Tuesday, February 26, 2008

Building a Foundation for the Distribution of New Beverages

When expanding your portfolio in the beverage distribution business, a distributor must understand and follow certain guidelines that affect the rollout of a new beverage line. I believe that additional groundwork, preparation, and sales presentation tailored locally for a new beverage introduction will pay considerable dividends in the establishment of new brands in your market. Many distributors assume the brand programming developed by the supplier will be automatically successful in their local market. Many times this is not the case. A one-size-fits-all approach will not always work. Exceptional distributors that build brands will take the brand programming and revise it with their local intricacies, pricing influences, and vernacular to help establish an enduring foundation for the brand.

An example: My company focused on initial Red Bull distribution in the on-premise on our own at our own expense, not only for its undeniable reputation as a mixer, but because all the support we received from Red Bull NA for the first year was product. We supplied the bars with personalized point of sale that we did in house and sampled it extensively. In fact, we didn’t even try to place it in the off-premise for the first two months. I firmly believe that a beverage consumed and asked for in social situations will translate to acceptance on a convenience store shelf and floor. I also believe that Red Bull has created a bureaucracy it doesn’t need. The brand’s mystique and distributor network should’ve been sufficient. An arrogant sales force will be its demise.

There are three parameters a beverage wholesaler should abide by when establishing a foundation for new product distribution:

1.Product and Supplier Knowledge. Extensive research must be conducted on the product and supplier by the distributor. Know every ingredient. Have a list of benefits, nutritional information, and product specifications. Know company contacts, advertising slogans, and all of its uses. Its imperative to know what the supplier’s mission is, what it stands for, and its beliefs. Due diligence is an absolute must before you sign the contract.

2.Local Geographic Brand Programming. You will always receive a new brand or package introduction sales presentation from a supplier. If you don’t, be worried. Anyway, once you get this ask your supplier representative to help you tailor it to your local market, if he doesn’t ask you first. Always ask for extra funding for incentives. When building your local programming, build it in language your sales force will understand and give them the tools they need for the rollout to be successful. Train them extensively. Have signage already produced, sufficient inventory of glide racks and ice bins, street sheets printed and ready to go, plenty of product, iced down samples, straightforward objectives that are not overcomplicated and confusing, and an attainable incentive that creates excitement. Try to design and convey to your sales force the exact message and look you want to see in every account. Make your employees compete…track sales, distribution, and display execution. A cookie cutter approach that designates the slightest details in the introduction is the optimum tool for a successful product rollout.

3.Convince the Retailer Beforehand. People love to buy and shop, but they hate to be sold. I am a salesman, but I hate to be sold something. I can’t stand a cold call. I want my retailers to be convinced that they need my products. I want my customers to shop from me. I want my products to be the retailer’s idea. I want my retailers to be creative with my products. A soft sell where the retailer is convinced in the product’s benefits and contributions to his own business is wonderful. Start a campaign a month before the rollout. Gain placement of teaser point of sale. Give away samples and merchandise. Talk to your customers early and tell them what you need for the brand to be a success. Make people want and ask for the product before the introduction.

Following these three brand programming guidelines for beverage distributors when introducing new beverage products will help you in building an informed and knowledgeable sales force, retailer and customer satisfaction, and trust and dependence from your suppliers.

Tuesday, February 19, 2008

Three Tier Contemplation

Everyday I hear someone in the Beverage Industry speak about the Three Tier System. In beverage terminology, the three tier system is the arrangement carved from the repeal of prohibition that sets legal boundaries between breweries, wholesalers, and retailers. Section 2 of the 21st Amendment to the Constitution of the United States gives the actual states authority to regulate the production, importation, distribution, retail, and consumption of alcohol beverages inside their own state lines. In most states, breweries can't own distributors, distributors can't own retail establishments, retailers can't own breweries, and so on. The restrictions imposed upon each tier are in place for reasons of control, such as taxation, consumption, and licensing.

