NBWA Reflection: POS Tracking Software More Important Than Ever
As I write this, we have just returned from the 2015 NBWA Convention in Las Vegas.
First, our gratitude to Craig Purser and his team for another job well done! They are the best in the business for helping us get in direct contact with beer wholesalers that need our POS Tracking and Line Cleaning Software solutions. Thanks Craig!
The Amazing Number of New Brands
One of the key things that caught my eye again this year was the ever increasing availability of beer choices offered to the US retail beer buyer: Now well over 13,000 named brands.
Thirteen-thousand! Let that sink in just a moment.
One of our greater-Cincinnati party stores probably has 1,300 beers to choose from. And, although the number of new craft beers continues to be added to the store’s inventory faster than I can keep up with, the number of beers sold only appears to be growing steadily, but not necessarily at great speed.
Perhaps by Christmas, the number available under one roof will have climbed by another 50 or so, then after the holidays there will be some that go away, never to return; and then some new brands that will be added. There is growth, but I don’t see 13,000 beers for sale at one retailer anytime soon. I would imagine that the number of beers at this retailer may approach 1,450 by fourth-quarter 2016. But, come to think of it, this is much too large a number, all in the same place at the same time, for most of us to get our heads around.
Thirteen-thousand different beers – it boggles the mind, but 1,300 beers are also daunting.
Take a Look at a Grocer’s Bar
This month, a new Super-Kroger’s opened in Cincinnati. Have you heard about the “Market Place” concept? This Kroger’s is larger than three football fields laid end-to-end. Inside, near the center, this Kroger’s has an impressive bar with some 12 taps, and the beer on-draught changes regularly and frequently. It also has one those “eno-tap” contraptions of tubes and faucets allowing wine to be “tapped” from up to 12 different bottles and delivered in two-ounce pours.
All this considered, the infrastructure and design elements taken together, this “island” inside this enormous Kroger’s store, is larger than many stand-alone bars that I have been to over the past 30 years. Flights of beer and wine seem to be the first thing patrons go for, followed either by a full glass of wine or mug beer; next followed by the ritual filling of what looks to be an infinitely large supply of “growlers”, initially supplied at no-charge for beer-buying customers.
Twelve different beers on tap, twelve different wines on tap – even this much variety and taste-ability can almost overwhelm. And, get this, the in-store bar also serves “light-bites”, elaborate cheese plates and tiny gourmet sandwiches specifically chosen to compliment the beer and wine choices offered. Most of the half-dozen “bar tenders” seemed to know nothing about the tap beers, and even less about the wines. However, there was one guy who was on the ball, and available to describe the various beers, and one would presume, also has some wine skills, too.
Point-of-Sale (POS) Marketing Could Really Help
Talk about your POS marketing – the entire set-up was designed to promote the products and also be the point of sale for choosing the beverages you planned to take home with you.
Well, I sat there sipping my beer flight and marveled at what this entire “alcohol island” must have cost to build and how much it costs to maintain with, one, two, three, four – five employees, plus the guy who really knew the products.
Then I noticed two guys, approaching the bar, pushing a hand truck carrying a new barrel. These gentlemen weren’t wearing the Kroger golf shirts like the other folks behind the bar. No, these guys were wearing different colored golf shirts that I identified as they closed in. The new peoples’ golf shirts were embossed with the logo of a prominent Cincinnati beverage alcohol distributor.
Imagine that: Kroger’s has its own wholesale distributor (WD) sales reps keeping the Kroger taps flowing. This means these folks were not on the Kroger payroll, but apparently were “on site” on a Saturday night to ensure the beer would not stop flowing. I don’t know if the distributor helped Kroger’s pay for the bar within a grocery store concept, but it certainly seemed that the WD’s reps were given complete freedom to pull the empty barrel and start a new one and even interact with Kroger’s patrons. These WD reps were treated as fellow employees as far as I could tell.
When I ask certain questions about the extent to which goods and services are treated as POS, I sometimes feel I get evasive answers, almost as if what I am asking is, somehow, a bit of a gray area. One thing that I know is that the tap pull handles are supplied by the beer WD’s as are the table tent/menus listing the bistro’s light bites. And of course, the two reps, even if they are simply on-loan from the beer WD aren’t working without pay. Is all of this expense not considered POS? Looks like POS to me.
Who’s Paying for All This POS?
Once again, my head started spinning and it wasn’t from the 10% ABV craft beer I was imbibing. Rather my head was spinning as I contemplated what certainly seemed to me to be perhaps the most expensive POS I have ever seen. If the bar’s construction costs were somehow lessened by the WD – and I have to assume there was at least some form of “help” offered by at least one of the various WD’s whose products were for sale – then what we have inside this grocery store is an investment in both permanent and temporary POS made by and continuing to come from at least one if not more WD’s.
And Who’s Tracking and Managing These POS Costs?
Of course I wondered if any WD was tracking, managing and measuring the effectiveness of the POS outlay on display. My assumption is that marketing monies had been poured into the store long before the first shovel-full of dirt had been turned over. I imagine there is a quantifiable ROI on the distributor’s point-of-sale promotional spending at this store. I also believe the distributor is acting based on blind faith and really has only a vague idea how much was and is spent to maintain what appears to be a long-term commitment to gaining brand dominance, one Kroger’s store at a time.
Here’s What’s Going On
With thirteen thousand beers on the market, the sales “winners” can only be, and will only be, those brands that track, measure and manage the vast outlays of capital required at the point-of-sale just to get noticed.
Let’s face it, another $100 million spent on TV ads for either Bud or Miller beers haven’t really done all that much the past few years to “sell more beer” – either because everyone already knows Bud Light or Miller Chill, or because they don’t care what is advertised on TV, often fast forwarding through TV ads.
But when the beer shopper is actually at the place and time when a buy can be made, that is when advertising – POS – is “super-effective”. Does anyone actually believe another $10 million Super-bowl ad for a well-known virtual commodity like light beer will move the sales needle anymore? On the other hand, time and again the data positively correlates POS marketing to an increase in sales.
