Has anyone here worked in beverage distribution?

[Shaun @ Tru6]

The deal Pur set up seems to be targeted to miilennials who will bottow the $15k from their boomer parents and try to make a go of it.

Pur can't lose.

Can you sell 300 cases to college kids and include coupons for Smirnoff.

[Rick Lee]

Originally Posted by Eric Coffey

Regardless, the recurring purchase requirements and buy-in costs seem unreasonable, and would be a non-starter for me personally. In addition to the initial $15k territory buy-in, you would have a minimum monthly burn of $3,528 (300 cases/month @ $.49/can) after 90 days. That's just for inventory, not including any additional overhead/expenses. You would need to move at least 15 cases a day starting out (based on a 5-day work week) just to prevent backing up in inventory. Otherwise, storage may become an issue.

Even if it is a "premium" beverage, it doesn't have much (if any) brand recognition/strength at this stage. If this was a Red Bull or Monster distributorship, I'd say go for it. As it stands, you would be selling a no-name health/energy drink to retailers at what, $1.00-$1.50 per can to cover all expenses and make a decent profit? If so, the price that a retailer would then mark it up to doesn't seem palatable as a consumer. Keep in mind that retail shelf/fridge space is golden, and the beverage industry is fiercely competitive and over-saturated. There are countless beverage companies out there, all fighting for the same space, from indy c-stores to grocery chains and big box retail.

Have a look at the pricing for wholesale, dist. and retail around the middle of this page.
Pur Distribution - Pur Beverages - Healthy, Natural Energy

Of course, the catch is - can I really move enough volume at those prices or will I be bleeding profit by giving sample away, cutting my price or even paying for shelf space?

Previous rep. said he did around $120k in revenue in his first year, about half of which was profit, and he came into it with zero sales experience. I would want to try to start where he left off. The eventual Phoenix rep. will have the benefit of there being a local warehouse here by the airport. So I wouldn't have to pay for shipping; I'd just have to drive down there to pick up the product before heading out to meetings. Driving out to Surprise or Buckeye for a meeting, taking an order and then going to get the product by the airport and going back out west for delivery would be a profit killer.

[t-tom]

Don't do it. Any business the requires you to purchase 300 cases a month is bad. If they had faith in their product there would not be a minimum purchase. I was an account manager for Coors Beer here in Kansas City for 3 years. 150 stops a week and about 800 miles, it is not an easy job. Getting shelf space is one of the hardest things to do in the industry. Before you get shelf space you have to build a relationship with the owner or manager, this takes time and trust. Very few retailers are going to give shelf space to some guy that just walks in off the street. Shelf space is like a commodity in the beverage industry. Stores are built around shelf space, there are entire industries that do nothing but design shelf and cooler sets. You also have to remember if you do get shelf space that means someone else is loosing shelf space, they won't be happy and will do everything they can to get it back. It is a very cut throat industry. How does the company handle RTV (return to vendor) the stores you do get into aren't going to eat the cost of the returns and I'd bet that Pur isn't going to eat it either that kinda leaves you. I'm not talking about customer returns I'm talking about when the shelf stocker drops a couple cases, or the Account manager who's shelf space you took gets pissed and destroys 10 cases.

[JavaBrewer]

Impressed with the entrepreneur spirit but boy does this sound like a quick way to lose $15K.

[stomachmonkey]

Originally Posted by t-tom

...How does the company handle RTV....

Along those lines, what is the product distribution in the cases.

They have 3 flavors, are the cases single flavor or mixed and if mixed is the mix proportional to historic sell through.

There will undoubtedly be a most and least popular flavor.

How much of the least popular are you required to take and what happens if it does not sell through?

I would want local data on that as most and least popular can be geographically influenced.

Around here you can sell Dublin Dr Pepper all day long and twice as much on Sunday but I don't think the product plays anywhere else.

[Highway-Star]

It's a Pyramid scheme.

[Rick Lee]

Originally Posted by Highway-Star

It's a Pyramid scheme.

What's your definition of that? What distribution route business (that normal people can buy into) isn't some variation of a pyramid scheme? Even if you drive a Snap-On or Frito Lay truck, you have to buy the product and marketing collateral from the mother ship and then bust your ass selling it. Snap-On makes you buy the truck and also extend credit to customers and then do the collections work when they don't pay. And that's after you make a six figure investment.

I was just at the local Albertson's and saw the Coke, Pepsi and Dietz & Watson reps stocking the shelves and displays. Those guys are salaried grunts, wear a uniform, have no skin in the game, but get a steady paycheck in return for their labor. I'm looking for a little more risk and reward.

I also talked with the guy who runs the nutrition store in my local gym this morning. He gave me a lot of info and then the contact info of their company's buyers in Vegas. Going to see some bar owners in about an hour.

[McLovin]

It's a scheme, but not a pyramid scheme (in a pyramid scheme you'd make your money by signing up more people/distributors into the structure - you're not doing that).

