One Blog |August 9, 2017 | Point-of-Sale Marketing Management
Beer Business Daily — 2017 Distributor Productivity Summit - Trip Report
Mark Fullerton
The Great Disruptors In Distribution
We’ve just returned from the first “Distributor Productivity Summit” presented by Schuhmacher Publishing Company and Wine & Spirits Wholesalers of America.
More information can be found at Beer Business Daily.
We received the agenda for the with a provocative cover memo titled, “Preparing for the Great Disruptors in Distribution” warning attendees:
“. . . it’s just going to be a matter of time before the Great Disruptors (Amazon and Walmart [and Costco and Sysco]) turn their eyes toward bev-alc distribution.”
Of course, Schuhmacher and company have correctly identified that the reason distributors will be pressured by the Great Disruptors is that beverage alcohol, as a category, has such attractive margins that this “disruption” is inevitable.
Distributors have good reason to prepare for new rounds of competitive activity — master agreements or no master agreements, laws or no laws.
Distributors need to recognize the threat posed by Walmart’s goal of getting their distribution and logistics costs down to a low of 15% of revenue.
They need to understand that Amazon, in many US markets, has already started selling beer and wine direct to consumers.
Any beer or wine distributor who has not already seen Amazon’s site, should become very familiar with this:
From Amazon’s Website
“Alcoholic beverages are not listed on Amazon (except for wine & beer).”
And this:
And perhaps most importantly these:
Bud Light, 24 pk, 12 oz cans, 4.2% ABV
$17.99
Add to cart
Miller Lite, 24 pk, 12 oz cans, 4.2% ABV
$17.99
Add to cart
All with the promise:
“In Stock - Ships from and sold by Prime Now LLC. - Delivered chilled”
Resting On Your Laurels
Distributors cannot rest on their historical laurels and performance when they find themselves competing with the likes of Amazon, Costco, Sysco and Walmart. These companies make a strong case that their scale and reach — to say nothing of their deep pockets — better qualifies them logistically to distribute suppliers’ products.
Rather, distributors now need to point to and capitalize on several of the most important benefits they will expertly bring to the table — Specific beverage alcohol distribution expertise and their capabilities in point-of-sale marketing and promotion.
Although some brewers have had challenges working with distributors, many suppliers continue to believe that no one else brings more invaluable marketing capabilities better than a beverage alcohol distributor. And this is especially true for what is today the hottest sub-category within bev-alc, namely Craft.
Distributor Challenges and Solutions
To highlight the “challenges”, according to Schuhmacher’ s perspective:
“. . . often craft folk and distributor folk seem to speak separate languages.”
This communication issue needs to be resolved, rapidly, and the most effective and efficient marketing practices — the distributor’s strong suit — need to be implemented.
According to several of the speakers at Schuhmacher’s Summit, fighting the Great Disruptors will not be without some difficulty and perhaps even some setbacks.
Distributors need to quickly make sure that their clear competitive advantages as masters of beverage alcohol logistics and as skilled marketing organizations are highlighted.
Takeaways From The Summit
The past five years have seen as many changes in beverage alcohol distribution and marketing as in the previous fifty years. According to Kimberly Clements, Co-Founder of PINTS, LLC and former President of her family’s business, Golden Eagle Distributors:
“Distributors need to step up the training of their employees, manage the proliferation of brands taken on and make sure the POS, tap handles and signage in the trade correctly represent the current promotions of the brands and are consistently placed and displayed in their markets.”
Additionally, it was clear that a key theme of this Summit was improving overall distributor efficiency; as one of the presenters reminded those of us in the audience,
“What gets measured gets improved!”
Of course, with a number of the presenters talking about getting the right POS materials to market, and consistent display execution, the attendees were assured,
“. . .correct and timely display execution is still the best way to get a sales lift,”
Conclusion
We concluded that beverage alcohol distributors actually can successfully fight the Great Disruptors. A key point from the Summit is:
Beverage alcohol distributors can differentiate themselves from the disruptors by demonstrating their marketing value and providing point-of-sale marketing services that are Tracked, Measured and Managed.
It will be those distributors who differentiate themselves, and simultaneously adopt enterprise-wide efficiency practices who will successfully meet and succeed against the Great Disruptors.