It is long past time to wake up and start marketing like the big business that most beverage distributors today are. It’s now time to market at the point-of-connection between the shopper and your product; and, it needs to be accomplished using digital tools that provide the same degree of accountability and manageability as your order entry, purchasing, warehousing and financial reporting systems.
How OnTrak Software Can Help!
OnTrak now offers 5 Digital POS Tracking Tools for today’s beverage distributors: SignTrak (for custom, temporary signage), PermaTrak (for permanent POS), MenuTrak (for custom beverage menus), SampleTrak (for beverage sampling), and our newest offering, LineTrak (for draught line cleaning).
For more information about our POS Tracking and Line Cleaning Software, please click this button:
A Recent Customer Conversation About POS Marketing Management - The Costs and Supplier Recovery
If this is your first time on our site, or first time checking out our blog, let me give you a very brief introduction to OnTrak Software.
About OnTrak Software
We are a point-of-sale (POS) marketing technology company that helps our customers – primarily beverage alcohol distributors – Track, Measure and Manage their investments in POS marketing materials using our suite of cloud-based Digital Tools. We call it POS Tracking Software.
For nearly ten years, our customers have been telling us that POS costs and speed to market are out of control – one’s too high and one’s too slow. One of the reasons for these twin negatives are the traditional paper forms for ordering, producing and delivering POS promotional materials just can’t keep up with the POS demands from suppliers and retailers.
While suppliers often have generous recovery programs designed to offset the distributor’s investment in graphics personnel and equipment, actually getting those marketing recovery programs to provide benefits to the distributor can require extensive reporting regarding the types and effectiveness of the POS initiatives.
OnTrak Customer Example
OnTrak’s suite of Digital Tools addresses all of these issues – but you probably figured we’d say that. Let’s continue by discussing one of our real live customers, a “middle-plus” market distributor of beer, wine and spirits wholesaler covering several states and representing dozens of suppliers.
What Did Your POS Cost?
I recently asked our customer how much they spent on the POS orders they processed in September of this year. The answer was, “I don’t know off the top of my head, but I can get it for you in a couple of minutes.” Literally, a few minutes after I hung up the phone, I received an email from my customer, one of the larger medium-sized beer, wine and spirits distributors in the US, with the number $41,995.40. In the case of our customer, the dollar figure they noted was their cost for the production of a very specific type of POS marketing – menus: Mostly wine menus.
Typically we see “beer dominant” distributors spending on POS increase during the late spring and summer months and “wine dominant” distributors spending on POS spike during the last 3 or 4 months of the year – more or less tracking with the busy seasons for beer vs. wine and spirits sales. This customer is clearly wine dominant and uses our MenuTrak product to automate beverage menu creation and supplier bill-back recovery.
How Much Did You Recover From Your Suppliers?
Well, I couldn’t just let that nearly $42,000 cost figure stand without knowing how much of the expense they recorded would be eligible to be recovered from their various suppliers marketing allowance programs.
So, I asked our customer to tell me the amount recovered.
This time, the answer was given while I waited on the line: $41,972.87.
Nearly 100% of the cost?
I was on the phone, in total, about 5 minutes. I did ask how long this report would have taken without the business analysis report writer than comes with MenuTrak. The response was: “Days. We wouldn’t have been able to run the report for a week or two after we closed the previous month; also there are virtually never any questions about the reports or the amounts detailed, everything is laid out by supplier, customer, product promoted and associated costs via the POS. Every detail a supplier requires is on the report.”
So, we have an over $100M beer, wine and spirits wholesale distributor who is able to account for what is advertised at the point-of-sale, when, how much the POS cost to produce, and how much of that cost is offset by the suppliers. The production of the report took less than 5 minutes.
The Bottom-Line Benefits Of OnTrak
This distributor uses the OnTrak products to place POS orders, track the flow of work through production and delivery, measure, record and report costs both to “internal customers” and externally to suppliers, ultimately allowing the distributor to manage the expenses of perhaps their second largest expense item, after payroll or fuel – POS promotions.
On top of these features, our customer is enjoying the benefits of improved POS accuracy – that is, there are fewer errors and reworks – getting their POS to market more quickly, and spending hours generating and filing recovery reports with suppliers, rather than days or weeks.
One additional and very much appreciated (but not planned for) benefit is the improved cash flow, with respect to recovery dollar settlements, due to the OnTrak recovery reports being able to be generated quickly, completely and accurately with all of the data required to generate quick settlements of recovery dollars due from suppliers.
OnTrak now offers 3 other Digital Tools for today’s beverage distributors in addition to MenuTrak: SignTrak (for custom temporary signs), PermaTrak (for permanent POS), and SampleTrak (for beverage sampling.
For more product information, or better still, to request a live demonstration of any of our products, please click this button:
The Top-line Impact of Tracking, Measuring and Managing POS Marketing and Promotional Materials
A Look-Back Over the Last Eight Years
In the beverage alcohol distribution industry, the spiraling growth of spending on point-of-sale marketing (POS) has been an issue of some concern for most of the last decade.
Prior to 2008, however, beverage alcohol – beer, wine and spirits – sales could be pretty much counted on to be better this year than last and it was almost a sure thing that next year would be better still.
In response to the circumstances imposed on distributors during the ‘Great Recession’, some pursued consolidation (either by looking to acquire and grow, or be acquired in order to avoid dire consequences); some pursued adding many new brands and products to their portfolios; and almost all began in-earnest self-examinations to determine where money could be saved and where money could be invested to drive additional sales.
Managing the Cost of POS
It is true that most distributors have been inefficient in at least one highly-visible but apparently difficult to manage area of their business – POS marketing. And, due to the fact that POS is believed by virtually all distributors to be very effective at keeping and capturing additional market share, many distributors have done little to manage the costs pertaining to the ordering, production and placement of POS for fear of losing sales to competitors who beat them to the punch in getting effective POS placed at-retail in a timely fashion.
Much of the above noted self-examination was to determine both the cost and ROI of virtually every expense in a distributor’s operations. Delivery trucks and maintenance costs, to warehouse lighting, to diesel or bio-diesel fuel procurement and several other “green” initiatives, to the often called “black hole” of POS were all considered fair game for the efficiency experts to dig into this time around.
