributor contract is the golden ticket to retail stardom. Shelves, placements, visibility, if only it were so simple. The truth, rarely discussed outside industry circles, is that distribution is one of the toughest, least forgiving battles in beverage alcohol. To succeed, brands must move past myths, understand the structures at play, and embrace their role as marketers, educators, and relentless demand creators.vinepair+2

The Backbone: The Three-Tier System

At the heart of liquor sale and distribution in the U.S. is the three-tier system, a post-Prohibition legal framework designed to regulate alcohol, collect taxes, and prevent monopolies. Here’s the fundamental setup: the supply chain is split into producers (brands, manufacturers), distributors (middlemen, wholesalers), and retailers (liquor stores, bars, chains). Each tier is licensed and regulated separately, and inter-tier ownership is usually forbidden to prevent market abuses.nabca+5

Producers create and package alcohol, they can only sell to licensed distributors, not directly to retailers (except for minor exceptions in some states). Distributors act as the gatekeepers, moving products to licensed retailers but rarely helping build brand stories. Retailers then bring products to consumers, with further regulatory restrictions and markups along the way.overproof+2

The system has strengths, transparency, traceability, tax collection, consumer safety, and competition are improved. But it also creates choke points, especially for upstart brands. One distributor contract does not mean shelf dominance, account activation, or consumer buzz. It simply means the truck can deliver your cases; the rest is up to you.nabca+4

Why Distributors Are Essential, But Not Saviors

Distributors are indispensable: they possess the infrastructure, logistics, capital, and access to bring products to an array of retailers. They help ensure only compliant, safe alcoholic beverages reach consumers, and their systems facilitate recalls, inventory management, and supply chain discipline. But distributors operate portfolios filled with hundreds or even thousands of SKUs from countless suppliers. Expecting them to “make” your brand is wishful thinking.mclaughlinpc+6

Most distributors focus resources on brands with proven pull, strong velocity, and robust supplier-side activation. Their reps are charged with merchandising shelves, managing chain resets, and supporting placements, but incentive programs, corporate priorities, and pure sales volume dictate which SKUs are prioritized.pepperi+1

For new suppliers, this hard reality often stings: signing a distributor is only the beginning. Getting a product authorized for chain retail means very little without consumer demand, in-store activation, and real case movement. Distribution gets a brand in the door, it does not make you the star.tomwark.substack+1

The Problems New Brands Face

The trouble starts with fundamental misunderstandings of the system. Many new brands believe distribution equals marketing, when in fact it equals logistics. Here’s what most miss:

1. You Are One of Many

Distributors have hundreds of brands on each truck, and thousands of SKUs in each warehouse. Achieving shelf space is important, but maintaining that space is all about driving cases out, velocity is king. If a product doesn’t move, it risks losing placement instantly, regardless of the initial distributor enthusiasm.ghjadvisors+2

2. Distributors Are Partners, Not Marketers

The myth persists that distributors will push a brand’s story, execute “pull” programs, and deliver consumer excitement. In reality, the distributor supplies logistical support, account reach, and channel access, but the narrative and buzz remain the supplier’s responsibility.parkstreet+2

3. Velocity Rules

Movement is everything; distributors are rewarded for moving cases, not for brand-building. They respond to incentives tied to volume and activation, not to unproven promises or marketing language. Without velocity metrics, a SKU is easily deprioritized, even if it is the supplier’s main hope.ortec+1

4. Incentives Guide Focus

Distributor reps merchandise and hustle, but they’re driven by incentive programs set at the corporate level. These can shift from month to month, zeroing in on high-performing items or chain priorities and leaving many brands in the dust. Supplier-side incentives targeted at reps, like bonuses for activation, or premium placements, help but do not guarantee focus in the field.andavisolutions+1

5. Marketing Responsibility

Suppliers must realize that marketing falls squarely on their shoulders. Building demand, executing consumer programs, and generating buzz through digital and grassroots efforts, all fall outside the distributor’s usual scope. Retailers don’t purchase stories they’ve never heard about, and consumers don’t seek out brands they don’t recognize.tomwark.substack+1

6. Chains Set Rules, Independents Still Matter

Large chains set national and regional standards for product authorization, resets, and in-store positioning. Winning in chains is a multi-step challenge, requiring supplier-side programming, persistent support, data-driven case movement, and robust consumer activation. Independents, meanwhile, remain crucial for seed accounts, grassroots testing, and local buzz. Both channels require pull, but the strategies to win them differ.ghjadvisors+1

7. You Must Create Pull

Distributor reps and retailers respond to demand and velocity. When consumers start asking for a brand and movement follows, attention increases across all tiers. This “pull” effect is what elevates placement from a line item to a priority, transforming distributor engagement from passive to active. Without pull, even the best distributor partnership will remain tepid in the real world.parkstreet+2

8. At the End of the Day: Distributor = Truck, Supplier = Megaphone

The distributor’s primary role is the operational movement of product. The supplier’s job is creating stories, igniting consumer excitement, and making every bottle or can relevant at the shelf. The most powerful brands act as their own megaphone, amplifying their message with energy, creativity, and strategic investment.ortec+2

Solutions That Actually Work

Brands seeking success must switch focus from distribution as an endpoint to distribution as a means, an enabling platform. The following strategies help bridge the gap between mere access and true activation.

