A-B/InBev - Distributor Assessments for POS Tracking & Line Cleaning

In keeping with our focus topics, this blog will be limited to a discussion of two somewhat broad sections of the Anheuser-Busch/InBev (ABI) Distributor’s Agreement — the distributor’s responsibilities pertaining to point-of-sale (POS) Marketing and Draught Line Cleaning.

1. Distributor Compliance with the Amended and Restated ABI Master Agreement related to the use of ABI assets (distributor’s in-house printers) for POS Marketing Production

According to Anheuser-Busch’s general and investor information website http://anheuser-busch.com/:

“One of the main drivers of Anheuser-Busch’s success over the past 150 years has been its ingenuity and innovation in advertising and marketing. As time changed, Anheuser-Bush always has created new ways to connect beer drinkers with its products.”

During “The Modern Marketing Age” (ca: 1950 — today), AB quickly adapted to the new mass-medium, TV, and also stepped up programs to support its body of wholesale distributors (WD's) in their creation of “POS” (point-of-sale marketing and promotional materials)  — consisting substantially of a variety of “custom-temporary signage” displaying AB approved logos, phrases and other content such as “This Bud’s for you” or, more recently, “Rock Some Bud”.  Today, ABI WD’s have access to literally thousands of digital ABI-specific graphics at their secure “for members only” website https://www.abmarketing.com.

It’s Not Just a Sign Shop Anymore

Virtually all beer distributors have one or more sign shops in-house staffed by graphics designers and multiple-format printer operators. In growing numbers of larger WD’s, there are now POS Marketing managers — sometimes reporting to a Chief Marketing Officer — who also work closely with sales managers, sales team leaders and merchandisers.

A key responsibility of POS Marketing managers is the timely fulfillment of virtually all of the distributor’s point-of-sale and shopper marketing initiatives — from temporary signs and displays to neon signs and tap-pulls and everything and anything the distributor requires to market their beverage alcohol products at-retail. 

As beer WD’s grow in footprint (i.e., revenue and geography), POS Marketing managers increasingly are assigned budgetary responsibility and may be called upon to provide analysis of POS campaign ROI and effectiveness.

As suppliers, like AB Inbev, MillerCoors plus a rapidly growing number of craft brewers continue to enhance and evolve their financial marketing support, sometimes simply called bill-backs, the POS Marketing manager becomes the logical nexus for the reporting required to demonstrate “POS Compliance” and eligibility for a supplier’s POS reimbursement programs. Indeed, in some WD’s the POS Marketing manager is tasked with the responsibility of assuring supplier bill-back procedures are followed and even with the responsibility of following through the supplier-to-distributor payment reconciliation process.

Today, due to the inevitable rise in the importance of shopper marketing, trade promotions or POS advertising, etc., “POS” for the average beverage alcohol distributor has grown to at least a mid-sized 6-figure per year business unit within the organization. For some distributors, their annual spending on point-of-sale initiatives has, in the past few years, become a multi-million dollar department.

Naturally, WD’s want, whenever possible, to turn their investments in POS from a cost-center to a cash-neutral cost-center, suggesting WD’s are looking to recapture as much cost as possible by taking every advantage of their supplier’s marketing support programs.

You Want Me to do What?

This brings us to ABI’s latest “Assessment” relating to a WD’s sign shop infrastructure. 

You see, ABI and AB before it, realize the competitive importance of POS marketing in retaining and growing market share. To be supportive of this reality, ABI promotes and bolsters their distributors’ sign shop infrastructures by underwriting part of the costs of the printers WD’s use to create POS signage. A printer-refresh-cycle was established wherein ABI offers its WD’s the opportunity to refresh their printer technology to the current state-of-the-art at a substantial savings. Most WD’s avail themselves of the opportunity provided by ABI’s co-op of the cost of the printers to keep their print shops stocked with current, more efficient, technology.

A long-time unenforced stipulation in ABI’s Amended and Restated Master Agreement states that any of the WD’s printers thus co-opted by ABI are to be used to print marketing materials advertising only the brands from ABI. Distributors could, for example, certainly create POS for non-ABI brands, of course. They just weren’t supposed to use the ABI funded printers to do so.

In 2015, according to several ABI distributors we’ve talked to, ABI officials — during the initial “trial-run” assessment of distributor operations — indicated something like: “An ABI sponsored printer could not be used to create signage for Yuengling or Fat Tire,” for example; and during a subsequent assessment, we’ve been told ABI again raised the issue of “using ABI subsidized printing equipment” for the production of non-ABI POS materials.

Apparently, some WD’s felt this second mention perhaps smacked a little too much of big-brotherism and wondered out loud if it just might be worth shopping for printers and supplies from a source that would remain outside of the scrutiny of an ABI “Compliance Assessment” — even if the printers ended up costing a bit more.