Reducing the Cost Per Case Delivered
It should – the last eight years have seen small, medium, large and super-large distributors eager to find solutions that will reduce their “cost per case delivered.”
Think of it this way: Imagine a 10M cases (sold per-year) distributor who implements a system that will reduce his cost per case delivered by just one-half-cent. Such a system would increase the distributor’s bottom line by $50,000.
For the purpose of our discussion, if the average selling price per case is $15.00 and the after tax profit per case is $.50, this distributor would have to increase revenue by at least $1,500,000; and, the quantity purchased, warehoused and delivered would need to increase by 100,000 cases. Of course, it is always possible the distributor may have to increase payroll, warehouse management and transportation expenses proportionately to provide the logistical support required.
More Brands – More Need for POS
As beverage alcohol distributors continue to expand their brand and product offerings, it is no wonder they’re now running more promotions, and spending more on POS campaigns, and doing it more frequently than ever before. POS, from custom to permanent signs, menus and B2B sampling continues to increase beyond the tracking capacity of even the most comprehensive spreadsheets.
Even if the spreadsheets are kept up-to-date, there is always the time it takes to consolidate the spreadsheet data from the various sales teams and correlate POS data to revenue or case sales. Just a few short years ago, it was not uncommon for a beverage alcohol distributor to have, at most, only a couple hundred SKUs within a few dozen brands.
Today’s distributor – especially now that distributors have added non-alcohol beverages and an ever-growing portfolio of spirits, wines and craft and import beers – will find it virtually impossible to keep track of POS ordering, production and placement. Spreadsheets were put in place in response to the inefficiencies of completely paper-based POS tracking systems, but today, tracking using spreadsheets is inefficient and many have simply reached the limits of a spreadsheet’s scalability.
The Growing Demand for Digital Tools
Today, digital tools are required to track, measure and manage POS spending. A growing number of distributors have come to the realization that POS ordering systems are or in some cases already have reached their limits of sustainability – all they can do, typically, is place a POS order. The most agile distributors, often accustomed to operate (since 2008) with a reduced or no IT department, are turning to SaaS (cloud or Internet-based) POS management systems that allow them to transition from completely manual or spreadsheet based tools to fully digital tools – giving them the time to focus on creating, managing and fulfilling demand rather than chasing paper.
OnTrak’s POS Tracking Software
Of course, the digital tools I’m referring to here are from OnTrak; products like SignTrak®, PermaTrak®, MenuTrak™ and SampleTrak™ allow you to extract key POS spending data into reports and spreadsheets that enable beverage distributors to see a complete picture of where what and when POS was deployed, what products were promoted, and how much was spent over the past week, month, quarter or trimester.
A correlation of sales of products to POS promotions is also possible so that distributors can actually see the top-line impact of their POS initiatives. Supplier reports can also be created with a few clicks, thus compressing the time from POS spending to the recovery of supplier POS dollars (allowances). Suppliers can have much more immediate insight into the impact of the POS sponsorships and co-op allowances. Data compilation, at one time taking so long, reports were delivered long after the promotional period had passed, is now compressed to matter of a few short hours often providing actionable insights for the upcoming promotional initiatives.
Reports correlating POS placements to sales, once thought to be either too time consuming, prohibitively expensive or virtually impossible, can now be run daily if necessary allowing near immediate analysis of the effectiveness of a current POS campaign. Using digital tools facilitates POS campaign management and insight into POS promotions, costs and ROI analysis.
OnTrak Customer Feedback
A large mid-western distributor recently told OnTrak:
“The effectiveness and efficiency gains provided by OnTrak’s digital tools for POS have allowed us to do more effective POS promotions. The sales teams can now see what works and what doesn’t; we’re all much more aware of the top-line impact of our POS spending. We’ve become more efficient. OnTrak’s products have cut our costs by one-half cent per case delivered. ”
OnTrak’s Suite of Digital Tools Enables Our Customers To:
- Have visibility into POS promotional activities
- Streamline POS ordering and production, and improve communications between the in-house POS organization and the trade reducing errors and speeding POS to market
- Eliminate guesswork as to which POS works
- Organize all POS tracking, production, measurement and management data into a central point of control
- Provide anyone who needs access to POS campaign information with access to real-time POS to sales correlation
All of the above enables you to quickly see and evaluate the top (and bottom) line impact of your POS campaigns.
Seeing is believing!
To learn more about all our products, including LineTrak™ (which provides tracking tools to manage draught line cleaning activities), please click the following button:
Why You Need to Start Tracking, Measuring and Managing Your Point-of-Sale (POS) Marketing Programs
It is increasingly unlikely that anyone reading this blog will actually remember the economy that emerged after World War II.
I was born in the early 1950’s, and although it is true that I was alive during the post war, post great-depression period, I mostly remember reading about, not living what it was like in the aftermath of the war.
“The World” of my earliest memories only goes back to the late 1950’s. My recollection of our economy is only of a growing economy and an optimistic society, fueled by the almighty consumer’s quest for “more and better”. I remember, or at least I think I do, the birth of the shopping mall – a wondrous place, a shrine to conspicuous consumption and the place to go to “see it all”.
At the same time, manufacturers and suppliers of all these ingenious new consumer products continued to accelerate production of “more” thereby providing hungry consumers with a seemingly endless supply of new, innovative products on which we could spend our newfound, post war “wealth”.
Those were the days of apparently boundless consumerism, both fueled and satisfied by limitless producer innovation – correct?
Not so fast.
Consumer-driven growth, then, just as now, is not simply the product of an industry’s capability and capacity to make bigger and better things.
I would argue that the prime driver – or what actually fuels growth – is marketing, and to put an even finer point on it, advertising.
The Good Old Days?
Here, in our blogs, we’ve exhausted our nostalgic perspective of last century’s nuclear family sitting around the TV watching the Ed Sullivan show or Ozzie and Harriet as the consumer goods manufacturers of the day injected their advertising messages directly into our collective cerebral cortex. In a typical evening of watching TV together, the entire family would see product promotions for consumer packaged goods, or what we now call CPGs, on the three available channels – ABC, CBS and NBC.
