Client Issue

Our client is a large European beer company. In recent years their revenue growth had suffered due to specific issues with organised retail customer trade terms. We conducted a Commercial Diagnostic and uncovered 4 key issues:

• Terms by customer were not linked to importance to the client

• The gap between highest margin and lowest margin customers was too great

• Clients main growth initiatives were ‘wrapped’ up in ‘volume’ discount, rather then focused on driving real category growth

• The penalties for poor performance were difficult to manage

What We Did

Step #1

We developed a ‘new’ approach for Modern Trade Trade Terms, to grow revenue and profitability and protect against trade consolidation risks by leveraging known category management principles & key business growth drivers:

• Assortment: right range & right mix by store type

• Product visibility; coolers & cold shelf; ambient fixture slots

• Ease of category navigation: tailormade point-of-sale materials; category navigation tools 

Step #2

We built a series of key account manager tools to drive implementation of the new approach, including a P&L instrument embedded in trade terms which

1. Enabled Account Managers to evaluate financial effects of their activities through KPIs (defined according to business growth drivers) and SKU details

2. Were used in budget calculations

3. Provided a guiding framework for negotiations with Key Accounts

Outcomes

Reduce overall Trade Terms payments in accounts between (1.9)% & (6.7)%

Overall margin improvement from +11% to +36%

Increased year on year volume and value share 1.1% and 0.7% respectively