{"id":1795,"date":"2018-11-28T19:12:32","date_gmt":"2018-11-29T00:12:32","guid":{"rendered":"http:\/\/199.250.223.35\/~craftbrewery\/?p=1795"},"modified":"2020-09-17T16:16:48","modified_gmt":"2020-09-17T20:16:48","slug":"free-resource-how-to-value-self-distribution-rights","status":"publish","type":"post","link":"https:\/\/craftbreweryfinance.com\/oldversion\/free-resource-how-to-value-self-distribution-rights\/","title":{"rendered":"Free Resource: How to Value Self-Distribution Rights"},"content":{"rendered":"

This question came up recently from a brewer:\u00a0How do you value self-distribution rights?<\/strong><\/p>\n

A good question. But even better: How do you\u00a0increase\u00a0<\/em>the value of your self-distribution rights?<\/p>\n

in this post I’ll provide answers to both questions and a give you a\u00a0sweet spreadsheet tool\u00a0<\/strong>you can use to value your own self-distro rights.<\/p>\n

Craft Brewery Financial Training Members:<\/b> To get more details and step by step instructions on this topic, Log In to your account and access the Online Courses from the Member Menu.\u00a0<\/span><\/p>\n

Not a member yet?<\/b> Sign up and get <\/span>instant and unlimited access<\/span><\/a> to Craft Brewery Financial Training online courses, resources and guides.<\/span><\/p><\/blockquote>\n

The Value of Brand Self-Distribution Rights<\/strong><\/p>\n

As the name implies, brand distribution rights are rights granted to sell certain beer brands in specific territories.<\/p>\n

These rights are created by a contract between brewer and distributor. The brewer grants the distributor the right to sell and distribute their brands, and the distributor sells, delivers and services the products.<\/p>\n

While these rights are typically assigned to the traditional beer distributor, the rise of self-distributing breweries has created a new path to value for breweries.<\/p>\n

Thanks to franchise laws and high demand from buyers,\u00a0brand distribution rights can be extremely valuable.<\/strong><\/p>\n

How to Value Brand Rights<\/strong><\/p>\n

The value of brand distribution rights is created when sales are made to customers, and repeat purchases occur.<\/strong><\/p>\n

The distributor\u2019s job is to make the market. They develop customers and create recurring revenue. These recurring sales become an annuity \u2013 repeatable, consistent and predictable income.<\/p>\n

Business people like recurring revenue, and this is what creates the true value of your brand distribution rights.<\/strong><\/p>\n

Beer brands and beer brand distribution rights are two different assets. Both hold tremendous value for your craft brewery.So,\u00a0Before signing away the potential value of your brand distribution rights<\/strong>, it\u2019s worth considering a self-distribution model in your business.<\/p>\n

What are distribution rights really worth?<\/strong><\/p>\n

In the beer distribution world, the\u00a0value of brand distribution rights is measured by the amount of gross profit the brands produce.<\/strong>Gross profit is the difference between the sale price to retailer and cost of the product, freight and taxes to the distributor.<\/p>\n

The total pool of gross profit dollars<\/strong>\u00a0is then multiplied by a factor \u2013 commonly known as a\u00a0\u201cgross profit multiplier\u201d<\/strong>. The product of these two numbers is the value of the brand distribution rights.<\/p>\n

Sweet Spreadsheet Tool to Value Brand Rights<\/strong><\/p>\n

Use this Tool<\/a><\/strong> to help value your brand rights.<\/p>\n

When you grow CE volume and Gross Profit dollars in your self-distribution territory, you grow the value of your brand rights.<\/p>\n

Track your past results, project future results, and use the Brand Value Tool to estimate what self-distro rights are worth to your brewery.<\/p>\n

 <\/p>\n

P.S. Not a member of Craft Brewery Financial Training?\u00a0 If you want more details on self-distro financial planning and route building templates, check out the Online Course: Brewery Self-Distribution 101<\/a>.\u00a0\u00a0<\/em>The course is yours free with your\u00a0annual subscription<\/a>.<\/em><\/p>\n

What you\u2019ll get:<\/strong><\/p>\n