It didn’t even matter what network you watched. For the most part, the advertisements were identical on all three – we all knew Maxwell House was “Good to the last drop, and that “Winston tastes good, like a cigarette should”, no matter which network we watched. “Plop, plop, fizz, fizz,” and all that jazz.
Big brands were conceived, developed and launched via what we now call “traditional media” – and these big brands expanded nationally. With the vast majority of the population exposed nightly to the same messages, it was no wonder marketing or advertising is now credited with the meteoric rise of brands, including many of today’s giant CPG firms, including Kellogg’s, P&G and Anheuser-Busch to name a few.
The Better New Days!
Marketing and advertising today are even more important than ever before in the process of creating, building and maintaining brands.
The reason for this is that consumers are more fragmented now than they have ever been. So CPGs marketing programs have had to fragment, or segment in today’s market in order to retain their power and ability to inform and persuade the targeted market to buy.
In other words, “the primary engine" of our economic growth was and still is marketing!
And, the most effective marketing tool available to drive growth of CPGs is point-of-sale marketing –Targeting consumers at “The Moment of Truth” when a shopper becomes a buyer.
Any manufacturer who wants to establish or build a brand recognizes that we are currently moving through the “Era of the Shopper”. One of the hallmarks of this era is the rapidly declining effectiveness and increasing expense of traditional marketing: Declining effectiveness coupled with increasing expense is a recipe for free-falling profits.
What can you do?
Track, Measure and Manage Your POS Marketing Programs
If you’re a manufacturer, distributor, or even a retailer, one of the first orders of business in your quest to build and grow your brand or “increase sales”, is to begin to track and measure the impact of your point-of marketing or advertising.
It may have become a corny phrase, but it is true –
“You can’t manage what you don’t measure”.
Considering how little, if any, measurement of the effectiveness of point-of-sale marketing or shopper advertising is currently being done by CPG manufacturers, it seems obvious that there’s a lot of low-hanging fruit to be picked from the “tree of at-retail marketing”.
It may seem way too easy to say that “all you need to get started” down this road to optimized point-of-sale marketing is the selection of a couple of key performance indicators. Indicators that when correlated to sales, can suggest which of your at-retail marketing / advertising programs truly produce improved sales.
Finally, I’m going to let you in on another little known fact:
The software tools to enable you to automatically track, manage and measure your point-of-sale marketing / advertising programs are so inexpensive and easy to adopt you probably wouldn’t believe me if I told you what it costs to buy and implement them.
Give us a call and be prepared to be surprised. If you choose not to call, you’ll be missing out on a marketing game changer.
For more information about our point-of-sale tracking software, please click this button:
Draught Line Cleaning – Part 3 – The OnTrak Solution - LineTrak™
This is the third of a three-part blog discussing the tracking of draught beer line- cleaning.
In Part 1, “The Problem,” we introduced, defined, described and discussed draught-beer line cleaning.
In summary, draught-beer lines need to be cleaned at least every two-weeks to keep your beers tasting great. In some states, beer line cleaning is the retailer’s responsibility, but overall, beer distributors have a vested interest in making sure their customers’ draught-beer lines are clean.
In Part 2, “Possible Solutions,” we discussed several solutions to tracking and managing the draught-beer line cleaning process.
We identified possible solutions distributors might consider, with each one requiring the maintaining of a tap-line cleaning log and check list showing completion of the required cleaning steps. A number of options were discussed, summarized as follows:
Wholesale distributors could choose to sub-contract draught-line cleaning to a third-party provider and also require that they provide both distributors and their retail customers with detailed reporting including “when” the lines were cleaned and “what steps” were completed, with customer sign off;
Wholesale distributors could elect to develop their own software application designed to be used by the distributor’s own line cleaning crew their device of choice or,
Wholesale distributors could choose to subscribe to an already developed software application that can execute in an Internet connected, or stand-alone environment, and on virtually any form-factor, such as a tablet, iPad, Android, or Surface device.
What is OnTrak Doing?
In Part Two, we also noted that OnTrak Software is currently developing a tap-line cleaning and tracking application that will address the needs of beverage distributors to meet the requirements of their suppliers to take on the task of line cleaning or; what to establish a “best-practice” to gain a competitive advantage as a superior draught-line cleaning provider.
After having solicited the input of several distributors and our customers, we are confident we will soon be bringing to market a robust digital tool – A software ‘App’ that provides verification of draught system cleaning so you can be confident you are serving a consistently great-tasting beer.
As mentioned in our last blog we’re already in the development stage of this software. It should come as little surprise that we’ve christened this new software “LineTrak™”.
LineTrak™ replaces a paper-based system, providing visibility into a two-week schedule and cleaning activity records, including customer acknowledgement.
As part of our LineTrak™ offering, we listened to our target market (beer distributors) and we determined the new application will be developed to run on tablet-type form factors.
We’ve also come to the conclusion that the most beneficial tool for our customers would be one that provided both a connected and unconnected capability allowing users in the trade to work with the app even in off-line situations (on either PC/Windows based tablets or more typically Apple and Android form factors, e.g., iPads).
Current LineTrak™ Features
We determined that unlike most apps, a centralized administrative functionality would also need to be developed by our technical team that would provide companies with the following features:
Access to Back Office Application’s Data
Account Line Cleaning Assignment/Scheduling
Daily Synchronizing of the Off-line devices with the line cleaning central administrative/scheduling system
Survey Question Responses
Reporting Including: Activities by day and by Rep; Activities by week and by Rep; Cleanings scheduled but not completed
Line Cleaning Vehicle Tracking (GPS)
Naturally as we begin to roll LineTrak™ out to customers, the product will continue to grow as new features and functions are identified. At this point, however, we’re excited to be well along the process of developing the app and are – today – anxious to discuss, in greater depth, the features and functions of this valuable new digital tool for beverage distributors.
If you’d like additional information about LineTrak, you can schedule a live demonstration of the product's features and functions.
