Wednesday, April 30, 2008

Freight Allowances and Fuel Surcharges for Beverage Distributors

Freight Allowance or Fuel Surcharge? I find these terms going through my head twenty-four hours a day. A freight allowance is usually passed down to beverage distributors from their suppliers to alleviate the financial burden of high freight rates. Freight Allowances are also used to equalize FOB’s for beverage distributors located long distances from where the products are produced and shipped. A fuel surcharge is an incremental charge added to the total invoice from a beverage distributor to a retail establishment. If your company is not receiving freight allowances or passing on a fuel surcharge to your customers, you need to ask yourself some serious questions.

Freight Allowances

Many beverage distributors receive freight allowances from their suppliers. If you are not receiving them, you need to demand an allowance from your suppliers. I have heard and seen instances of beverage distributors in California, Texas, and Florida receiving substantial freight allowances from many well-known suppliers. If your suppliers are doing this for one distributor, they should be doing it for all.

Fuel Surcharges

Some distributors, including myself, have added $1.00 and $2.00 fuel surcharges to retail invoices. There has been some backlash from the suppliers and major chains, but overall many retailers have come to expect a fuel surcharge. I am considering changing my surcharge to a percentage of the total invoice. It will probably be 2% to 2.5% of the total invoice cost.

With rising diesel and gasoline costs to beverage distributors, make sure you start asking for freight allowances and adding fuel surcharges now. Fuel for our trucks will never be cheaper than it is now. And that causes many sleepless nights for me.

Wednesday, April 02, 2008

Struggling with Convenience Store Cooler Box Sets?

Why do we lose sleep over cooler resets? How come my company never gets enough cooler space? Will there ever be a time when I can expect fair market share in a beverage cooler? Space management is more important to your beverage business than anything else. When building your beverage business, building a space management plan will deliver added market share and cash flow. Some key characteristics to a good space management plan include:

1. Take time to analyze your current space in all accounts.
2. Take more time to analyze the space allocated to the competition.
3. Note the brands and packages that are selling.
4. Watch for out of stocks.
5. Definitely check code dates…they are time bombs sitting on the shelves.
6. See which packages are over spaced and under spaced.
7. Make sure there are no gaping holes in the set or underutilized space.
8. Discuss your products strengths and your competitors’ weaknesses with account decision makers.
9. Keep your space clean! Doors, shelves, products, deep well…your customers appreciate this more than you know.
10. For incremental sales, think outside the cooler. Use racks, suction cups, displays, hot shelves, ice downs, etc.
11. Refuse to lose space…find alternatives, beg, and whine. Remember in the beverage business you can go from first to worst any given day.

Your space management plan should revolve around these key characteristics. You will enjoy the benefits of increased sales from more packages on the shelves, less out of stocks, more cash flow, and a buyer impressed with your knowledge and interest in his business.