Alcohol Beverage Distributors - The Recession May Be Over. Now What?

Reality Check

In much of the US we’re still seeing 10% unemployment and nearly that much in under-employment. And that doesn’t include those folks who have simply stopped looking. So, while it is technically correct that the US has been out of recession for nearly a year and a half, the reality is that we’re in a long, slow recovery that still feels like a recession.

Now, what does this have to do with our typical post here on the OnTrak website?

Plenty! Despite what may feel like a permanent downturn, the reality is our economy is turning around. The fact is we are growing again. So…

Is your company ready for the recovery?

There are ways to help you evaluate your readiness for the “Great Recovery.”  It’s not too late for you to take the following three steps, to position your company for “your end of the recession.”

1. Measure Your Market

If you have cut your customer research activities and budget, you now need to invest the time and money to know how your retail customers (and their customers) responded to the recession.  It is unlikely that the end-consumers of your beverage products will return to their pre-recessionary buying habits. You need to know now, more than ever, how alcohol beverage consumers redefined their priorities during the recession and how they now value the beverages they consume — your products.  Price sensitivity, one of the hallmarks of the recession in terms of consumer behavior, may linger for years even after this current downturn becomes economic history. 

For example, consumers will likely take more time deciding what to buy at the point of sale. They will be more willing to postpone purchases, trade down, or simply buy less. New brands will require more Marketing at-Retail initiatives — including POS signage and beverage menus — to encourage consumers to take a chance on them.  Remember, it is hard to manage what you don’t measure.

2. Manage Your Products

Working with your retail customers, you must test the impact of your Marketing at-Retail programs; and, using the data from these tests, forecast demand for the products you represent.  This way you will be able to respond as the end-consumer trades down to brands that stress value or “price performance.”Hard times often favor products perceived as “good-enough” over ones considered great. Among national beer brands for example, Natural Lite has gained share at the expense of Bud Lite.

The weakest items in your portfolio should be candidates for dropping.  New products, especially those that address the new consumer reality and put pressure on more established competitors, should still be introduced, but Point of Sale advertising should stress value and exceptional price performance, not brand image.

3. Don’t Cut, But Rather Maintain Marketing Investments

Although it is easier to say than do, the past two years were not the time to cut your Marketing at-Retail investments. Likewise, now is not the time to cut POS advertising and investment in new technology to help you Manage, Control and Measure your Marketing at-Retail initiatives. By now you have probably seen the results of studies that point to the successes of brands that maintain or increase their Marketing at-Retail spending during a recession, especially when their competitors cut back.

Those brands that maintain or grow their point of sale promotions typically improve their market share as economic good times return. Beleaguered consumers need encouragement at the point of purchase — they need information to inform and persuade them that they are getting the best value and the lowest price. This information, of course, has its greatest impact at the time and place of purchase.

Indeed, now is the time to increase your Marketing at-Retail spending as better economic times are poised to return. If you have cut your Marketing at-Retail investments, now is the time to invest in the tools to help you manage, control and measure the impact of your point-of-sale marketing programs. Using these tools will allow you to increase the use of POS that returns the most immediate and improved sales impact.