As another year wraps up, the team here at VXP is reflecting on a year of watching the distribution industry shift and change. From our vantage point as sales partners, we have the opportunity to observe and contribute to the way that dozens of different wholesalers operate.
This means that we get to see who is growing and who is struggling. Who is innovating and what new ideas are working. And, most importantly, we see how all of that affects a business’s profitability and long-term sustainability.
This letter isn’t just a recap; it’s a conversation starter about where we’re heading and what’s possible for all of us in the year ahead.
What’s Driving Change?
The market is shifting fast, and staying ahead means tackling some big challenges. Traditional beer sales are declining as consumers explore new options like low-alcohol drinks, better-for-you options, and even THC beverages. These trends bring opportunities but also raise questions about sustainability and market stability.
And…..competition for discretionary spending. Every dollar your customers have is stretched between more choices than ever—cannabis, online gambling, dining out, online gaming, subscription services, OnlyFans…the list goes on. This isn’t just a category battle; it’s a fight for relevance and wallet share in a world full of distractions. Check out one of our most recent Tapped In Sales podcasts with Harry Schuhmacher where he discussed his perspective on this challenge.
Add in regulatory uncertainty—especially around THC beverages—and the stakes get even higher. Navigating evolving rules isn’t just tricky; it can be expensive and risky. Labor and leadership pressures add fuel to the fire. Losing key people or transitioning leadership, especially in family-run businesses, can disrupt operations and culture.
What does it all mean? Being agile and building resiliency wins. Whether it’s adapting to new products, managing regulations, or future-proofing your team, staying sharp and focused is the name of the game.
Being Agile in 2025
Profitability is the name of the game, and top distributors have made it clear it’s priority number one. The smartest operators are rethinking their playbooks—evaluating product mixes, scaling back on lower-margin items, and doubling down on categories that move the needle. Whether it’s NA drinks, wine, spirits, or THC-infused beverages, they are all finding ways to focus on what drives real incremental profit.
The heart of this change is about playing smarter. Sales teams are zoning in on high-impact packages where volume meets profit potential. Leadership teams are stepping up, too, taking a hands-on approach to pricing strategies and cutting underperforming SKUs, all through the lens of volume x profitability.
On the wage and incentive side, things are evolving fast. Exposing sales teams to gross profit data and using the volume x profit approach is helping shift focus to higher-margin products, and tools like VXP are making it easier to align team goals with profitability. This isn’t just about better numbers—it’s about smarter decisions at every level of your organization.
Of course, making significant changes isn’t always smooth sailing. Resistance within teams can slow things down, and shifting the culture to match your goals takes work. But the results speak for themselves: by staying focused on what matters, you’re not just surviving—you’re building something that lasts.
Building Resiliency in 2025
Getting your operation to the proper scale is critical for navigating the changes we’ve seen in 2023 and 2024. Many of you have already taken bold steps to adapt, showing resilience is built through thoughtful adjustments and a willingness to innovate.
Most of you have right-sized your cost structures to align with today’s service needs. And you already know—you can only cut so far before the next step is growth. Right-sizing doesn’t mean doing less; it means doing more with what you have. Strategies like route optimization, adjusting service levels, and raising delivery minimums ensure your labor is as efficient as possible while still meeting customer expectations.
We’ve seen this firsthand. Clients have embraced operational restructuring with strategies like transitioning to a 48-hour delivery model, consolidating routes, and consolidating roles to better align with current market dynamics. These shifts aren’t just operational—they’re cultural. Aligning sales and delivery teams around shared goals has been essential to achieving greater coverage with fewer resources and reduced costs.
The bottom line? Resilience isn’t about holding on to old ways but building intelligent, more agile operations. By scaling your business to match the realities of the market, you’re not just staying in the game—you’re setting yourself up to win.
Invest and expand to rebuild in the aggregate.
The brightest teams heading into 2025 are redefining what market share growth means. It’s no longer just about beverage or beer share volume—it’s about capturing territory share dollars. You’ve already built a powerful route-to-market (RTM), and now is the time to fully leverage it by expanding into new categories and finding ways to grow your GP$ across the board.
Here is the mindset shift: As Moneyball puts it, “Guys, you’re still trying to replace Giambi the GP$ we have lost. We have to re-create him GP$, re-create him the GP$ in the aggregate.”
Take the NA category, for example. While it might feel like a revolving door of brands, there’s still real money to be made. The same goes for wine, spirits, and even non-traditional categories like salty snacks. These products align perfectly with your RTM strengths—especially in gas stations, convenience stores, and grocery channels. They offer tangible opportunities to diversify your profit streams and reach new consumers.
Supplier relationships are a critical part of this equation. The beverage landscape is more diverse than ever, and shrewd distributors are leaning into THC beverages (where legal), non-alcoholic options, and snacks to hedge against declining beer sales. These innovative categories not only boost GP$ but also provide a buffer against shifts in consumer behavior.
With opportunity, though, comes responsibility. Quality and compliance are more important than ever, especially with new products like THC beverages entering the market. Protecting your federal permits and staying on top of evolving regulations isn’t just important—it’s essential. Partnering with reliable suppliers that consistently deliver quality will solidify your operational foundation and set you up for sustained growth.
Your willingness to experiment and embrace diversification is already paying off. Whether you’re bringing NA brands into convenience stores or expanding into premium snacks and specialty products, you’re proving that innovation isn’t just about survival—it’s about staying competitive and thriving in a rapidly changing market.
Success in 2025
Distributors who want to own their own destiny will succeed in 2025 and beyond. While alignment with major suppliers remains strong at +95%, the remaining 5% of creative friction—where distributor and supplier directions diverge—is both expected and healthy. This entrepreneurial spirit and willingness to adapt will drive your success in the years ahead.
Change isn’t easy. Resistance from within is understandable. Teams accustomed to “the way we’ve always done it” can struggle to embrace new systems or processes. We’ve seen it firsthand when transitioning to VXP’s sales incentive model. It’s a shift, no doubt, but the payoff has been undeniable: smarter decisions, stronger teams, and better results.
At the heart of it all is a shared vision—a desire to survive market fluctuations and thrive beyond them. You’re building something bigger than today’s numbers. You’re creating businesses with deep roots that can grow for generations. That’s not just about strategy; it’s about sustainability, adaptability, and leaving a legacy you’re proud of.
So here’s to 2025—a year for leaning into bold moves, focusing on what matters most, and building something that lasts. At VXP, we’re proud to be part of this journey with you, helping you turn challenges into opportunities and ideas into results. Together, let’s make 2025 your best year yet.
