One Blog |November 17, 2017 | POS Tracking Software
Two Interesting Articles on Beer Market Volumes and the Global Beer Business
OnTrak Software provides software solutions to help beer distributors better promote and sell their brands at the point of sale.
We’d like to share two business articles which provide an interesting outlook on today's beer market and offer our perspective on how our solutions help beer distributors.
1. Overall beer market to see lower volumes, but craft should see 5 to 6% growth, CNBC Food and Beverage report says.
- The Brewers Association projects U.S. craft beer will generate 8 or 9 percent sales growth this year, below the 10 percent pace clocked in 2016.
- The craft market's volume growth is forecast to 5 to 6 percent higher this year, although far from the double-digit pace of the previous decade.
- Still, craft's volume growth compares favorably with a decline in this year's forecast of the overall beer category, according to a Susquehanna report.
- There are also "signs that the second half of the year has been a little bit better than last year," says the brewer trade group's economist.
The Impact of Point-of-Sale Marketing on Volumes
Point-of-sale (POS) advertising, promotions, at-retail initiatives and programs, and shopper-marketing, collectively "POS Marketing", continues to be how shoppers are engaged. POS is how consumer packaged goods, like beverage-alcohol, are sold. 80% of the decision to buy YOUR brand is made at the point-of-sale - information from POPAI – now called Shop! Association.
But wait, haven't we been told and taught in B-schools that we reach consumers via several different "channels" -- not just POS?
Well, yes . . . but the above was almost a trick question.
You see, it is very important to distinguish shoppers from consumers.
Admittedly, at a restaurant or bar, the shopper is the consumer 99% of the time. And, much has been made about the power of on-premise consumption influencing retail or off-premise sales.
These nuances are all correct, but it is important to be mindful that when the consumer is not the shopper, we need to look at two additional aspects of "marketing" keeping in mind the end-game is to sell more beverage-alcohol to the retail customer.
First, we need to look at marketing across all available marketing media. Second, we also need to look at how the brand suppliers, distributors, and retailers work to coordinate both POS and "pre-POS marketing efforts" to provide a consistent message.
The recognition of where the buying decision is made is of the utmost importance assuming your purpose is to gain sales -- or at least retain or gain market share.
With that in mind, you would think that "Big Beer" would be keenly interested in tracking and measuring data from their distributors regarding the correlation between POS and sales.
In fact, we can tell you that does appear to be the case.
At the same time, with some recent declines in the sales of craft, you would think, Craft Suppliers would be keenly interested in knowing what their distributors were doing to promote their brands, too.
Well, perhaps necessity will be the mother-of-invention; let's see what 2018 brings.
To read the full CNBC Food and Beverage article please click here: >>Read More
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2. A Perfect Storm in the Global Beer Business
2015 McKinsey & Company’s Marketing and Sales Article
- For decades, the thirst for beer seemed unquenchable. Now that consumption has stalled, manufacturers must come up with new strategies for growth.
- The global beer industry faces its greatest challenge in 50 years. All at once, there is falling consumer demand, increasingly competitive products, heightened requirements by retailers and consumers, and tougher market access.
- Breweries are not only battling volume issues. Competitive pressure has intensified dramatically in the premium and super premium segments, which have experienced strong growth and retained attractive profit margins. The fact that economies of scale are less important in these profitable sectors makes it easier for niche providers to compete successfully.
- Retail stores such as supermarkets and large chains of discounters or convenience stores are becoming an increasingly important distribution channel for beer manufacturers, at the expense of bars and specialty stores.
While we can agree with McKinsey, it is also important to recognize the additional impact of online sales in the beer market.
Beer Business Daily
According to Beer Business Daily, reporting from the 2017 Beer Marketer's Insights Conference, "Heineken USA chief Ronald den Elzen warned that eCommerce is not only growing, but it's already huge and will continue to grow 70% a year for consumer goods, likely constituting 10% of sales by 2025. While beer and alcohol online sales are a much smaller than other CPG categories (only 0.2 share), it could grow to 53 million cases in five years, says Ronald."
The growing importance of at-Retail and 70% annual online sales growth certainly would appear to put even more pressure on the middle-tier to deliver new merchandising and point-of-sale promotional "solutions."
The Importance of Tracking POS
The need to track, measure, and manage POS to provide ROI metrics thus helping determine the most effective at-retail initiatives continues to grow in importance to distributors. The middle-tier must demonstrate their ability to (control and) minimize stock-outs.
Knowing the relationship of POS to sales is a competitive advantage for distributors who need to demonstrate they will provide effective shopper marketing programs coupled with inventory replenishment processes designed to keep their customers' shelves full of the products being promoted.
Clearly, a POS tool that provides ordering capabilities, visual verification, measurement, and extensive reporting is vital to as more emphasis shifts to retail and online.
To read the full McKinsey article please click here:>>Read More
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _