Bill Sipper Cascadia Beverage 101 Beverage School Presentation San Francisco 2013
-
Upload
william-sipper -
Category
Business
-
view
519 -
download
0
description
Transcript of Bill Sipper Cascadia Beverage 101 Beverage School Presentation San Francisco 2013
Types of Distribution
DSDDirect Store
Door
Convenience Broad liner
Food Service Distributor
Club
Direct to Retailer
Natural Distributor
Specialty Food
Distributor
General
Wholesaler
Warehouse
Role of Distributor
Present/Sell to Customers
Deliver to Customers
Collect Money From Customers
Merchandise Products
Place/Manage POS
Secure Multiple Locations
Place/Manage Equipment
Manufacturer
Wholesaler/Distributor
Retailer
Consumer
What are Distributors
Looking For?
Uniqueness
Product Appeal
Ingredients
Calories/Fat
Pricing and
Promotional
Strategy
Consumer and
Retailer Demand
Margin
Sales Support
Exclusivity
Buyout
Recommendations for Presenting
New Items to a Distributor
Push and Pull Strategy
PUSH Strategy
Full year recommended promotional and incentive calendar by month
PULL Strategy
Full year recommended promotional calendar by channel
How you are going to spread the word out about your brand (demos, social networking, consumer sweepstakes and promotions, advertising, public relations, guerrilla, etc.)
Make sure you can concisely present your strategy in an easily understandable manner
Elevator Pitch
What you are going to do for the distributor and how much money can they make selling your product?
Be Prepared to
Answer Questions
Consumer research
or testing?
Who is your
consumer?
Where do you want
to be placed on a
shelf (Adjacencies)?
Delivered or Pick Up
Price?
Shelf life and spoils
policy?
Payment terms?
Order lead times and
minimums?
Distributor Programs
Promotional Programs—ex. Buy X Get Y free or
―15%‖ off per case
Incentive Programs/SPIFFS
Can be targeted at distributor sales force,
sales management, distributor ownership or
even independent retailers
Ad/Catalog Fees
Trade Promotions
Trade promotions are developed to spark consumer trial and
awareness in the beginning and to increase frequency of
purchase as your brand becomes larger
Poor promotions have poor results
Promotions that are too ―rich‖ will break you.
Speak to your distributor or customer and ask them what has
worked in the past and what they recommend for your brand at
your sales level
Push vs. pull promotions
Some promotions are designed to get the retailer to put you
on their shelf, expand the number of your skus they are
selling, gain better shelf position, or to secure a display.
These are called ―Push‖ Promotions
Types of Promotions
Off Invoice
Billback
Manufacturer’s
Chargeback
(MCB)/Case Stack
Deals/Hip Pocket
Deals
Scan Down
Coupons
Incentive Programs
How Much Money
Will I Need?
Realistically $3M-$5M
A little less for a brand almost exclusively focused on the natural and gourmet channels
Don’t need it all upfront but probably need close $500k to really get started
Friends and family are the best route to raise capital
Have an exit plan in mind before raising capital
You don’t have to sell the company, but investors want to know how they are going to get their money out
Margins and Pricing
Manufacturer Gross Profit Target = 45%
45%-
55%
C-Store
25%-
35%
40%-
50%
Drug
45%-
50%
Club
11%-
13%
6%-
8%*
Major Natural Food and Gourmet Chains work on 40% - 44% Margin
Gross Margin
Gross Margin is defined as the difference between the costs (COGS) related to manufacturing your product and the price that you sell the product for
Is freight a part of COGS?
Margin or Markup
What is the difference?
Retailer Margin = Selling Price–Cost
Selling Price
Retailer Markup =Selling Price – Price
Cost
Build a Sales Organization
• Product
• Pricing
• Placement
• Price
• Promotion
• POS
• It rarely works the same exact way twice
• No Re-treads
• Make sure this is a symbiotic relationship
• Add structure where necessary
• Start Slow
• Need Industry Execs/Counsel
• Keep things fresh
EntrepreneurIndustry
Execs
Blocking
and Tackling
Consistent
No Cookie
Cutter
Brokers
Natural—separate subject
Helpful in grocery, mass, and drug
channels
May interfere with DSD
Usually 3%-5% commission
based on volume
Some require minimum
monthly retainers
Natural Food Brokers
Necessary for the
Natural Food
Channel!
Need to be
reinforced, at
some point, with
additional
merchandisers
Retainer and
Commission
Make Wholesaler
Calls
Make Key Account HQ
Calls
Make In Store Calls
Build Displays
Book Promotions
Natural, Specialty
and DSD distributors
Hybrid or not?Tough call
You can’t service the entire country and every account exclusively with either DSD, Specialty, or natural distributors
DSD understandably wants exclusivity and protection
DSD is very expensive
A distributor Doen’t want to build a brand and lose it after all their hard work is done and they are finally reaping the benefits
But…Certain key accounts have ―Preferred Vendors‖. Overall, Depending on the Product, a hybrid system may be necessary.
Yet very few beverage companies can sustain themselves long term with sales exclusively from natural and gourmet retailers. Most beverage companies will want to transition to DSD.
DSD Contract
Exclusivity
Perpetuity vs. Term
2-4x gross profit for the past 12
months minimum
Invasion Fee
Manpower and marketing
commitments
Advice: hire an attorney that
specializes in the beverage industry
Almost The End
This is not a difficult business. Do not over think it;
If you don’t know something, ask for help;
Entrepreneurs need expert assistance as much as
expert assistance needs Entrepreneurs;