When I introduced Krombacher in 2011, I told the wholesalers that the key to success was to get distribution in all key chains. While getting the sales number out of this distribution was important, the real key was to quickly find out how the consumer would accept the brand(s). Assuming there was not an issue with the liquid, important factors to consider were: how was the packaging, pricing, p-o-s, mother cartons and did the product message get to the consumer? I felt all along that these were the keys to long-term success.
With the Krombacher introduction, we were fortunate to get some key authorizations early in the introductory. Binny’s, HEB, ABC and Total Wine, among others, all supported us. Because we had targeted Florida, getting Publix to come on board was of utmost importance. We were fortunate to align with most of the AB network, however, once we got in to present to the Publix buyer, we hit an unexpected wall. Given the introduction of Bud Light Platinum, and their massive marketing spend, the buyer expected a marketing program from Krombacher of similar size. He requested a BOGO for all 720 stores. The cost of entry was staggering, even for a brewery the size of Krombacher. In marketing terms, however, a BOGO is a relatively small expense for distribution and immediate exposure given the magnitude desired by Publix.
At the recent Craft Brewers Conference, Bob Sullivan, VP of Crafts for Andrews Distributing, suggested that the “SKU challenge could best be handled by the dominant craft player in the area.” He went on to state that the local craft brewer is more likely to ” “look at the best interests of the retailer” and “craft expertise on schematics is ultimately the best bet for retailer profit.” Really?
Kevin Stadler, the architect of AB’s fact-based chain selling in the 1980s, had these comments, “Ultimately, what is in the best interest of the retailer has to be defined by the retailer. What do they want out of the category?” Kevin further emphasized that if the objective is a full range of assortment, the retailer should look at customer behavior and work with a category captain that understands that category. If the goal is to maximize profits, the retailer needs to work with a category captain that has a complete model for cannibalization and halo effects. If the object is to highlight up-and-coming products and create a beer section that begs for repeated new product trail, then the retailer would want to understand the local landscape. If it’s a national retailer, and they want a consistent look and feel in all markets, then the category captain should be one with a national program.
The real questions should be: is it in the best interest of the retailer, not, is it in the best interest of the industry? Does it increase volume? What is the spend per basket? And how is it beneficial to the retailer?
Sully also states, “Crafts have a disproportional space verses mainstream beer.” Another way of putting it, domestics have been under indexed. Finally, Kevin believes that “you should use the tool that matches the problem, and ultimately the retailer needs to enforce a no-bias category captain policy with key performance indicators periodically checked.” Space, it’s the final frontier!.
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