The key take away is this:

Some WD’s see the combination of ABI’s recently announced “Marketing Incentive” (as discussed in the November 23, 2015 issue of Beer Business Daily) and Distributor Assessments as a way for ABI to push, perhaps “herd”, WD’s to focus virtually entirely on ABI’s brands, despite the fact that Bud and Bud Light are currently in a relatively slow, but steady volume decline.

It seems that we’ve perhaps reached a “point-of-inflection” where the macro-brewery WD’s — this time it happens to be ABI’s WD’s — may want to look into their options for outfitting and managing one of their most important and expensive operational business units.

Regardless of the path you and your WD chooses to follow, it is becoming ever more important that you have the appropriate Digital Tools (see Note), like SignTrak and PermaTrak, to help you order, track, manage — and control — your POS Marketing’s Budget, ROI and Effectiveness.

2. Distributor Compliance with the Amended and Restated ABI Master Agreement Related to Draught Line Cleaning

You don’t own 45% of the overall US beer market by being disorganized or without having an exceptionally detailed master agreement with every one of your phalanx of distributors — who, after all, are the pipeline that gets ABI’s products to the retail marketplace.

Since we work with many beer wholesale distributors (including 8 of the top 20), it recently (late 2015) came to our attention, that compliance with some of the terms of the Distributor’s Agreement have — for Anheuser-Busch Inbev (ABI) distributors — come under some heightened scrutiny over the past year; and, according to our sources, 2016 promises to be a year in which ABI wholesale distributors should expect any violations ABI uncovered during the first assessments (started in 2015) to begin to be enforced.

As you probably know by now, OnTrak’s focus here, generally speaking, is to write about the tracking, measuring and managing of beverage alcohol marketing and promotions at the point-of-sale (POS).

Additionally,  in response to our customers’ requests in 2015, we broadened our products’ focus to include beverage alcohol tap-line cleaning, tracking and reporting software as we have been persuaded (by our customers and our own taste buds) to believe that clean beer (and wine) tap-lines are also one of the marketing tools WD’s used to stimulate on-premise beverage alcohol sales.

LineTrak: We Built It - You Came

We’ve yet to come across the distributor who doesn’t agree clean beer and wine tap-lines absolutely are equated with great tasting products. We’re typically talking about draught-beer lines, but at least two very large wine and spirits distributors have told us they clean draught-wine lines for their on-premise customers; and that keeping a record of the cleanings is important to them, their customers and for accountability with their suppliers. Increasingly, beer distributors also expect their line cleaners to help keep track of the number of taps dispensing beers marketed by the distributor’s competition as well as the number of total lines flowing with the distributor’s own beer brands.

The record keeping component of line cleaning tracking is straightforward. That is, the distributor wants  to be able to demonstrate to both the retailer (the distributor’s customers) and the supplier (the distributor’s vendors) and possibly the local board of health (the government) that the distributor is complying with supplier’s guidelines as well as health and sanitation requirements of state and local governments — or, at the very least (in states where the distributor does not perform and does not hire a third-part cleaning company) is on top of the cleaning regimen — compliance — at the on premise point-of-sale.

The “marketing” component of line cleaning is there to provide the distributor with the answer to a few critical survey questions including questions that could indicate the loss of a tap-line to a competitor and the ability to electronically communicate to the distributor that an account sales rep should be contacted and be made aware of the potential or actual loss of a beer tap.

The key take away is this:

If you are an ABI distributor you are, according to your agreement with ABI, “responsible” for the cleanliness of your retail customer’s draught-beer lines.

But remember, the clean tap-line requirement is hardly exclusive to ABI. In fact craft brands have elevated line-cleaning and reporting to “The 11^th Commandment”.

Additionally, if you use a digital tool (see Note) like LineTrak, to help you keep track of line cleaning, there is every reason to utilize the line LineTrak application to help retain and gain market share.

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Note: Digital Tools - SignTrak® PermaTrak® SampleTrakâ„¢ and LineTrakâ„¢

Resources:

ABI Beertender Guide, Your Guide to the Beer Business page 12; www.abwholesaler.com/docs/beertenderguide.pdf

Beer Business Daily (BBD), “The Truth Squad Speaketh”; various dates www.beernet.com (subscription required)

Brewers Association, “Draught Beer Quality”; www.draughtquality.org/wp-content/uploads/2012/02/One-Pager-The-Facts-About-Draught-System-Cleaning.pdf

Beer Advocate, “Respect Beerâ„¢”; www.beeradvocate.com/

Beer Business Daily (BBD), “The Truth Squad Speaketh”; various dates www.beernet.com (subscription required)

Anheuser-Busch, “Marketing and Advertising”; http://anheuser-busch.com/index.php/our-heritage/history/marketing-and-advertising/    

AB-Marketing; https://www.abmarketing.com

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