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KEG Case Study

Location & Distribution

How geography shaped a successful negotiation
Highlights

THE CLIENT

J.J. Taylor Distributing Company of Minnesota, Inc.

THE CHALLENGE

Improve logistic efficiencies in a distribution system

THE OUTCOME

A successful geographic realignment of J.J. Taylor’s distribution territory

Finding Partners

Problems in business are often industry-wide. Whether it’s regulatory challenges or supply-chain problems, companies rarely experience difficulties that are entirely unique. Consequently, even rival businesses can often benefit from cooperation. 

Efficient distribution is a perennial challenge for beer distribution companies. It doesn’t matter how tasty your IPAs are or how expertly crafted your hard cider is if you cannot efficiently get your brands  to the marketplace. When I was approached by Jay Martin, Chief Operating Officer of J.J. Taylor Companies, Inc., he asked me to address rising challenges in their distribution territory. The end result Jay wanted what was best for the supplier (brewer), the retailer (bars, restaurants, liquor stores), the distributors, and ultimately, the consumer.

J.J. Taylor’s Distribution Landscape

Having established a wide portfolio of breweries throughout the state of Minnesota, J.J. Taylor was facing difficult geographic challenges. Because its brands were scattered throughout the state – some urban, some rural, some in the north, some in the south – shipping its products efficiently was quite difficult. 

 

Ideally, companies with large product portfolios reduce distribution costs by shipping products in bulk; unfortunately, if your accounts are scattered across a large state, bulk shipping is a considerable challenge – oftentimes you find your trucks with unfilled space that could otherwise carry more product. 

 

To address these distribution challenges, J.J. Taylor was planning to initiate a subcontracting process. By partnering with smaller distributors throughout the state, they could marginally reduce shipping costs in more remote areas of the state. While this idea was a step in the right direction, I saw a larger opportunity.

That was absolutely the case for J.J. Taylor and their distribution challenges. Just like J.J. Taylor, several other beverage companies in Minnesota were struggling to improve the efficiency of their distribution process. To help find a mutually beneficial solution, I reached out to two such distributors: Locher Bros, Inc. of Green Isle, MN and Bernick’s of Waite Park, MN. 

 

Having close ties with both Locher Bros and Bernick’s, I knew not only that their interests were aligned with J.J. Taylor’s, but also that their leadership teams shared a disposition towards fairness and mutual respect. Armed with this knowledge, I initiated negotiations with both companies in full certainty that neither would attempt to take advantage of my client.   

Outcome

By geographically condensing their portfolios, both J.J. Taylor and Bernick’s were able to add volume to their trucks, improving their gross profit per delivery while Locher Bros. was able to expand its operations accretively . 

 

Through industry insight and close relationships, KEG not only made these efficiencies possible, but did so at a rapid pace. Negotiations between J.J. Taylor and Locher Bros took less than 60 days. J.J. Taylor’s deal with Bernick’s was done in less than 90.

Let's Talk
Phone: 651-775-9078
Email: mike@kegconsult.com
1600 Utica Ave South
Minneapolis, MN 55416
Is your business facing similar challenges?

If you are looking to build a more sustainable business model for your taproom, brewery or bar, we’d love to help.

 

Get in touch with the KEG team today – your first hour of consulting is absolutely free.