We are also interested in your feedback regarding any possible additional requirements that would help your distributorship.
Please click the following button to request a 15 minute demostration, or you can call Denis Clark @ 513.936.4032.
Draught Line Cleaning – Part 2 – Possible Solutions
What are the possible solutions to your draft beer line-cleaning problems?
In our previous blog posting, Part 1, “Draught Line Cleaning – The Problem”, we introduced, defined, described and discussed draught-beer line cleaning.
In summary, draught-beer lines need to be cleaned at least every two-weeks to keep your beers tasting great. In some states, beer line cleaning is the retailer’s responsibility, but overall, beer distributors have a vested interest in making sure their customers’ draught-beer lines are clean.
Most beer distributors offer draught-beer line cleaning to their customers either because their suppliers require it, or they want to maintain a competitive advantage with their customers. The routine cleaning of the lines may be carried out by the distributor themselves or by a specialized draught-beer line cleaning company.
The Total Cost of Draught Line Cleaning
Top-25 distributors can, undoubtedly, spend millions every year on line cleaning.
Even relatively small distributors have told us the annual costs to clean draught-beer lines can easily be a six-figure number.
Unless there are changes to local or state regulations, it is likely that beer distributors will continue to bear both the responsibility and costs associated with line cleaning. Additionally, beer distributors and their suppliers actually do want control over the line cleaning scheduling simply because draught-beer taste and quality are compromised by dirty tap-lines.
During the past couple of years there have been many cases of lines improperly cleaned or lines overlooked during cleaning. Sour tasting beer and beer with “chunks” are something no draught-beer retailer wants.
Even worse is when the lines are cleaned improperly resulting in cleaning chemicals not being completely flushed out of tap lines. These chemicals are almost always caustic and very often poisonous. When all of the steps required for proper cleaning are not completed and documented there is always the risk that a bartender could unknowingly be pouring a glass full of cleaning fluid rather than beer.
When a customer or a customer’s customer is harmed the real costs can go through the roof.
The Impact of Craft and Import Beers on Line Cleaning
During the past few years there has been an explosion in the numbers of craft and import beers coming to the market. More craft breweries are coming on-line virtually every day. These brews often come to a given market first as draught-beer, then at a later date they’re either withdrawn from the market, or are so successful they begin to be distributed in bottles, cans and growlers.
Craft brewers are even more fanatical about line cleaning than the majors (Anheuser-Busch/InBev or ABI, and MillerCoors or MC) – if that’s possible.
For example, it is not uncommon for tap-line #1 to have “Ranger” flowing through it for a couple of weeks (Ranger being distributed by the local MC wholesale distributor or WD). Then in week three, tap-line #1 is switched to “Hop Head Red” (distributed by the local ABI WD). The MC rep affected by this change will let his management and WD operations know, and tap-line #1 will be withdrawn from the MC WD’s cleaning schedule. Unless line cleaning records are kept current by both distributors, and line cleaning data is shared with the retailer, it is certainly possible that tap-line #1 will become essentially an “unclean orphan line”.
That line may be ignored by both distributors and the retailer – until a customer comes to the bartender and says something equivalent to “waiter, there’s a fly in my soup” but more like, “bar tender there’s a chunk of something floating in my beer”.
Unlike Bud or Miller branded beers which are exclusively distributed by AB or MC WD’s, “Fat Tire,” for instance, may be distributed by either the local MC or local AB distributor (or in some rare cases a craft and import only WD). If the New Belgium Brewing sales executive for your region finds a distributor (you) out of compliance with New Belgium’s policies, it is not impossible to imagine that distributor will “lose the Fat Tire franchise” so to speak.
In such a circumstance as described above, there are no winners, only losers.
What Are The Requirement For a Line Cleaning and Tracking System?
Here is just a sample of the input we have received from talking to beer distributors who are our customers. They want and need:
- A solution that allows both the distributors and retailers to keep track of the line cleaning schedule, including a check-list indicating that every line-cleaning step required has been completed. This would go a long way to ensure the retailer’s customers are always served the freshest and best tasting beer possible.
- A system that would let suppliers, distributors, on premise retailers and their patrons to know the status of the “draught-beer transport system” they rely upon to guarantee them their best beer taste possible.
- A program that would allow suppliers to monitor their distributors for greater accountability in regards to the many aspects of the distributor’s operations; including the actual draught beer delivery systems present at the on premise consumption retail locations.
- A tracking system that would allow supplier representatives, during a routine ride-along, to see evidence at on premise locations that their distributors are complying with their “best-taste” and “fresh-beer” guidelines.
- A line cleaning log that is kept by the distributor and readily available at the retailer’s location would, for most suppliers, become a fundamental requirement for the distributor to retain the rights to distribute their products.
Again, we value your feedback, so please comment on this posting.
The Sub-Contracting Of Line Cleaning
One possible solution to your need to track and manage your draught-line cleaning responsibilities could be the sub-contracting of draught-line cleaning to a third party provider. You could require that third party to provide both you and your retail customers with detailed reporting including when the lines were cleaned and what steps were completed, and by whom. Unfortunately sub-contracting to another firm does not release your company from making sure the line cleaning was performed on schedule and correctly. You are still accountable for the meeting the standards as well as documenting the results.
Software Applications to Track and Manage Line Cleaning
Another solution could be for your distributorship to develop your own software application designed to be used by your own line cleaning crew on lap-tops, tablets or smart-phones.
Of course, your application would have to include route and customer scheduling information, a line cleaning check-list, and a recording of customer or supplier acceptance criteria, among several other features and functions.
You would also have to be able to change the application’s functionality to adapt to market changes, and you would also have to be able to provide full-time help-desk support for the line cleaning crews using the application in the trade.
Don’t forget, this would be an information technology solution, so you might have to hire and retain a staff to provide ongoing maintenance and upgrade support as well as device operating systems upgrades which may impact the operability of your application.
There’s An Easier Way - The OnTrak Way!
A third, and perhaps a better option, would be to subscribe to an already developed software application or “App” that can execute in any environment, on virtually any device you might adopt.
