By Colm Devine, Chief Sales Officer, Teybridge Capital Europe
Behind every bottle on the shelf is a chain of producers, distributors and retailers. Each one has its own margins, payment terms and cash flow needs. At Teybridge Capital Europe, we finance drinks businesses of every kind, from spirits and liqueurs to ready-to-drink cocktails and non-alcoholic brands. In my experience, the brands that grow fastest are the ones that understand that chain inside out.
In our last article, The Next Round, we looked at where consumer tastes are heading. This time, I want to follow a bottle from the distillery to the shelf, and show where the biggest opportunities and pressure points sit.
Key takeaways
- Most alcohol moves from producer to distributor to retailer to consumer.
- Distributors open doors to retailers, but a first order doesn’t guarantee repeat sales.
- Rate of sale (sell-through) is a better guide to performance than headline sales (sell-in).
- Growing drinks brands commit cash long before they get paid, so the right funding at each stage is essential.
How Does the Alcohol Supply Chain Work?
Most alcohol moves through four stages:
- Producer: makes and packages the product.
- Distributor: buys the stock and moves it into the market, often handling importing, storage, logistics and retailer relationships.
- Retailer or hospitality venue: supermarkets, off-licences, bars and restaurants buy the stock and sell it on.
- Consumer: buys and enjoys the finished product.
Selling abroad adds more layers. Every market has its own licensing rules, import procedures and taxes. The United States is a good example. Most states use a three-tier system, which separates producers and importers, distributors and wholesalers, and retailers. Producers generally can’t skip a tier and sell straight to shops.
So an Irish distillery breaking into the US would ship its whiskey to a licensed importer, who passes it to a distributor, who supplies the stores and bars. The prize is a huge new customer base. The cost is significant upfront investment in compliance, shipping, storage and marketing, often well before repeat sales arrive.
Why Do Drinks Brands Use Distributors?
Think about your local off-licence. It might stock hundreds of products from dozens of brands. Ordering from every distillery and brewery individually would be impossible. Instead, it places one order with a distributor covering 40 products, and gets one delivery.
For the producer, a distributor offers instant access to an established network of retailers and venues, without building a sales and logistics team in every market.
But here’s the catch. A distributor might buy a large volume of stock, giving the brand an impressive sales figure. If shoppers don’t then buy it, repeat orders slow down. That’s why what happens after the distributor takes delivery matters so much.
Sell-In vs Sell-Through: Why Rate of Sale Matters
Rate of sale is how quickly a product sells, usually measured in bottles sold per store per week. It is one of the most important numbers in the drinks industry.
It helps to separate two figures:
- Sell-in: how much the brand sells into distributors and retailers.
- Sell-through: how much actually sells to consumers.
Say our Irish distillery sells €1 million of whiskey to distributors. That looks fantastic. But if bottles move slowly off the shelf, distributors end up holding months of stock. That can lead to fewer repeat orders, pressure to discount, requests for promotional support, or even returns.
Strong sell-in shows ambition. Strong sell-through shows real demand. Pricing, competition, seasonality and changing tastes all shape how fast a product moves. That’s why rate of sale, stock turnover and repeat orders paint a much clearer picture of a drinks business than headline revenue alone.
What Is a Bonded Warehouse?
Alcohol rarely travels straight from distillery to shelf. It can spend weeks or months in storage, often in a bonded warehouse.
A bonded warehouse is an authorised facility where alcohol can be stored with excise duty suspended until the product is released for sale. For spirits, where duty is a major cost, that’s a real cash flow advantage. These warehouses also keep strict records of every stock movement, which gives clear visibility over where products are held.
That visibility matters to lenders too. It’s one reason alcohol stock can be an attractive asset to finance, a topic I’ll explore later in this series.
Why Is Cash Flow So Challenging in the Drinks Industry?
Drinks businesses spend a lot of money before they get paid. A growing spirits brand has to buy ingredients, bottles, labels and packaging, produce the product, store it and ship it. Then the distributor may take 30, 60 or 90 days to pay. For aged whiskey, the original investment may have been made years earlier.
Many brands also produce in large batches a few times a year, then sell that stock gradually over months.
The result is a familiar pattern: the faster a drinks business grows, the more cash its growth absorbs. The good news is that the right funding can match each stage of the trading cycle:
- Before production: purchase order or supplier finance helps fund ingredients and packaging.
- While stock is held: stock finance releases cash tied up in eligible inventory.
- After delivery: invoice finance bridges the gap between issuing an invoice and getting paid.
The goal isn’t just access to finance. It’s having the right structure in place at the right moment, so cash flow keeps pace with ambition.
What Separates Successful Drinks Brands?
The most successful drinks businesses I work with don’t stop at a great product or the next big order. They know which distributors are performing, how fast products are selling, where their stock sits and when cash will come back in.
They also know that entering a new market takes more than signing a distributor. It takes building demand, managing stock carefully and having the financial headroom to grow.
At Teybridge Capital Europe, understanding these trading relationships is central to how we structure working capital facilities. By looking beyond headline sales to how a business really operates, we can put finance exactly where it makes the biggest difference.
A great product creates the opportunity. A strong supply chain and the right funding partner turn it into lasting growth.
Frequently Asked Questions
How does alcohol get from a distillery to a supermarket?
Alcohol usually moves from the producer to a distributor or wholesaler, who supplies supermarkets, off-licences and hospitality venues. International shipments may also involve importers, logistics providers and bonded warehouses.
Why do alcohol brands use distributors?
Distributors give brands access to established retail networks, combine orders from many brands, and manage logistics, storage and local relationships.
What is the three-tier alcohol distribution system?
Used across most of the United States, the three-tier system separates producers and importers, distributors and wholesalers, and retailers. Rules and exceptions vary by state.
What is rate of sale?
Rate of sale measures how quickly a product sells to consumers, often as units sold per store per week. It helps brands and distributors understand real demand and forecast repeat orders.
How can drinks businesses fund growth?
Many use a mix of finance matched to their trading cycle: supplier or purchase order finance for production, stock finance for inventory, and invoice finance to unlock cash from unpaid invoices.
