Client Issue

Our client had recently lost its competitiveness and ‘license’ to operate with wholesalers.

A deep dive in the existing commercial investment policy revealed some underlying issues hindering performance with wholesalers:

• Spend overall was fragmented across numerous investments, with no robust connection to channel strategies e.g. growth drivers being underinvested in, and smaller channels were receiving greater investment proportionally versus GSI

• Insufficient differentiation in investment offered to different wholesalers, and specifically not recognising wholesaler strategic importance and capability

• Minimal investment at a local level, so warehouses not incentivised to proactively either stock or sell client SKUs

• Limited enforcement of pay for performance, complicated by inadequate monitoring system

• Complex commercial investment structure, with over 15,000 potential variations, making it difficult to monitor & control, driving up costs. Resulting cascade calculation meant customers often unclear of actual discount value, and invoicing prone to errors

What We Did

Aligned commercial investment policy with new segmentation (size/attractiveness & will/skill criteria) to ensure spend consistent with those wholesalers offering greater opportunity for collaboration and growth.

Refocused investment on key ‘Push-Pull’ strategic business drivers of SKU availability, and sell-through to retail. National and local KAM’s provided with a tool to identify and address specific warehouse availability.

Commercial Investment architecture simplified, with fewer discounts, and a modified basis of calculation limiting invoicing issues.

Refocused investment more on SKU availability push & pull mechanics for best results, and enforce conditionality:

• Linked commercial investments directly to getting SKUs into warehouses, driving sell through to retail

  • Ensured disproportionate investment allocated to the latter stages in the route to market i.e. local warehouses

• All wholesale commercial investments were made conditional. If wholesaler did not meet conditions investment was not paid

• Used ‘Efficiency’ discounts more effectively to improve Working Capital

Outcomes

• Grew net revenue per unit case by 0.7% YoY

• Grew overall volume and revenue by 3.2% and 4.0% YoY

• Increased local budget spend by over 50% to drive local decision making

• Reduced invoicing errors by 83% saving over €1m annually

• 85k additional SKUs in trade over 12 months