As luck would have it, OnTrak is currently developing a new application called LineTrak™ based on the requirements collected from a wide variety of beer distributors across the nation.
We are still seeking additional input to determine if there are any other “universal” features and functions you may come up with. You can submit your requirements by commenting on this blog.
We welcome your feedback. Perhaps it will lead us to deliver that “app” to you!
The next blog topic will discuss “Draught Line Cleaning – Part 3 – The LineTrak™ Solution”: An “App” that will help you track and manage the process of keeping great beer, tasting great.
To learn more about OnTrak and the current solutions we have developed for companies that distribute beer, please click this button.
Draught Line Cleaning – Part 1 – The Problem
What does it take to keep great beer, tasting great?
I’d like to use this blog to introduce and describe an issue – actually a problem – in the draught beer industry – And more importantly even if you think this is not a problem for you, why you should care.
The Current Situation and Background
According to Anheuser-Busch’s “Beertender Guide”, on premise beer draught lines need to be cleaned on a regular basis to prevent flavor deterioration.
In some cases, this requirement comes from the distributor’s primary supplier; from retailers; from state and regulatory bodies, or from the distributor’s own business “best-practices”.
In some states, such as Ohio and New York, the local board of health requires the retail establishment to clean their draught lines, however, there is no regulation preventing the retailer from having the cleaning performed by a third-party.
Other states, such as Texas, require the wholesale distributor to clean the lines. In many states, distributors offer draught line cleaning to their retail customer in order to gain competitive advantage and retain customers. Regardless of the reasons behind performing tap line cleaning, the consensus is that draught lines must be cleaned at least 26 times per year, or a minimum of every two weeks.
For many distributors line-cleaning is their responsibility. For all distributors, line cleaning – regularly and correctly performed line cleaning – certainly is, or at least should be, their concern.
According to DraughtQuality.org:
“The number one factor affecting draught beer quality is poor hygiene. Whether you’re a brewer, wholesaler or retailer, you must be vigilant in making sure lines are cleaned properly and regularly. Poor hygiene and improper cleaning and/or rinsing will result in loss of sales and reflects poorly on the entire industry.”
Additionally, there can be legal consequences associated with not cleaning or improperly cleaning draught beer lines, to say nothing of the potential health issues. Suffice it to say that dirty draught lines do not paint a pretty picture, both literally and financially for beer companies, be they suppliers, distributors or retailers.
Why Should Draught Line Cleaning Be Important To You?
As a bit of a refresher on why you should line clean, consider:
Beer is “alive”!
Much of what we enjoy about beer is derived from the fact that beer originates with organic compounds including yeast. When beer is pumped from kegs through lines to the tap, new, unwanted, yeast and bacterial organisms find their way into the lines where they can be said to literally feast on the beer flowing through them.
Over time these living organisms as well as minerals begin to attach themselves to and clog the draught lines. From time-to-time these line deposits can come loose and actually end up in the consumer’s glass. It’s not a pretty sight.
What Happens The Moment Beer Begins To Flow Through Lines.
All of the surfaces the beer touches begin to have bacteria grow on them. In as few as two weeks, the bacteria and mineral deposits adversely affect the beer’s taste. If the lines are cleaned using the appropriate cleaning solution and method, both the build-up of deposits and the flavor destroying bacteria are flushed out of the system.
Line cleaning is not typically difficult, dangerous or time consuming. And, although there is – for either the distributor or the retailer – some cost to the process, line cleaning is, in the bigger picture, not prohibitively expensive.
As a supplier, distributor or retailer, you have an important interest in making sure line cleaning is done with near-fanatical regularly and is performed absolutely correctly. It is, hopefully, obvious by now:
Dirty draught beer lines don’t save money – they cost sales. Should a patron take a big gulp of dirty beer (or as one distributor called it “chunky-skunky beer”) you could have a law suit on your hands.
In case I haven’t made the case for clean lines based on some rather unattractive outcomes, know that clean draught lines helps your beer keep its taste and looks; and, clean lines actually will reduce waste by virtually eliminating re-pours to unhappy or grossed-out patrons.
So there’s the Problem, or maybe the opportunity.
One of the top challenges of a beer distributor is that while they have put in place a line cleaning process, the really don’t have a good solution for tracking what has happened. And this is the case whether they do the line cleaning with their own people, or outsource the line cleaning to a third party.
Ultimately The Distributors Are Responsible
What if there was a solution for keeping track of all the activities that are required to effectively and efficiently manage to the line cleaning requirements that come from suppliers, retailers, or state regulations?
Or what if you want to put in place a “best practices” approach within your own business to service your customer’s expectations?
Well that’s what our Next Blog Topic will discuss – “Draught Line Cleaning – Part 2 – Possible Solutions”.
Please subscribe to this blog so that you can receive further updates on this topic.
We Need Your Feedback
If given all the resources to develop an “app” for the tracking of line cleaning, what would it look like?
The first step in that process is to gather requirements, and you can submit your requirements by commenting on this blog.
We welcome your feedback. Perhaps it will lead us to developing that “app” for you!
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To learn more about OnTrak and the current solutions we have developed for beer distributors to track and manage their printed and permanent POS, please click this button.
The Changing Face of POS Marketing – Or At-Retail Marketing
One Thing We Know For Sure
There’s one thing that we should get out of the way from the start:
Marketing messages, delivered at the point-of-sale, are more important to increasing sales and building brand and product identity than ever before.
So, what do we mean when we say point-of-sale (POS) marketing?
For us at OnTrak, as well as with our prospects and customers, point-of-sale marketing – or just “POS” – means virtually anything that is used to promote brands and products to the retail consumer at the place where they buy.
This message has become stronger and stronger as we have met with more and more beverage alcohol suppliers and distributors over the nearly 8 years we’ve been in business.
Types of POS Marketing Materials
In the case of beverage alcohol, POS includes both temporary printed signage – typically produced by distributors in their own print shops, and permanent signage – acquired by distributors and loaned to their retail customers.
