The cost of doing business for allied trade partners

At first mention of “allied trade partners,” the immediate reaction of most suppliers or trade organizations is pretty visceral — a recoil at the sheer mention of any business adjacent to the production sector that involves “selling” a product or service. Allied trade partners conjure up thoughts of being placed on a call list with used car salesman tactics and marketing emails that don’t seem to end after hitting “unsubscribe.”

But this type-casting of allieds is fueled by only a few players that, for lack of a better term, are the jerks that ruin things for everyone else in the industry segment.

Yes, allied trade partners do need to sell products or services to suppliers. That’s how they make money for their businesses, just like suppliers must sell their craft beverages to consumers to turn a profit. But most allieds really have to hustle hard and get creative to reach their target audiences because the system has been built to shut them out.

“Pay to play” is a common term that gets tossed around the beverage alcohol industry in reference to relationships between retailers and suppliers, but a widely unknown fact is that pay to play occurs just as often in the allied trade segment. Just as some suppliers utilize tactics that are less-than-legal or seem predatory, some allieds don’t apply best practices in marketing and end up looking pretty sketchy at best. Because of this stereotype, most allied trade partners are viewed as outcasts and must buy their way into the inner circle if they want to reach supplier partners.

Understanding the allied trade partner model

Directly paralleling the craft beer industry, most Allieds fall into the small to medium-sized category and many are independent, single owner LLCs. As most independent producers know, when you’re small and resources are limited, there are countless barriers to entry when it comes to profitability, hence the rogue and often guerilla-like marketing tactics that some Allieds choose to employ.

In an effort to shed some light on the true cost of doing business in the allied trade partner segment, here are some of the common expenses that most members of this community have to endure to reach suppliers.

Trade association and organization membership dues, which cost anywhere from $300-800 per year per entity. In order to penetrate the inner circle, you’ve got to be a member of multiple guilds, advocacy groups, and trade associations because if you aren’t a member, you immediately get the cold shoulder when it comes to contributing educational materials, speaking at conferences or events, and/or accessing members that could be a great fit for your product or service. Large allieds don’t have any issue with shelling out tens of thousands of dollars each year for membership fees, but smaller businesses are limited by their meager budgets and often get written off by trade organizations automatically if they are not a paying member.

Five and six figure amounts are spent annually on participating and speaking at trade shows and industry conferences. Most allieds do not get paid to speak. Unless you pay for a sponsored session or have been in the industry for decades, most allieds are not compensated for their expertise. Partners must submit proposals to speak and if they are accepted, they have to shoulder the full cost of air travel, hotel stays, rental cars, meals, child care, and the cost of missed work/family time. If the partner organization is large, these costs are inconsequential, but for smaller allieds, this is a monumental expense.

Trade shows are also a budget buster for allieds. Depending on the size and scope of the show, a booth can run businesses anywhere from $500-5,000 to be on the floor. And that’s just for the physical booth, so you also have to factor in the cost of presentation materials, time spent meeting with attendees, and expectations of “swag” to sway participants to remember your brand after the event.

A lesser known intangible expense is mental health. The idea of wellness is just now beginning to take hold in the craft beverage industry and allieds are not immune from this ongoing issue. Pandemic market conditions, low wages, unsafe working conditions, gender gaps, social justice inequities, and political unrest are just a few of the reasons mental health needs to be addressed in the craft beverage industry. These issues carry over into supplier adjacent businesses as well. Daily rejection, pressure to keep up with larger competition, time away from home and family, the pressure of public speaking, digital marketing tactics, guardrails for selling activities, lack of access to resources, continuing education, sexism, ageism, racism, elitism, and inconsistent income streams all factor into the roller coaster ride of being an allied trade partner.

Empathy makes us all better business partners overall and can help our industry grow. Just as the TTB puts guardrails on suppliers, retailers and wholesalers in the alcohol industry, but allows them to still sell products, the beverage industry should provide opportunities for allied trade partners to showcase their benefits without such high costs by setting clear boundaries and relaxing access to audiences. Because of industry stereotypes, suppliers in the craft beverage space are being deprived of educational resources from allied trade partners that could really help their businesses flourish.

Julie Rhodes is the owner of Not Your Hobby Marketing Solutions, a strategic advisory & educational services company that teaches sales, digital marketing, and distribution management tactics to growing craft beverage businesses through industry-specific online courses and customized coaching. Find out more at NotYourHobbyMarketing.com