If you do it, good luck! Will be hugely interesting to see how it goes.

[McLovin]

What happens if you fail to buy the 300 cases/month? What's the consequences?

You might think about forming an LLC to be the party to the agreement, you're the member of the LLC.

That way if things go sideways, they'll only have a shell entity to go after.

(Although they may have already thought of that, and require that you either sign personally or sign a personal guarantee).

If you're downside is limited to the initial $15K, that's not too much. But read the K carefully, the real downside could be tremendous.

[Eric Coffey]

Originally Posted by Rick Lee

Have a look at the pricing for wholesale, dist. and retail around the middle of this page.
Pur Distribution - Pur Beverages - Healthy, Natural Energy

Of course, the catch is - can I really move enough volume at those prices or will I be bleeding profit by giving sample away, cutting my price or even paying for shelf space?

Looks like their projected margins (for you) are even more optimistic than I mentioned. If you are able to consistently sell it to several independent retailers/c-stores for $43/case, at volume, then you are a sales god. FYI, a case of Monster would be at least $15 cheaper to that same retailer at even the lowest tier of wholesale pricing, and they are 16oz cans not 11.5oz. Red Bull (8.5oz?) wholesales for at least $10 cheaper per case as well.

Originally Posted by Rick Lee

Previous rep. said he did around $120k in revenue in his first year, about half of which was profit, and he came into it with zero sales experience.

If that's true, then it shouldn't be hard for him to prove. I'd want to see an account ledger, financials, and confirm existing accounts/relationships.

[Rick Lee]

Well, that came to a screeching halt today. I did some market research by visiting the nutrition store at my gym, Albertson's, two local bars and chatted with a demo lady at Costco. She said she gives away 8-9 cases of product on a Saturday demo day. The sample she gave me of another energy drink was about the size of a shot glass. The two bar owners I talked with go through 2-3 cases of Red Bull per week.

I emailed the owner, told him the above and that I would go find some indep. grocers tomorrow, but that what I was finding looked daunting, to say the least. He wrote back to not bother, he wouldn't do business with me and that "indecision is a bad attribute in entrepreneurialism." I guess it cost me $24 and a few hours of my day to keep from losing at least $15k - time and money well spent.

[Jim Richards]

It sounds like he was looking for a sucker. It's smart that you're letting him keep looking.

[Rick Lee]

I really wonder who he's gonna get to just fork over $15k and commit to moving 300 cases a month with nothing more than a phone call or two. I'm willing to take some risks, but I have a crazy desire to do a little due diligence, which seemed to really irk him. Oh well. Onto the next one.

[Arizona_928]

I have a good friend who family vendors for Costco. Baked goods. They make decent money shy of six figures, but the buy in to the routes are usually 200-300k. Word of caution though. Costco is brutal on the vendors. The no questions asked returns, and you can't sell open cases will kill you until you're established...

I guess the answer do you think you can sell 300 cases? Might consider the 99 cent store, and dollar tree. That is as a last resort.

What's the cost per pallet?

[Rick Lee]

Originally Posted by AZ_porschekid

What's the cost per pallet?

$1176 or $.49/can, $11.76/case. Lots of margin built in there, if you can sell it to distributors and retailers for $28-42 per case, respectively. But I don't know who would buy it and was told to pound sand before I could complete my research.

[wdfifteen]

When people around here have a heart attack they move too Phoenix.

[KevinTodd]

Be very, very careful. The territory you describe seems rather small for such a specialized product, and contracts with chains (even small, regional ones) will hinge on depletion allowances (read discounts) in order to set pricing and potential programming.

You'll have competitors with huge budgets knocking your hard-earned placement off the shelf (or bar as it were)...also are you delivering all of this product, once case at a time, to within a 100 mile radius? That in itself is almost impossible from a financial prospect.


Waiting for a distributor to pick you up is another thing entirely. I was the VP of Sales for many years for one of the largest in the country and sometimes I had up to 30 new products waiting for me each day. I passed on great products many times simply because I already had other products that were too similar.

I'm also wary of the entire guarantee that you yourself will have to purchase 3 pallets per month....that is a lot of energy drink....

I'm sure there are details that we're not getting here, but even though the lure of this deal looks great; it may be much more difficult once you sign.

I certainly am not trying to be the harbinger of bad news.....

[Rick Lee]

Read #31. It's already dead.

[Shelzy222]

Rick, you were VERY smart not to get involved with this.

I am the ex-girlfriend of the owner.......ALWAYS be wary when it seems too good to be true....

[Rick Lee]

Thanks, but this opp is dead and buried. FWIW, the owner sent me a note about six mos. ago, said his assistant had come across this thread in some kind of search and brought it to his attention. He apologized for having been kind of short with me. I forget his exact wording, but seemed genuine about it and wished me well.