A broader definition and utilization of permanent POS materials includes displays, lights, umbrellas, glassware, mirrors, coolers, cabinets, table tents, chalkboards, logoed apparel, door pulls, tap pulls, coasters, bar-mats, corkscrews and bottle openers – and the list goes on.
Increasingly, food and drink menus – supplied and usually financed by distributors – and B2B product samples can also be considered POS marketing or promotion. Beer, wine and spirits B2C tasting events could be included in the POS marketing-mix basket.
The Cost of POS
It is true that some of the POS that distributors place is almost certainly a total waste of time and money – and it’s not an insignificant amount.
The average paper or Coroplast sign created by every beverage alcohol distributor in the US costs between $30 and $50 each. It is not uncommon for a 5-million case malt beverage distributor to generate between 10,000 to 25,000 signs annually. Many of our customers generate over 100,000 signs every year – and every year their cost of POS increases.
To put this in greater context, the beverage market comprises about two-thirds of the two-trillion dollar US CPG market. POS for these products certainly appears to be where the lion’s share of the approximately $20 billion per year, at-retail marketing expenditure is going.
So, why am I suggesting some POS spending is probably ineffective and wasteful?
Simply put, my opinions are based on both an assumption and an observation that most beverage alcohol distributors, and their suppliers, don’t have an accurate ROI measurement of their current investment in POS.
This despite the fact that there are POS tracking tools available, that when coupled with a distributor’s existing product, customer and route accounting systems, will provide them with the data necessary to measure the effectiveness of their retail marketing campaigns.
Here’s what is even more confusing: Distributors continue to increase their spending on POS because their customers and suppliers “urge” them to do so. In some cases it’s a mandatory requirement. On the one hand, the increase in POS spending is perhaps a good thing since POS does work to increase sales and brand awareness. On the other hand, this increase in POS spending may be unnecessarily wasteful since much of it goes unmeasured and unmanaged.
But regardless of the costs, it is also true that POS works.
Many notable studies conducted by the ANA, AT Kearney, CGT, GMA, P2PI, POPAI, and Shopper Marketing Magazine have documented the effectiveness and efficiency of POS marketing for all consumer packaged goods. (See Note) These impressive companies, have studied POS effectiveness, and their analysis proves that POS works.
We believe most beverage alcohol distributors use POS both offensively and defensively. But we also believe POS is really a competitive tool. So, while distributors may be increasing their spending on POS, they also need to track, measure and manage POS effectiveness and ROI, and recover more of these increased costs from their suppliers. If you’re not addressing the whole POS life-cycle, then you’re likely to be spending more and valuing POS less.
Today, the American consumer is much less likely to be stimulated into buying simply by seeing paper or permanent signs, mirrors or glassware displaying a brand’s logo. Part of the reason for this is the proliferation of the number of beers, wines and spirits. Craft beers and spirits have rapidly increased in number, and ironically both shoppers and consumers, who may not be the same person, now look to POS materials to educate and inform them about beverage products in the bottle, not just a creative name and logo. This same thinking can be applied to wines, now that we have surpassed 105,000 wine labels available to consumers.
Traditional, “image building”, POS may not be sufficiently influential today. With well over 200,000 beverage alcohol products, and many more non-alcohol beverages available to the American market, today’s beverage buyers at retail outlets, bars and restaurants are seeking more facts before they spend $11.00 on the latest and greatest 4-pack of beer, or $10 on a pint, to put a finer point on it.
The current opportunity is to use POS marketing as the most efficient way of communicating the information retail customers demand before they take a chance on your brand or product. If you use and measure your POS marketing materials appropriately and effectively, you will stand a much better than fighting chance of success.
How OnTrak Helps
I’d be remiss if I didn’t remind you that OnTrak offers a suite of POS tracking, measuring and managing applications (SignTrak, PermaTrak, MenuTrak and SampleTrak). These solutions can be deployed in a few weeks, and cost less than you might think. On average less than $15 per month per rep and merchandiser.
To learn more about OnTrak and our POS Tracking Software, please click this button:
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Note: ANA: Association of National Advertisers; CGT: Consumer Goods Technology; GMA: Grocery Manufacturers Association; P2PI: Path to Purchase Institute, POPAI: Point of Purchase Advertising International.
You’re Spending More on POS Marketing Than Ever – Now What?
The State of Today’s Retail Marketing Technology - Or What OnTrak Software Can Do For You.
Every Beverage Supplier and Wholesale Distributor is interested in capturing more market share and increasing sales. By now, we all know: One of the best tools available to attain these goals is an effective and efficient at-retail marketing campaign - aka point-of-sale (POS) Marketing.
POS Marketing and the Beverage Industry
About six years ago, our research regarding at-retail marketing uncovered US annual retail marketing spending of over $19 billion. Similar research undertaken today identifies that current spending on at-retail marketing has grown to more than $25 billion – an increase of over 30%! Now, your beverage alcohol company may not be spending 30% more on POS marketing today than it did in 2009, but it should not come as a surprise that you are very likely spending considerably more now than you spent then.
Based on several expert, retail marketing organizations’ research, it is also very likely you will be spending more in the upcoming years than you are spending now. This increase in spending is driven by the simple fact that POS marketing works to drive additional sales, often in the form of what POPAI calls unplanned purchases. This is especially critical for items where several substitutes are available to the shopper. Some of the best Consumer Packaged Goods to point to are beverages, since they make up nearly two-thirds of all CPG spending.
Assuming you agree that you spend “a lot” on POS marketing, what can you do to make certain you’re getting the best return on your retail marketing investment?
As we’ve said here before in our blog entries, you can’t manage what you don’t measure. Yet, measuring the impact of POS will be no less difficult than measuring almost any other data-driven function in your company – without the proper tools, that is.
The Impact of Technology
Retail Marketing Technology is the key to measuring the impact of your POS initiatives across brands, customer groups and of course across the various types and placement of POS materials. This means, for example, that your sales reps and marketing and merchandizing people can meet with your customers armed with accurate POS marketing data. Current and accurate data can then be leveraged to assist you in planning increasingly successful upcoming promotions.
