One Blog |November 8, 2016 | POS Tracking Software

Addressing Beer Distributors 2017 Marketing Productivity Challenges

Mark Fullerton

It's All About POS!

OnTrak Software is all about Point-of-Sale (POS) Marketing, as you probably have gathered by now, even if this is your first visit to our website.

POS for most beverage alcohol wholesale distributors in the US is their #2 expense, right behind payroll. We’ve heard this from both Anheuser-Busch (A-B) and MillerCoors (MC) distributors, as far back as 2008, which was our third year in business.

But It’s Really All About Cash Flow

Another data point we’ve heard from beverage alcohol distributors is that our products help them better manage cash flow related to their marketing expenses. The revelation that our software tools helped to turn a beer distributor’s “sign shop” cash flow from negative to positive is great for us to hear — and that’s the case every time we hear a distributor’s CEO, CFO or General Manager say it.

Here’s one of the key reasons why:

Generally speaking “cash flow” is used to evaluate the “quality” of a company's income; that is, how liquid it is — which will indicate whether the company can remain solvent.

Since OnTrak’s products typically offer cost improvements for the #2 expense item on distributors’ income statements, our products help marketing expenses, such as POS, actually generate positive cash flow.

Think about that for a moment: By using at least one of OnTrak’s POS tracking tools, a beer distributor can convert the cash flow associated with the marketing expenses associated with POS promotions that are fabricated in the distributor’s sign shop. These expenses, frequently called a “black hole” by distributor’s executives, can often be transformed from negative to positive cash flow with POS tracking tools.

Typical POS Expenses and Savings

With typical spending on POS marketing averaging about 10 cents a case or more, a five-million case per-year distributor will spend some half-million dollars per year on POS.

This is a really big deal for a beer distributor because positive cash flow, generated by its POS expenditures, indicates that the distributor’s most important liquid asset — cash — is increasing. This is also a big deal to us because we’re excited to actually be able to offer a tool to distributors like you that literally generates positive cash flow from one of your top expense items.

This is almost unheard of.

Based on feedback from almost 100 customers, they've told us, "If you can find a tool to help you turn your sign shop or graphics department" — the primary driver of a beer distributor’s marketing expenses — "from negative to positive cash flow, using such a tool is a no-brainer."

In fact, one A-B distributor, Silver Eagle, shared this: “SignTrak has reduced our costs by one-half cent per case delivered.”

News From The Industry On Marketing Expenses

Indeed, the need to gain additional efficiencies with respect to distributor’s marketing expenses was recently discussed by Beer Business Daily — BBD (Notes 1, 2).

They noted that beer distributor’s Marketing Expenses are “Starting to Matter, Big Time.” Indeed, it is remarkable just how much it matters — now. Yet, in 2014, only 4% of 400+ A-B wholesaler executives and 5% of MC executives cited “Marketing Expenses” as one of the three areas needing “cost improvement” next year (Note 1).

The same survey, taken in August 2016, noted, “Marketing Expenses” jumped ten-fold in importance, now cited by 44% of A-B execs, and 50% of MC execs in the “Top 3 Targeted Areas for Cost Improvement in 2017” (Note 1).

According to the BBD article:

“This is a major increase in targeting marketing for cost improvement.”

The Good News

The good news for beer distributors facing the challenge of improving the efficiency of their marketing initiatives is the availability of OnTrak’s newly updated Digital Tools including SignTrak and PermaTrak.

The fact is these solutions offer the strongest benefits in the area of cost improvement — in short, OnTrak’s solutions significantly increase the efficiency of beverage alcohol distributors’ at-retail promotions including temporary and permanent POS.

We’ve developed an ROI analysis exercise (Note 3) that will quickly demonstrate our products’ “Super-Power” is reducing the costs associated with tracking, measuring and managing POS.

SignTrak has the ability to virtually eliminate your sign shop’s reworks this alone pays for the subscription many times over. As a result, SignTrak helps to generate positive cash flow from your sign shop, thus immediately addressing exactly what 424 Beer Wholesaler Executives say is a key area in need of resolution in 2017 (Note 1).