Sourcing Cash: Why You Need to Manage your POP Campaigns

The basics of “manufacturing” beer, wine and spirits have remained fundamentally the same for many, many years. The biggest challenge facing beverage alcohol suppliers, wholesalers and retailers is not production, but marketing and sales.

Today, prospective consumers need to be introduced to a wide variety of new beer, wine and  spirit types and flavors.  And since the goal it to stimulate sales, what is the most effective form of advertising and most persuasive media to turn an introduction into a purchase?

The Effective Marketing of Beverage Alcohol

Alcohol beverages are sold largely due to the efforts and innovations of the distributor marketing and sales teams, rather than due to the skills and craftsmanship of brew-masters, vintners and distillers. 

When we’re talking about alcohol beverage marketing, we’re really talking about the distributors's ability to create compelling at-retail point-of-purchase (POP) advertising and promotion programs. The three-tier system has essentially placed distributor marketing efforts as the key component that can almost literally create or kill a brand.

Supplier acceptance of the distributor role in brand building and marketing return-on-investment (ROI) has accelerated for many reasons. But mostly because many beverage alcohol suppliers have come to rely on their distributors to serve as their primary sales and marketing arm.

For distributors to provide suppliers with both the traditional sales functions, and with the new and creative marketing and promotions support, requires distributors to track, measure and manage their marketing campaigns; and also requires suppliers to help in funding distributor efforts.  

‘Sourcing Cash’ From Distributors

The suppliers we’ve talked with are more than willing to provide cost recovery for distributor investments in POP — permanent and temporary signage, displays, menus and samples — as long as the distributors account for what brand promotional materials were placed, in which accounts, when, for how long, and with what sales results.

Many distributors struggle with these requirements. Some distributors see greater marketing responsibilities and the associated costs being shifted to them perhaps less as a method of improving supplier’s brand equity than as a way for suppliers to “source cash” from the distributor. Until recently, I had never heard the term “source cash.” Now, I know what it means.

According to one top-10 wine and spirits distributor CFO, “Some of our largest suppliers have essentially made us responsible for marketing their brands, and in addition have pushed the expenses to us. The only way we can get reimbursed for our outlays is to provide them with detailed reports showing them what items were promoted, to what customers, for how long, etc.” 

The CFO continued, “Producing these reports is a completely manual process that takes several people the better part of a week every month to compile, and we’re always concerned that something slips through the cracks.”

There is a Solution

If you find yourself in a similar situation, I urge you to make the investment in the marketing and sales initiatives your suppliers request, but then invest in a system that will help you be responsive to your supplier requirements for cost-recovery.

You need to find a partner who has the tools and the experience to help you track, measure and manage your POP campaign requirements.

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