As suppliers and distributors working with your retail customers, you may, over time, prove that your POS strongly correlates to an increase in retailers’ sales. This may then open the door for your reps to lobby for increased store inventory levels, decreasing the likelihood of outages of your brand.
With measured POS, suppliers and distributors both win – as do your retail customers and their customers.
Building the ‘Rep’ of Your Reps
A common perception in the world of beverage alcohol distribution is that a distributor’s sales reps can be perceived as spending more time ‘taking orders’ rather than ‘adding value’ to your customers by offering and selling your brands..
Adopting retail marketing technology is one clear way to build a sales representative’s credibility with your retail customers as more than an order taker or inventory control administrator.
The data your reps can provide will be, over time, seen by your customers as actionable, thereby helping prevent out-of-stock issues for the retailer. To restate: As the value of this POS marketing data is recognized, your retail customers will start seeing your reps less as order takers and more as providers of innovative marketing approaches. Your reps will become Sales Representatives in the most positive sense of that description.
The Right Answers for Your Customers, At the Right Time
As a supplier or distributor who invests in retail marketing technology, both you and your retail customers will realize greater sales productivity and capture increased market share. As a result, you will improve your capacity and capability to perform in the role of a consultative seller because you have measured the performance of your POS marketing campaigns and materials. The bottom line is that through the deployment of technology, including data-driven analytics, you and your sales reps can deliver the right POS marketing at the right time.
For more information on how you can find retail marketing technology solutions to help you help your retail customers convert their shoppers into click the following button:
Why There Are No Ratings, Reviews and Pairing Suggestions On Wine Menus
This blog entry continues the thoughts about adding information to your wine menus that were discussed in the prior blog entry.
So to continue the theme, I finally received some explanations as to why there is virtually no information (or ratings, reviews and suggestions) provided for wines on a restaurant’s wine menu – Even though these wines are often priced at hundreds of dollars per bottle.
I’ll let you be the judge, and invite your feedback, about the applicability of the explanations and the appropriateness of the explanations, including my own, in determining a course of action for your restaurant or, perhaps more importantly, your distributorship.
It Makes No Sense Not To Include The Information
With well over 100,000 wines marketed today in the US alone, my premise in the previous blog was that it makes no sense not to describe the wines on a menu in a fashion similar to the way the food items on a menu are described.
In fact, I’d go so far as to say, most people really don’t need much of a description for a NY strip steak, lobster or even a Berkshire pork chop on a restaurant’s menu. On the other hand, the description of a wine’s taste, rating and a suggestion of what it might pair well with, seems to beg to be included on the menu under the wine’s vintner, primary grape, vintage and retail price – especially on today’s hundred-plus bottles wine lists.
Here’s Some Reasons For Not Including The Information
An explanation of why there has been little to no information about the wine on the menu – even though it is quite possible that one bottle of wine is priced as much as or more than all of the entrees at a table – goes something like this:
Selling a bottle of wine in a restaurant increases the wait-staff’s interaction with customers, which will likely drive up check sizes. The key word in that explanation is “selling.” Most servers are well-versed in the food items on the menu; yet, it is not uncommon for servers to know little more than the differences between a red and a white and dry vs. sweet wines.
Recently I had a server suggest pairing red wine with meat and white wine with fish. I actually pity the server who, in the spirit of being helpful, makes a wine suggestion that turns out to be unpopular with a patron.
Nevertheless, according to restaurantowner.com:
“While a server is opening and serving a bottle, he can interact with guests, make food menu suggestions, and create opportunities for further sales. By freeing the bartender, you give him more time to spend with guests at the bar, which creates fatter drink tabs.”
Well, that much is undoubtedly true, but this certainly places a lot of pressure on a server to pick just the right wine for the meal – A server who may never have tasted most of the wines on the wine list, and can’t pronounce many of them.
That further explanation, from "restaurantowner," does go some distance in explaining why you might not want the wine menu to provide tasting, rating and pairing information about the wines on the menu. But, what is required to pull this off is a wait staff with at least some depth of wine knowledge, so they can make “informed” suggestions when asked “What wine would you recommend with our meal?” This may be the most dreaded question ever for many servers, I’d imagine.
A Sommelier May Be A Solution – Maybe?
Some, but not many, distributors have taken this “interaction with customers” explanation further still, suggesting that instead of putting some basic description of the wine on the menu, that the restaurant will sell more wine and increase interaction with their customers by employing a sommelier.
Not knowing, at least at first, what the going salary range for a sommelier is, I started looking into the subject.
First, I found an article in Forbes magazine – “Unusual Jobs That Pay Surprisingly Well”
According to this 2012 article, a sommelier earns $80,000 to $160,000 per year. Upon further review, I found salaries can actually be somewhat more affordable for a sommelier who has not earned the title, “Master Sommelier.” An up-and-coming or “less experienced” sommelier can earn about $60,000 per year.
Here’s another tidbit:
There are only about 120 Master Sommelier’s in the US. My translation: Good sommeliers are a rare and hot commodity, and even inexperienced ones can be expensive.
I would assume that having a sommelier probably would increase a restaurant’s wine sales, perhaps dramatically. At those salaries, they would have to. Conversely, as I re-read the Beverage Dynamics April, 2015 issue regarding the impact of offering wine information as part of the wine menu, I focus on the claim of a 20% increase in wine sales simply by adding wine reviews, ratings and food-pairings to the menu. I also am reminded that, for many restaurants, the wine menus are produced for them by their wine distributors at no charge.
It seems to me that only a very few restaurants (less than 1%) are in the position to afford a sommelier; and, for those that can afford it; the ROI has to be there. For the vast majority (the other 99%) of white table cloth restaurants, perhaps – adding wine ratings, reviews or food-pairing information certainly would seem to be a cost effective way to increase wine sales, perhaps dramatically so.
So What’s The Answer?
You make the call, but from my perspective, unless you’re in the “1%”, investing in more informational wine menus may be the easier answer for you. Why not try it!
For more information on OnTrak Software and MenuTrak, in use by three of the Top Ten US Wine & Spirits Wholesale Distributors click this button: