Will there be a second Summer of Love for the Beer industry?
After the great summer and the successful World Cup campaign by England last year, brewers will be facing some tough like-for-like Sales targets to meet in 2019.
Those brewers needing to sure up this year’s performance will of course be tempted by the allure of deep-cut promotions and multi-buys across Off Trade just to keep targets in sight. Whilst pulling the promotional lever can maintain a healthy flow of revenue, it will almost certainly be a trap door for margins and profit.
The well-trodden path
As the financial year progresses, poor and ill-informed decisions can easily be made as adverse variance to budget increases and pressure mounts on volumes. Without proper analytics systems or tools in place to enlighten decision makers, the following predicaments are not uncommon:
- Reckless promoting to recover volume with no process to objectively assess success or otherwise
- Taking that listing in the discounters and compromising your pricing structure across all the grocers
- Retaining accrued trade spend to drop onto the bottom line instead of using it to drive performance
- Employing brand investment to support customer trade activity instead of top/mid funnel activities
- Investing heavily in a new brand launch then failing to secure listings and execute on time
- Failing to tackle sensitive investment issues head-on in JBPs ensuring bad deals are perpetuated
Revving up for smarter solutions
So, what can brewers do to drive positive top line growth and maintain healthy margins? The answer lies in adopting and driving the principles of Revenue Management, the super-charged cousin of Category Management. A union of Finance, Commercial and Marketing, it helps suppliers drive the right behaviours by getting the right products and packs into the right places, at the right price with the right promotional support, supported by a great plan. (Lots of Ps apologies).
The uncomfortable truth is that for so many “rights” to feature in a solution, the industry must be doing an awful lot of “wrongs” currently. It is rare for an organisation to wilfully do the wrong things (Carillion excepted) rather mistakes are often made from a position of darkness where leaders do not have access to the right intelligence and insights. Revenue Management can restore the light and remove the need for educated guesswork helping both business heads and frontline sales staff make better business-positive decisions.
A light at the end of the tunnel
What are the key things to do? Having access to the right data is absolutely key as is understanding how to analyse and action the insights that emerge. Many brewers consider costly short-term help from their data suppliers as external analysts whilst others take the necessary step to begin the Revenue Management Journey by introducing new machine learning systems and tools for a dedicated internal team. We would recommend the latter from a sustainable perspective but whatever’s right for the organisation, here are 3 simple considerations that should help gain alignment in your organisation.
- Identify and clearly articulate what the most important issues are and share across leadership
- Assess how well equipped the organisation is to find a solution – data, tools, processes and resource
- Understand what actions need to be done and how you can promote the desired behaviours in others to achieve the solution
There is an awful lot behind each of those point above whether that’s access to data and analytics, understanding technical needs and capabilities and finally the need to be comprehending of those colleagues less well-versed in the opportunities and benefits Revenue Management can deliver.
Has the ship already sailed for 2019?
Certainly not. With Q2 upon us, there are still plenty of opportunities to improve your organisation’s revenue performance before the end of the financial year.
- With Q1 completed, a large chunk of trade spend may already be committed so seek to ensure that the promotions and slots secured ideally deliver incrementality not just for your sales but also at a category level – this is what hooks the retailer and introduces flex in the plan. From our experience, immediate upsides of 5-15% from relatively straight-forward promotional analytics can be expected.
- Similarly, Brand spend in support of new launches should be invested wisely. Has sufficient due diligence and analytical rigour been employed in the 2019 planning process? There is still time to optimise the plan and ensure success.
- Finally, with the 2020 brand planning cycle about to get under way, are you sure you have asked the right questions and analysed the right data to inform decisions? This process is very much still in play so avoid making the same mistakes as previous years by introducing a rigorous approach to analytics.
Red Sky at Night
The beer consumer is changing so in turn the beer industry will need to respond and quickly. The sooner brewers can advance their capability in Revenue Management the easier the transition from darkness to light will be. Success means more than just analysing and modelling large sets of data, it’s about extracting actionable insights that deliver beneficial solutions for both the organisation and partners alike. As 2019 advances and drinking days get longer, there are better things savvy brewers can do than rely on the great sales guy in the sky or the dubious fortunes of our sports teams.
Wherever you are with Revenue Management, ScanmarQED can help accelerate your journey with our state of art machine learning Revenue Management tools, our comprehensive service and support and our industry expertise as both practioners and technical experts. For a complimentary needs assessment or indeed for any queries you might have, please contact ScanmarQED on +44 20 3137 680 or send a message via this contact form.