The Growing Importance of POS to the Beverage-Alcohol Distribution Business

630 Words | 5 minute read

While many other consumer packaged goods (CPGs) are moving fairly rapidly to online sales, Beverage Alcohol products — for a variety of reasons — are overwhelmingly purchased “at-retail”.  Although online sales, principally for wine and some craft beers have shown some increases over the past few years, it remains true that the vast majority of beer, wine, and spirits are displayed, advertised/promoted, and sold at retail outlets (off-premise) or at restaurants, pubs, and bars (on-premise).

Further, consumer buying decisions, due to the proliferation of beverage alcohol brands and products, are rarely planned, other than by category. Therefore, point-of-sale (POS) advertising is essential, influential — critical really — for BA brands to grow their market share.

This brings us to one of our recurring blog themes, presented as a question:

As a wholesale distributor (WD) of the hundreds of thousands of BA products available to the American shopper, what is your most effective tool to gain and retain market share? The answer heard most often is POS (Point of Sale) advertising

 

A Short POS “History Lesson”

Since the repeal of Prohibition in 1933, POS has been the most used and least managed form of advertising by BA wholesale distributors — despite the fact that POS is typically a WD’s second biggest expense after payroll. And, actually, for perhaps the first sixty or seventy years after Prohibition, that expense probably didn’t get WDs’ attention since their suppliers, primarily the breweries and distilleries, paid most of the freight for the WD’s sign shops.

About 2007, that started to change — suppliers either cut back on their “allowances” or required their WDs to more formally “claim” bill back amounts. In some cases, reports were required if the WD expected to maintain the considerable help they had grown used to almost right up until the Great Recession.

Increasingly, suppliers were said to be “sourcing cash” from their distributors which is another way of saying they were cutting back on their generous marketing allowances (unless the WDs demonstrated what they had done and how much they had spent).

 

The Growing Role of Technology

Fortunately, a new breed of tools designed to provide BA WDs a competitive advantage has come to the BA WD market. These tools provide ordering capabilities that take up where bar napkins, emails and texts, and even spreadsheet-like tools left off. Also these tools reduce time to market, reworks, while increasing WDs capabilities to efficiently produce more POS. Because dozens of POS characteristics are captured and stored, it is now possible to measure the effectiveness of the POS produced by your sign shop, graphics department or retail marketing team. Extensive reporting and analysis require just “a couple of clicks” and form the basis for claiming supplier marketing allowances, demonstrating compliance with suppliers’ marketing programs, and — in some cases more importantly — with ABC advertising and promotion regulations.

 

$$ The Bottom Line $$

Here’s the bottom line: The average “sign” produced by a BA WD’s sign shop costs about $40. Most sales reps, who don’t use a POS tracking/managing system cause at least one reworked (wasted) sign per month. If for no other reason than to cut costs (which go directly to earnings), the value of a system that can reduce your sign shop or graphic department reworks by 90% to 95% will increase your earnings by about $25 per month ($40 reduction minus the cost of the system at $15 per month), per rep by eliminating them almost entirely. If you have 40 reps that’s a bottom line increase of $1,000 per month.

Perhaps you should consider looking into a POS tracking and management system — especially considering the growing importance and cost of POS to the beverage-alcohol distribution business. Please feel free to give us a call to learn more about our available tools. We are happy to help.