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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