On a recent Sunday we went out to lunch in the country at a restaurant called Gilroy. The restaurant has a microbrewery attached to it or one could say that the microbrewery is attached to a restaurant. This restaurant/microbrewery has a great lesson for small businesses not only microbreweries on getting their products into the hands (and mouths) of the buying public.
Many small businesses battle with distribution. It’s one thing coming up with a new product or service but quite another to devise a distribution channel to the customer. Understanding distribution as well as existing distribution channels and even coming up with new distribution channels can make or break a small business enterprise.
Take all the small microbreweries that have that have risen as fast as yeast in recent years. The one thing that all of them battle with is finding channels of distribution. How do they get their product, no matter how handcrafted and fantastic their taste, into wholesale and retail outlets? If you speak to any microbrewery owner, they will tell you, “with great difficulty”.
One microbrewery that I know of in the Western Cape has come up with a very fine beer product but has only been able to get their beer into a few pubs and weekly food markets. The last time I checked they were considering selling the brewery because of the schlep involved in replenishing the beer at pubs and the low sales volumes on crates of bottled beer.
Where the Gilroy outlet has found a way to provide a channel for beer sales is by attaching a fun indoor and outdoor restaurant to the microbrewery, which is at the back, and so has a ready-made outlet for beer production. The restaurant area is large enough to host up to something like 200 people, which gives scale to the whole operation.
Yet not every microbrewery owner would want to start their own restaurant. The owner of Gilroy, Steve Gilroy, seems very much suited to the restaurant business as he has a charismatic personality which sees him on Sunday afternoons standing up and singing with the resident musician. Steve belts out songs like “You can leave your hat on” by Joe Cocker, filling in his own raunchy lyrics and entertaining the crowd. Not everyone has been a founding member of a notorious early 1970s hard rock Johannesburg band called Suck.
The Gilroy microbrewery brand also takes a tongue-in-cheek approach to marketing of its beer product with cheeky and raunchy advertising. Stated boldly in one of the posters in the pub is a “Reasons why Gilroy real ales are better than any partner”. The poster explains that Gilroy doesn’t sulk. “A Gilroy won’t sulk because you once liked Barry Manilow.”
So Gilroy has in fact created its own distribution channel direct to customers. This means that the small business owner can control his or her own destiny. No need to “suck” up to other pubs or liquor stores to get a tiny share of shelf space.
Coming up with alternative distribution arrangements depends on simple ingenuity or creative capital. It pays microbreweries to think of new or different distribution channels instead of having to do hand-to-hand combat with the brewery giants. One way I saw this been done was where a hotel pub near Simon’s Town became an exclusive outlet for a certain brand of microbrewed product. The hotel runs a loyalty card system to encourage customers to come back for more. This kind of arrangement works well for the hotel pub because customers can’t find the microbrewed product elsewhere. The microbrewery owner has a regular customer. The microbrewery owner can find other outlets in noncompeting areas for this exclusive arrangement.
Whatever product or service you have come up with it’s important to think about distribution right up front because if you don’t you may find that this crucial area remains a rock in the road that stands in your way of bringing your business up to scale. But get distribution right and a lot of other factors in your business will start to look good not least of which is your increased sales and profits.
