Always have distribution w/ Cheryl Durzy, LibDib

XChateau Wine Podcast

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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