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The Half Way Point of 2017

From where I sit I am 30,000 feet up in the air coming back from a supplier meeting in California and musing about my week.

Some key takeaways from this week where I was in Chicago (Big 5 distributor meeting), Houston (mid level distributor meeting), California (producer meeting), and all the while dealing with 3 brands and one off-premise retailer, is that there is more confusion in the adult beverage industry than any time in recent history.

Everyone is looking for more margin, no matter what tier you play in, and everybody is looking for the next “Tito’s” to round out a portfolio, production run or shelf plan-o- gram. It can be argued that you have all the bullets you need in the gun already to solve your GM issues, you just need to shoot the correct target.

Retailer– with 28 weeks left in the year and summer here you can make up lost ground. When I was CEO of Sam’s in Chicago we did 43% of our business in the 4Q, so there was always time to change the game. However, it is important to set your stores for success. Increase your private label/craft game. This would be the biggest opportunity to pick up sales cash flow without sinking a lot of dollars into inventory. Think alternative forms of distribution partners, embracing store resets to place high margin items near the hot traffic areas.

Distributor– you want more orders, more sales, then I recommend you work with your accounts and not only your producers. An account needs to be told and explained why the brands you are repping need to be on the shelf. They need DATA to explain that product X will sell more than product Y. They need a financial conversation why this wine/rum/mixer is better than the one they currently carry, and it should be in a SKU set. Self space/cooler space/floor space is all finite. You will need to, as part of your sell in, explain why the new item you are selling will replace an incumbent item that the off premise account has had success with. If you can achieve this on an ongoing basis you will have a high success rate with new brand placements.

Producer– Like I saw at USATT two weeks ago, there are more brands than customers, distributors, and places to sell it. Like ECON 101, more supply equally a lower selling price. No one, not anyone, needs another vodka. Customers want gins, tequila, bourbon (for now), >$14 white wine and >$15 red wine. You can buy IRI or Nielsen data all day long, but I invite you to spend an 8 hour shift in a big box or mass merch retailer. That will be a free lesson on price elasticity and what drives the consumer. Listen to the market and less to marketing folks and data. Gallo was built on visually watching the market, supplying watching the market while it was changing before their eyes.

Finally- It can be argued that the first 1/2 on any year is training for the second 1/2 of the year.

2017 is no different. Embrace your private label game. It seems to have worked out ok for Total Wine. Reset your store according to trend. Customers will spend more at the start of a shopping experience than the end of it, therefore set your store for higher margin goods while the customer wallet is most full. Distributors listen to your off premise partners and offer and sell what they need and can use in leu of what depletion targets needs to be hit. Producers, make products that the market wants, not your marketing team. No one needs a rose’ infused grenadine. No one ever! 

Now is the time, for all three tiers to pick up sales and tackle the second 1/2 of 2017 with a steely determination.

Brian RosenExpert Editorial
by Brian RosenRosen Retail Method

Brian Rosen is Former CEO of America’s #1 Retailer, Sam’s Wines in Chicago, Former Partner at PricewaterhouseCoopers in Retail and sought after retailer consultant.

He can be reached at @roseretail or brian@briandrosen.com

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