Controls and restrictions on the beverage industry were set in motion by men of vision and moderation. They knew the excesses of pre-prohibition times all too well. Every corner saloon was owned, or tied to a brewery. This made the brewer a retailer. Therefore, it is my opinion that brewers' influence upon retailers was the fatal mistake that brought about prohibition. This influence over retailers is the reason why a "middleman" or distributor tier was created. Today, I see many instances of the breweries circumventing laws enacted to prevent the abuses of alcohol:

1.Suppliers never go empty handed into a sales presentation with a convenience or grocery store representative. It is common practice for them to give a gift when starting the meeting. Guess what...these retailers now have their hand out every time we see them.
2.Breweries giving away coupons to consumers. There are laws on giving away free or reduced price product.
3.Suppliers forcing distributors to host taste challenges in local bars. It is against the law in most states to buy a consumer a beer.
4.Breweries hiring sales forces that interact with consumers in stores and bars.
5.Breweries hosting websites that any teenager can gain access to.

Face it, the big brewers are trying to sidestep the wholesale tier. Wholesalers...never, ever think that brewers or retailers are your "partners". The 21st Amendment prevents this from happening. I love to see Brewery CEO's tout the praises of the three tier system. What a load of BS. It's painful to realize our business is more about politics than how hard you actually work.

Wednesday, February 13, 2008

Conceptualization of New Beverages at Retail

With a new beverage product introduction, you must establish your presence at retail by using imaginative and ingenious methods that focus on key attributes of your product. This should be easy, one would think, for large companies with seemingly unlimited capital (i.e. Coke, Pepsi, AB, or Miller), but I write this from the outlook of a small emerging beverage company. A company that may have one new, niche beverage in the process of building their brand from the ground up, market by market.

As a wholesaler, I am inundated with new beverage opportunities. Many of these brands are viable, great tasting products that could contend in my market. Many are concoctions thrown together with a high margin. Some even have great POS and beautiful packaging. Most all miss the boat on the conceptualization of their new product in go-to-market retail strategies.

The definition of conceptualization when applied to a new beverage is complex. The term loosely means to form by concept, which, for us, is very broad and vague. I define beverage conceptualization as the formation of beverage strategies through the consideration of multiple economic impressions. These economic impressions include, but are not limited to: originality, accessibility, availability, acceptability, dependability, positioning, and marketability.

Now when brainstorming and building your beverage concept you have an outline to help build your go-to-market strategy. Ask yourself questions based on all the economic impressions I have listed above. Some example questions are:

1.Is my product original? Is there a need for it? Has it been done before? Am I jumping on the bandwagon?

2.Is my beverage easy to use? For anyone?

3.Where do you find my beverage? Can it be bought in retail easily?

4.Is my product worth buying? Why does anyone buy it? Is it beneficial to the consumer?

5.Is it a quality product? Can you guarantee its proclaimed virtues? What about imperfections in manufacturing?

6.Do the wholesaler and retailer understand my market blueprint? Is my plan too ambitious? Do I have set, easy to achieve distribution objectives?

7.Can my product be sold profitably for everyone involved?

If you can answer these questions easily and positively, you are well on your way to marketing a successful beverage. You have an outstanding product that fulfills a need in the marketplace. But don’t start having dreams of huge wealth and success. History is cluttered with beverage companies that developed unique products and then squandered their opportunity with arrogant management, excessive spending, and idiotic policy. Many of these companies believed that the retail tier is where their fortunes laid. When in fact it is the wholesale tier. First and foremost, you must take advantage and develop good relations with wholesalers. Build your programming with language the distributor and his sales force can understand. Give equal incentives to all distributors, big and small. Never, ever penalize a distributor because his market isn’t very large, you must understand he is just as important as the largest. Treat the wholesaler as you would your best customer. Once distributors believe and trust in you and your product, you will find your beverage in the cooler and on the shelf everywhere.