AboutEric Hofer Expertise Over 27 years experience, with 17 in international FMCG in back office operations and in field sales and data collection, including design, development and deployment of Handhelds, Marketing Equipment (Service, Tracking and Return on Investment), reporting and Vending management. Have participated on the launch of operations in new markets, and re-engineered the back office in several countries.
Experience Designed and led the development and deployment internal ERP system for Pepsi used in On-Premise/Vending in 13 markets.
Designed 2 handheld systems, the latest is now deployed in 4 markets internationally.
Re-engineered the back office functions (settlements, despatch, invoicing, credit control, etc) for over 20 snack, confectionary and beverage operators.
Developing software: Progress, VB, Access, C, Sybase, SA
Organizations Innovative-Selling Solutions
Publications BudapestSun
Education/Credentials State University of New York - BA Economics
NYU - Courant - Graduate work - Computing
Past/Present clients PepsiAmericas
PepsiCola International
PepsiCola Company
British Steel
British Telecom
Britvic (Pepsi's bottler in the UK)
AT&T
BellSouth
Mars Overseas Bottling
Pepsi France
Matutano (Frito-Lay Spain)
Frito-Lay
Pepsi Foods International
Chase Manhattan Bank
Kidder Peabody
National Power
SmithKline Beecham
Mars Overseas Bottling (Pepsi Azerbaijan)
A&P Bottling (Pepsi Serbia & Montenegro)
Iberia Bottlers (Pepsi Georgia)
Question QUESTION: I have been a beer home-brewer for over 20 years. My recent recipe has won several national awards. I want to use a "contract brewer" to brew and bottle MY beer. How do I go about finding a great beer distributor to get the "best deal" for national exposure? Just how does a beer distributor "sell" or market a NEW beer?
ANSWER: Robert,
The big question you have is about "capital". Do you have enough to do it yourself, or do you need other people's money (OPM)?
If you don't have the money, then you have the "sell" the idea to people with capital and/or means to get the product out there. That means risk that the recipe gets stolen (so you need to somehow "protect it" - which is something I don't know how to do vis-a-vis beer) before going further.
It's sadly a very slow slog to bring something "tasty" to the "national level of consciousness" - unless your country is say, the St Kitts or Vanuatu. And just because a product wins prizes, doesn't necessarily make it a good product to sell (sadly - and I'm sure you've had plenty of mediocre food, clothes, experiences etc. to confirm).
If you have the capital - and you'll need a lot; then effectively, you identify what you need to buy in; put the resources in place and work the plan.
As to getting the "best deal" - that's a subjective question: you mean in terms of your risk, your reward, how quickly you want to get to market, your exposure?
At these beer competitions, were there no offers to market the winning recipe? That's usually a reason why organizer organize such events. There's scouting for new ideas.
As to "how" a distributor sells or a new beer.... 1st, it's rare that the distributor does this; it's done by the brand owner. The owner (sometimes the local bottler) puts together a marketing plan. Identifies test group; establish marketing materials that hit that target group (e.g. teens, active adults, bowlers, etc.) - in effect gets them to identify with the product and/or wants to try it. One might organize events such as in-store promotions, tie in with larger events (eg. a football game or new restaurant opening), advertises, etc.
Please give me your thoughts as I need some direction:
- How much capital
- What risk are you willing to take
- How much can you commit (time, resources)
- Who else have you "sold" on the idea that would come in with you.
Eric
---------- FOLLOW-UP ----------
QUESTION: Eric,
Thanks for your knowledgeable and quick response.
Capital is NOT a real issue, except that I certainly don't want to be in the daily beer manufacturing process.
The use of a licensed "contract brewer" assures that the "recipe" and brewing process is somewhat protected with legal documents. The contract brewer has the required equipment for medium batch processing and bottling. I would pay a fixed price per batch.
From your response, it appears that I as the "producer" of the product MUST market the product AND then sell the product to the distributor who then can sell it to anyone he wants.
Is this really the way the "system" works? Can I "sell" MY beer locally to ANY store without a distributor? How does one "create demand" without distributing it?
I certainly agree that My beer will ONLY appeal to a small percentage of drinkers with a discerning taste, but "word of mouth" SHOULD stimulate sales, especially . Just "having" the beer on the shelf will offer these type of consumers an opportunity to sample/purchase a different beer.
Back to basics, I have may sufficient capital for "local" development i.e. local marketing. I'm NOT quitting my good job UNTIL a profit is realized. Time is 50 percent
and I have two other people who are available for "work."
So I'm now at this point. I can easily afford to produce numerous bottles of MY beer. Time and resources to do "local promotions" IS available.
I'm still having a concept problem about "growing" from store A to store B to store C, etc. Doing "promotions" forever is not in my dreams and certainly "national" marketing programs might be beyond my financial resources.
So about this "marketing plan" what would one do to GROW from real small to "the next step?"
Answer Lots of good questions!
Must a Producer market its own product?
