Alcohol Distributor - Effective Wholesaler

[torrenova]

I've a long standing business plan (work in progress) which I am coming back to that I think works without having to go further up the supply chain to wholesale level but I want to ask whether setting up as a wholesaler is just impossible, either from a logistical or legal sense whereby I could not (Thai company, not me personally) do so or whether it would be a case of vested interests arranging my funeral !

In the UK, if I approach Heineken to purchase XYZ then they sell it to me on negotiated terms. I've heard stories that it is a closed shop in Thailand and Heineken would not sell to me. Is there any truth in that ?

I take it for given that there would be numerous licences required but would there be issues with those ?

My idea does not require my involvement over negotiation (potentially) and my logistical and business ability. I would not be a "face", though I would need to be on a WP with the ability to deal at a managerial level.

Thanks.

[monty]

Not sure if it would work with local products. You'll be competing with with Thai wholesalers working at very low margins. I reckon you'll be struggling initially.

I doubt a big manufacturer would refuse to sell to you based on vested interests, but they likely would based on the size/track record of your operation.

For imported products this would be less of a problem, but it will be a niche market. There's some example, Fluid Pacific for example importing and distributing English ciders and beers.

[torrenova]

Not sure if it would work with local products. You'll be competing with with Thai wholesalers working at very low margins. I reckon you'll be struggling initially.

I doubt a big manufacturer would refuse to sell to you based on vested interests, but they likely would based on the size/track record of your operation.

For imported products this would be less of a problem, but it will be a niche market. There's some example, Fluid Pacific for example importing and distributing English ciders and beers.

Fluid came to mind but I'm not interested in their products at the moment.

My frustration stems from trying to deal with the established wholesalers. It is as if they would rather not do business in many respects rather than talk numbers. I had this in Mallorca 20 years ago and I had to go over their heads to the main island wholesaler rather than the local ones. In Pattaya, that would effectively be to the people who supply the wholesalers you see around town, perhaps on a Chonburi level. However, Pattaya in 2010 is not Mallorca in 1990 !

I appreciate the volumes may initially be too low to interest the manufacturers and to be honest, I would rather add some business to an established intermediary and avoid carrying too much stock. Volumes would however be significant, certainly at the top end of their volume charts and way outstripping most of their customers. On that level, I am finding it hard to motivate the existing suppliers to do business at prices which are commensurate to the size of my prospective purchases. It is as if discounts stop at such low levels that makes it unbelievable and begs my question of going further back up the supply chain.

To me, were I in their position, as long as my customer base was not going to be affected, any profit would be welcome and I would give out additional volume discounts.

[Doro22]

My two cents. Re: whole sale

Example:

Heineken have an appointed dealer in let say Phuket and area, this dealer will then re-sale to a whole seller (usually one W/S in a smaller market) at a lower price then anyone else can purchase.

The W/S commits to huge volumes (serious number of cases and kegs). Even though volumes are huge, margin is very low.

The W/S will then (in many cases) have sub agents (Patong, Karon etc).

Did I mention that all the W/S pay cash on delivery (to get some extra discount)? For mainstream beers and spirits it will be impossible to compete with these guys: cash rich Thai/Chinese.

For spirits, Diageo, Pernod, Bacardi etc will never deal with a new W/S operation as they don't want to kill current relationship with existing partners.

Side note: Lex "Farang setting up a W/S operation" there was one set up in a seaside town outside Bangkok, they went bust and the key guy fled with a lot of debts...

Fluid is a different thing, as they do own import and distribution, if memory serves me correct.

Better to set up a W/S with a different approach, better service: training your customers of up selling, basic bartender English, mixing cocktails, inspiration etc Help out with promotions and events, extended delivery slots. Added values can compete with a higher price.

Doro

Not sure if it would work with local products. You'll be competing with with Thai wholesalers working at very low margins. I reckon you'll be struggling initially.

I doubt a big manufacturer would refuse to sell to you based on vested interests, but they likely would based on the size/track record of your operation.

For imported products this would be less of a problem, but it will be a niche market. There's some example, Fluid Pacific for example importing and distributing English ciders and beers.

Fluid came to mind but I'm not interested in their products at the moment.

My frustration stems from trying to deal with the established wholesalers. It is as if they would rather not do business in many respects rather than talk numbers. I had this in Mallorca 20 years ago and I had to go over their heads to the main island wholesaler rather than the local ones. In Pattaya, that would effectively be to the people who supply the wholesalers you see around town, perhaps on a Chonburi level. However, Pattaya in 2010 is not Mallorca in 1990 !

I appreciate the volumes may initially be too low to interest the manufacturers and to be honest, I would rather add some business to an established intermediary and avoid carrying too much stock. Volumes would however be significant, certainly at the top end of their volume charts and way outstripping most of their customers. On that level, I am finding it hard to motivate the existing suppliers to do business at prices which are commensurate to the size of my prospective purchases. It is as if discounts stop at such low levels that makes it unbelievable and begs my question of going further back up the supply chain.

To me, were I in their position, as long as my customer base was not going to be affected, any profit would be welcome and I would give out additional volume discounts.

Edited February 23, 2010 by Doro22