Mastering Market Shifts: A Strategic Guide for Beer Distributors in Navigating Brand Slumps and Capitalizing on Opportunities
In the dynamic world of beer distribution, market trends can shift rapidly. External factors, such as changes in consumer preferences, economic fluctuations, and even unexpected news coverage can impact a brand’s popularity overnight. As a distributor, your ability to quickly adapt to these changes and develop effective strategies is vital to maintaining a competitive edge. This guide explores how to navigate these shifting landscapes effectively, offering insights on mitigating the impact of a brand slump and capitalizing on a competitor’s downturn. It’s all about turning challenges into opportunities, ensuring your business thrives amidst the ebbs and flows of the market.
Part I: Mitigating the Impact of a Brand Slump
1. Sales Side: Leveraging Account-Level Data and Shifting Focus
In times of a brand slump, your immediate task is damage control. Use account-level data to understand which accounts are affected most and develop tailored strategies for each. You might need to shift the focus towards higher Gross Profit (GP) brands or even away from the strictly beer category temporarily.
Knowledge from the trade
One of our distributors experienced a decline in sales of a particular brand last month. They used VXP to identify their top 10 accounts where this brand was struggling. After calculating the monthly profit that this brand represented, they set that as their target to compensate for the slump.
The key to their strategy was flexibility and openness to opportunities within other SKUs to close the gap. Interestingly, many of their opportunities were found in the non-alcoholic (N/A) space, given its incremental growth and high profit margins. This shift in focus was a strategic move, driven by VXP’s insights, towards higher Gross Profit (GP) brands and away from the strictly beer category.
Once they had this plan on paper, they handed it over to their sales reps. With VXP’s detailed information at their disposal, the sales reps were equipped to execute this strategy effectively, targeting these opportunities to grow profits at retail. This process demonstrates how aligning sales reps’ incentives with growing your business can help navigate a brand slump.
2. Placements and Displays: Optimizing Space
With the slowing sales of one brand, consider repositioning other brands into the freed-up display space. This diversification can draw customer attention to different offerings and potentially trigger new purchasing behaviors.
For example, suppose a retailer requests a reduction in the variety of a typically strong brand currently experiencing a downturn. In this situation, you have a unique opportunity to maintain a presence for your highest Gross Profit per Case Equivalent (GP/CE) products.
Knowledge from the trade
One of our distributors took advantage of such a situation, making significantly more GP/CE on 18 packs compared to 30 packs. Leveraging VXP’s sales analytics and the current slump in the brand, they were able to shift their market towards 18s. This strategic shift not only helped maintain their profitability during the slump but also steered consumer behavior towards a more profitable product mix.
This is an excellent illustration of how VXP can assist in identifying opportunities and implementing strategies that align with your business objectives, even in the face of challenging market conditions.
3. Operations Side: Effective Resource and Inventory Management
Your marketing dollars should be allocated effectively, focusing on brands that can provide a better return on investment during the slump. Inventory management is crucial as well; manage inventory of slowing brands to avoid overstock and wastage, and ensure rising brands are well-stocked to meet demand.
Part II: Capitalizing on a Competitor’s Brand Slump
1. Sales Side: Strategic Use of Account-Level Data and Expanding the Portfolio
When a competitor faces a slump, it’s a chance for your brands to shine. Use account-level data to target accounts that were heavily reliant on the slumping brand and offer your brands as alternatives. Consider diversifying your portfolio to accommodate changing consumer preferences.
2. Placements and Displays: Maximizing Brand Visibility
With a major competitor in a slump, retail floor space opens up. Negotiate for better product placements and increased displays for your brands. This increased visibility can attract customers who previously might not have considered your offerings.
3. Operations Side: Optimizing Marketing Resources and Inventory Management
Work closely with brand owners to amplify marketing efforts and allocate resources where they’re likely to generate the highest returns. Manage your inventory proactively to meet the increased demand, ensuring you’re always ready to meet your customers’ needs.
Turning Market Dynamics Into Opportunities with VXP
Whether you’re mitigating a brand slump or capitalizing on a competitor’s downturn, VXP equips you with the tools to navigate these market dynamics. With data-driven insights delivered daily to your front-line sales reps, a proactive approach to inventory management, and strategic use of marketing resources, VXP is your partner in turning challenges into opportunities.
Contact us to see how VXP can help you.