You know the adage, "if you want something done right, do it yourself"? From what I've seen, if one has "skin in the game" (e.g. is invested); then there's more motivation. If you're waiting on somebody else and you don't have an established name (with people knocking on your door to get involved), then I don't have high expectations of success.
However, one could determine to scale the amount of investment in marketing. Start off small, develop clientel and expand from a base.
Outlets for sales & Distribution
A couple of items might constrain you. There are tithe pubs. These can only sell what their funders (usually big brewers) offer; there are exclusive accounts (where in exchange for upfront money, marketing, etc) an establishment is under contract to only sell a certain product. Then there are "listing" fees - where you need to pay to get shelf space. There's consignment sales; and of course, there's the nice old mom & pop that is willing to take a risk on you, and sells without strings.
Of course, you can organize your own distribution. I don't believe there's much to stop you - though for alcohol you might need some sort of bonding/licensing depending upon the locale - there's usually this business-to-business difference with selling to consumers - but I'm not qualified to say (I'm sitting in Budapest, and am not even sure about the local regs here).
If I were in your position, perhaps out of my conservative nature, I'd aim small. Establish the local clientel that I could easily visit (service) myself and/or with my team. Keep within easy reach of your warehouse and delivery crew; identify new outlets coming on the scene or outlets that match your customer profile (and/or are willing to support a new, up and coming brand). You need this at the start to get growing; once the formula and name are established you'll find it easier to get more attention and sell.
Promoting
Word of mouth is but one way; outlet promotions; event sponsorship; tastings; getting into a couple of "key" establishments for a period and/or running a discount promotion... Having any product on the shelf definitely get sales - if only because people are curious, and afterwards see drinking the "lesser known" in some way defines oneself as a trendsetter (hip or whatever). [I don't mean to denegrate such, I'm only identifying what actually is happening].
On this front, establish a "marketing" budget - how much are you willing to set aside; and carefully track this. Effectively, each of your production runs becomes a "cost" and you'll compare the cost of production for that batch versus sales, etc. So you'll want to know how much of it went in promotion (marketing spend).
Image is big. I'm a techie but I know that without it, the imagination of most people just doesn't fire. So put some time in to establishing a marketing story, who you're connecting with, getting a set of good graphics that also connects. Look around at somebody who isn't nearby (geographically) but has a message / image similar to yours (connecting to a similar consumership) to get ideas.
I hear you on promotion fatigue... However, being realstic it never ends - it just becomes a department of people instead of you. Look at Coke - tell me if you've ever noticed a day with out in some way seeing their promotions - okay perhaps not a discount - but an advert, empty bottle etc? Again, as the market awareness grows, the fight to get just 1 facing ebbs and it becomes easier to get market share.
When you start locally you have a huge advantage over Anheuser-Busch. You're from the neighbourhood; people will refer to you as "one of our own." and that will get you a lot of custom. Then at the state level, again, "one of our own" gets a lot of play.
Staffing
Good to hear that there is at least another person inspired beyond you! That's usually the hardest part. Many people say they'd like to be involved but bail when actually expected to show up for work! Divide up the tasks - but remind everybody they are both "X" department and "Sales"; and be sure everybody knows the tariffs, terms, etc. so that they can deal.
Business Development Plan
This one requires a bit of knowledge of the product, market, access to capital, other resources, etc; and it reflects what you've achieved thus far. I can only give you a little bit here without a lot more info. For what I've heard (and inferred) so far:-
- start small, local
- determine how to protect your recipe
- define a local partnership with a contract brewer
- establish the means to warehouse and distribute your product
- identify "test" outlets willing to take a batch; presell as much as possible - locally
- establish initial "market" image; define graphics, messages, etc.
- determine what is best from "pre-made" items - eg. bottle types, sales agreement, etc.
- set up your "promotions" for sampling, etc.
- establish your back office - to track sales, orders, payments, etc.
- identify inventory / on-premise level(s) at which point you'll reorder
- make your initial test batch and deliver
- deliver and monitor sales and execute promotions
- conduct review of performance of the product in the market: consider pricing, differentiation, customer feedback, marketing awareness, repeat business
- determine how to expand the customer draw / outlet scope (the borders of your selling region)
Next step of the plan is reach Sales Team and then Sales Office Sustainability
- expand from "pre-seller" with a 3rd party distibution to own distribution - effectively becoming a "route sales" - defined established "routes"
- track progress working the "routes"
- expand routes to cover more geographic territory
- identify strength and weakness in route sellers; develop their skills and marketing materials
- continue to refine promotions
- establish cascading competencies - so Sales Manager rides with route sales and coaches
- expand to a 2nd sales team; creating a sales office
- convert as many accounts as possible to more economic selling - from Route sales to Tel and Pre-sales
Expand to other sales locales - new selling teams in remote parts of the country
- review capital/resource requirements
- define selling team
- use local distributor for delivery
- develop regional marketing and promotions strategy
