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Becoming an agent

Discuss beer or anything else that comes to mind in here.

Moderators: Craig, Cass

BarMark
Posts: 6
Joined: Mon Jul 27, 2015 4:03 pm

Becoming an agent

Post by BarMark »

Hello All,

This is my first post here.
I would like to find out some basic information concerning becoming an agent to sell imported beer in Ontario.
I wasn't sure of the specific forum to post this to. I hope I made the right choice.

I have been in contact with the LCBO for a while now trying to get as much information as possible, but
there are many questions that I still haven't received answers to.

Specifically about pricing/markups etc.

I am also interested in getting start-up tips from those who have already done this.

If anyone can help me out with this I would greatly appreciate it! :)

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Belgian
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Post by Belgian »

… because agents LOVE competition and will do anything to pass on their experience… ;)

Just kidding man, I support you and I wish you luck. I think it helps if you are at least part Ukrainian, but don't go on just that.
In Beerum Veritas

BarMark
Posts: 6
Joined: Mon Jul 27, 2015 4:03 pm

Post by BarMark »

Belgian wrote:… because agents LOVE competition and will do anything to pass on their experience… ;)

Just kidding man, I support you and I wish you luck. I think it helps if you are at least part Ukrainian, but don't go on just that.
Thanks for the encouragement. :)

It must be a cut throat business because no one has offered any help.
Even my e-mail to Drinks Ontario has gone unanswered.

Roland + Russell
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Location: Burlington, ON.
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Post by Roland + Russell »

Hi there,

Sure enough, just like in any other business, there is an understandable lack of enthusiasm when it comes to sharing your business practices and procedures with others. On the other hand, it is hard to give any kind of firm advice when it comes to pricing and mark ups as there are many permutations and specifics that are not universal for each and every situation.
Here are just a few parameters that you should keep in mind when structuring the retail price (assuming you managed to obtain the pricing sheets from the LCBO Trade site):
- you and your producer are responsible to ensure the product arrives at the shelves with the retail price submitted in the original application (months and months of possible developments such as currency fluctuations despite using LCBO currency projection sheets, transportation cost increases due to conflicts, higher oil prices, etc). In other words, you better add some cushion for these surprises.
- add some cushion for possible non-compliance charges (labeling issues, packaging, ABV deviation, palletizing problems, etc)
- add something for your marketing and promotional activities, oh and we can't forget the LCBO lab fees for products.
- read the tenders and Notice To Purchase letters carefully, there could be mandatory promotional fees etc included
- you will have to call and visit stores and establishments to entice them to order your product... time and money...
- take a look at your competition, see what sells at what price. This is a very competitive business, you have to make sure that your product applications are not pricing themselves out of consideration.
- do not ignore the cost of doing business... free samples are not free (when the supplier sends you product samples, you will be paying taxes, levies, brokerage fees)... phone, fax, internet, travel, entertainment, office expenses, accounting.
- there could be possible rebate fees of the product does not sell through a certain time period dictated by the terms in the NTP and the LCBO has been applying these fees quite frequently lately.

One piece of advice we would share with you... be prepared to lose money on some orders (a drop in CDN$ could easily wipe out your commision on the entire order) but try not to lose your producer. They will most likely have very little understanding for these problems, they expect to be paid the amount that reflects the quote they gave you.
If you expect this to be a lucrative business in the first 18-24 months, perhaps you should think twice about the whole thing.

In any case, hope this helps. Best of luck and don't forget to have fun. You will certainly meet some very interesting and colourful folks and it is quite safe to say that you might even have a drink or two along the way.

Cheers!
Roland + Russell
www.rolandandrussell.com
twitter.com/RolandRussell

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Belgian
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Post by Belgian »

- there could be possible rebate fees of the product does not sell through a certain time period dictated by the terms in the NTP and the LCBO has been applying these fees quite frequently lately.

One piece of advice we would share with you... be prepared to lose money on some orders (a drop in CDN$ could easily wipe out your commision on the entire order)
It strikes me that things must have been much better just a few years ago when the CDN$ was sitting around a buck or more, and this opportunity for profit margin might have been a great enhancement for product selection, even for our traditionally bland LC stores?

Regardless of that, the slowness of the LCBO process must itself cost importers money. Instead of say a private shop making an order & re-selling it within a reasonably short window of time, there is this onerous giant window of time for currency fluctuations that can trigger losses. Plus the burden of the LCBO 'helping' the selling process while obligating you to absorb any negative effects on sales (rebate fees).

Ontario should get out of retail, they are terrible at it. I appreciate Agents doing what they can here to cut though the forest of red tape and bring in the good stuff.
In Beerum Veritas

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Craig
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Post by Craig »

Belgian wrote:
- there could be possible rebate fees of the product does not sell through a certain time period dictated by the terms in the NTP and the LCBO has been applying these fees quite frequently lately.

One piece of advice we would share with you... be prepared to lose money on some orders (a drop in CDN$ could easily wipe out your commision on the entire order)
It strikes me that things must have been much better just a few years ago when the CDN$ was sitting around a buck or more, and this opportunity for profit margin might have been a great enhancement for product selection, even for our traditionally bland LC stores?

Regardless of that, the slowness of the LCBO process must itself cost importers money. Instead of say a private shop making an order & re-selling it within a reasonably short window of time, there is this onerous giant window of time for currency fluctuations that can trigger losses. Plus the burden of the LCBO 'helping' the selling process while obligating you to absorb any negative effects on sales (rebate fees).