Build Account-Level Pull

Invest in tactics that directly drive sales within key accounts. These include digital shelf programs, targeted tastings, bartender and server trainings, menu placements, in-store activations, and grassroots outreach. Pull doesn’t happen overnight. It’s earned through persistent engagement and measurable results, account by account.blueridgeglobal+1

Actively Partner With Distributor Teams

Collaboration matters. Equip distributor reps with sell sheets, incentives (bonuses for activations or case movement), real-time data, and clear programming. Align your goals with theirs: reward what works, support what is feasible, and provide collateral that makes it easier for reps to sell your story. Meet regularly with distributor management and field teams to hold them accountable and update priorities as market conditions shift.pepperi+1

Leverage Technology and Analytics

Use tools like digital reporting dashboards, predictive inventory software, and velocity trackers to spot gaps and opportunities. Platforms like Encompass Technologies provide supply chain visibility, while demand-planning and analytics tools from Ortec or comparable providers help brands fine-tune retailer programs and optimize for market realities.encompasstech+2

Understand Chain Requirements and Workflows

Every chain retailer is unique, some demand centralized programming, while others operate locally. Winning programs involve tailored planograms, account-level data, and timing that matches chain reset cycles. Never underestimate the importance of independent retailers in test markets or boutique cities, these venues are essential for grassroots buzz and early feedback.ghjadvisors+2

Legal and Contract Diligence

Brands should review every distributor contract with a legal or compliance expert. Make sure agreements contain clear expectations around case movement, activation requirements, marketing support, and territory rules. Avoid vague language and push for measurable commitments. Brands who neglect contract diligence risk misalignment, wasted resources, and painful surprises in year two or three.sovos+1

Resources to Empower Brands and Suppliers

Success in beverage alcohol is seldom achieved alone. Key industry resources can accelerate knowledge, streamline distribution, and support activation:

Encompass Technologies: Offers digital supply chain platforms for distributor-side ordering, reporting, and demand planning. Recommended for brands scaling regional and national distribution.encompasstech

Johnson Brothers: A leading national distributor, providing trade marketing expertise, luxury brand support, and multi-state network access.johnsonbrothers

Park Street University: Delivers expert guides on distributor negotiation, compliance, and brand-building essentials for new-to-market suppliers.parkstreet

Ortec Food & Beverage Distribution Guide: A comprehensive suite of analytics and route optimization tools for beverage marketers looking to increase efficiency and velocity.ortec+1

BevSource: Offers end-to-end beverage development, launch strategy, and compliance support—especially vital for emerging NA, RTD, and craft-focused brands.bevsource

The Case for Supplier-Side Investment

Distributors are “trucks.” Suppliers are “megaphones.” The hard truth is that brands must fuel the system with capital, expertise, narrative, and an unrelenting effort to generate attention. The most successful brands invest in digital marketing, hyper-local events, trade incentives, chain programming, and legal compliance. They budget for account sell-through, invest in in-market teams, and never assume distribution alone will deliver results.ortec+2

Suppliers should also benchmark their program performance. Use velocity per outlet (VPO), weighted distribution metrics, and competitive analysis to discover where brand-building activities translate into real pull. Top brands monitor data daily, test activations in live markets, and iterate programs seasonally to maximize ROI.bartenderspiritsawards+1

Navigating State-Level Nuances

The three-tier system is not monolithic; it shifts from state to state based on local regulations, population, and market history. Some states have control jurisdictions (the government operates part or all of the distribution), while others offer self-distribution privileges for craft producers. Direct-to-consumer shipping increasingly appears for wineries and some spirits, but most beer and liquor brands must still operate within the distribution framework.wikipedia+1

Understanding differences is critical. Brands should consult local legal experts and trade associations to navigate compliance, case movement, and new product launches.sovos+1

The Future: Innovation and Adaptation

As the beverage market evolves and consumer preferences shift, both distributors and suppliers are searching for real innovation. RTDs (ready-to-drink), NA (non-alcoholic) beverages, and hemp/THC-infused products present new challenges, often pushing the boundaries of the traditional system. Strong brands seek collaborative, adaptive distributor partners who embrace data, respond to emerging trends, and allow for market experiments in select accounts.ghjadvisors+1

Likewise, industry consolidation raises fresh hurdles. Mega-distributors are growing stronger, acquiring local rivals and centralizing portfolios. This can make it harder for small suppliers to hold attention, reinforcing the need for supplier-side tenacity, marketing investment, and grassroots pull.

Resources and Guides for Navigating Distribution

Suppliers and brands should never go it alone. Below are key guides, platforms, and advisory sources to consult:

  • Encompass Technologies’ Manufacturer Hub: Supply chain management and demand planning tools [Encompass Technologies]encompasstech

  • Johnson Brothers Supplier Portal: Programming, distribution, and trade marketing support [Johnson Brothers]johnsonbrothers

  • Park Street University Distributor Relations Guide: Step-by-step advice for contract negotiation and market entry [Park Street]parkstreet

  • Ortec Beverage Distribution Toolkit: Analytics and velocity reporting for suppliers [Ortec]ortec+1

  • BevSource Development Studio: Launch and compliance support for emerging RTD, NA, and spirits brands [BevSource]bevsource

Sources (Deep Dives and References)

In the final analysis, distribution is a complex, shifting landscape, one where access is necessary, but supplier-side action makes all the difference. Brands willing to learn, adapt, market vigorously, and partner intelligently will convert distribution from a difficult paradox into a platform for real success.tomwark.substack+3

Truthfully,

Sam