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
- Onboard w/ both RNDC and LibDib, no sales support
- 28% markup, inclusive of shipping
- 6 states, ~400 suppliers
- Most people want to get regular distribution, which can act as a trial for RNDC
Trade account benefits
- ~30k accounts (~50% active), not including RNDC states
- No minimum shipments
- Enables direct contact w/ wineries
- Access to smaller items not available elsewhere
LibTech (launched Jan 2024 in TN)
- RNDC invested in the last round, and LibDib built e-RNDC
- Selling e-commerce platform as SaaS to other distributors
LibDib is developing AI tools for suppliers, early 2025 launch
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