Ontario should get out of retail, they are terrible at it. I appreciate Agents doing what they can here to cut though the forest of red tape and bring in the good stuff.
The currency thing can trigger gains as easily as losses. You could also hedge against that pretty easily with a currency futures contract, although that might seem daunting for small business owners.

The Canadian Dollar is actually up against the Euro in the last year and relatively flat going back to 2011. Given that's where most of the imports are coming from, that should limit the damage of the high US dollar. It's certainly a problem for getting the US craft stuff in everyone around here wants.

Yes, Ontario is awful at retail. Almost goes without saying.

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Belgian
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Post by Belgian »

^ Absolutely, exchange could trigger gains but over a huge window of time the +/- risk might look less appetizing, right?

Only mentioned it as part of the amplified cost of doing (or - being interfered with in -) business in LCBO's Ontario.

I hope at least importers gain something back from having access to the freakishly large retail system. I use 'freakish' in the sense that it's not natural to a free market, and in my limited understanding it doesn't behave like many other retail systems.
In Beerum Veritas

Roland + Russell
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Post by Roland + Russell »

To be perfectly honest, it is easy throw the entire blame onto the LCBO's shoulders - God knows there are practices and ways that have been forced upon them. They also happen to have some very hard working, passionate and well intended people across the entire organization but the rules are there to be followed and implemented and they sometimes make very little sense to our foreign partners. And this is when the agents talent and skills come into play - half of your time goes into problem fixing, making people happy and taking care of things...

For those who, like the original poster, contemplate entering this business here in Ontario, dealing with the LCBO brings some very positive elements - not having to invest too much of your own money, having a large and honest broker who will not scheme, shortchange or steal, and the possibility to operate a business with very little overhead (no warehouse, no stores, etc).

Indeed, the last few years have been challenging, but the great benefit from all of the changes and developments that took place at least partially contributed to a vibrant and very promising Ontario craft beer scene.

This alone is worth raising a glass or two...
Roland + Russell
www.rolandandrussell.com
twitter.com/RolandRussell

BakaGaijin
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Location: Burlington

Post by BakaGaijin »

Great post by R+R. I'm going to go buy some of your imported beer.

Hey R+R, you represent Struise....where is the Pannepot?!?

Also, we need more Lambic! Who represents Tilquin, Oud Beersel, Girardin, Timmermans, Hanssens?!?

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Belgian
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Post by Belgian »

I have chatted with suppliers directly about products, I do appreciate how they view Ontario and how agents are able to make things happen here.

We have such an affluent province but one with so many frustrating regulations.
In Beerum Veritas

BarMark
Posts: 6
Joined: Mon Jul 27, 2015 4:03 pm

Post by BarMark »

Roland + Russell wrote:Hi there,

Sure enough, just like in any other business, there is an understandable lack of enthusiasm when it comes to sharing your business practices and procedures with others....
Here are just a few parameters that you should keep in mind when structuring the retail price (assuming you managed to obtain the pricing sheets from the LCBO Trade site):
- you and your producer are responsible to ensure the product arrives at the shelves with the retail price submitted in the original application
-
-
-
One piece of advice we would share with you... be prepared to lose money on some orders (a drop in CDN$ could easily wipe out your commision on the entire order) but try not to lose your producer. They will most likely have very little understanding for these problems, they expect to be paid the amount that reflects the quote they gave you.
If you expect this to be a lucrative business in the first 18-24 months, perhaps you should think twice about the whole thing.

In any case, hope this helps. Best of luck and don't forget to have fun. You will certainly meet some very interesting and colourful folks and it is quite safe to say that you might even have a drink or two along the way.

Cheers!
Thanks very much for your post R+R!
That was just what I had in mind re: tips and advice.

I can well understand that agents need to guard their secrets and their turf.
So I wasn't looking for anything that might hurt their business; just general stuff like you mentioned.

Yes the $CAN is certainly something that will factor into play at these levels for importing beer.
One thing I hadn't mentioned was that I am aiming for Private Ordering to start.

When I discovered this option it seemed the best for starting out.

If I could pick your brain once more there is just one thing that I would like to get a handle on.
That is, the most logical order of operation to get this thing in motion.

Am I close by stating:

1. Talks with producer (flight)
2. Business registration
3. Contract with producer (flight)
4. Sample order
5. 'Door-to-door' sales
6. Orders...
7. ?

Thanks again!

atomeyes
Beer Superstar
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Joined: Fri Oct 14, 2011 1:39 pm

Post by atomeyes »

i also debated about going the agent route.
keep in mind that the greatest challenges you'll have will include:
storing your imported product
cash to buy large quantities at once
pack size i.e. you can only sell a sealed pack unless you are listed at the LCBO. so selling a case of 24 beer to a restaurant may be inhibitive. on the flip side, you can, in theory, ask your client to create a pack size that's smaller.

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jeremyg
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Post by jeremyg »

i've actually been pondering becoming an agent myself lately

i understand there's a ton of hoops you have to jump through just to get off the ground

really appreciate your post R+R!

icemachine
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Location: Aurora, ON
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Post by icemachine »

Cass got his agency licence I believe to bring in Garrison beers, he may be willing to share some of his experiences if his FreeOurBeer blog isn't informative enough

http://freeourbeer.org/

http://freeourbeer.org/beer-importing-b ... -an-agent/
"Everything ... is happening" - Bob Cole

esprit
Seasoned Drinker
Posts: 1677
Joined: Sun Jul 29, 2001 8:00 pm
Location: Esprit Agencies-Toronto

Post by esprit »

I am Ukrainian and an agent with 26 years of experience. Contact me at espritagencies@sympatico.ca

Peter

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