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: Hello I would like to deepen my knowledge on beer distribution and logistics from different markets (USA, CHINA, Europe) and therefore wanted to ask what sources are recommendable to get more information. How do they distribution and logistics for beer work, what are the costs and what are the issues one has to be aware of in order to get most efficiency (concerning cost and money) as well as product sustainability out of it?
Thanks so much.
Constantin
ANSWER: Constantin,
This is a huge question space; and I'm not all-knowing. I wish at times I were such a person but I'd probably then be indecisive.
Let's get you started on acquainting you with the industry.
In English, there are plenty of resources where you can start; internationally though you'll run into issues with language.
Start at Google's Search as it's good at finding stuff. The keywords to play with are:-
- Beer
- Industry, Association
- Start up, launching
- "Business MOdel", "Cost Model", "Proposal"
- particular brewers (e.g. SAB, Guiness ...)
There are international companies selling into brewers, guilds and their distributors; consider what they offer for consultancy, materials (ingredients, containers, distribution fleets, etc.).
Costs - what type of costs; which country? What sort of business model? Which aspect of the business?
Are you considering levies as part of costs; association membership; are you talking about just the distributor, or primary transport; or storage, aging, import/export...
Issues - I'm aware of many issues re efficiency - though not exclusively in beer. You've got:-
- transitioning in size (growing pains)
- changes of distribution channels
- listing fees
- shelf squeeze out
- commission fees; agent fees
- storage
- shelf life
- health certification
- bonding fees.
Re your point on "Product Sustainability" - Can you explain further? I could interpret this to mean that the product sustains itself, drives volume and consumption - but if so, I think this is a marketing question and that's not specifically my area.
Please narrow down your question and so we can go further.
Eric
---------- FOLLOW-UP ----------
QUESTION: Hi Eric
thanks very much for your detailed answer. Regarding the cost issues you raised: I still have to think about it. But you hleped me further with the questions you asked in return. Concerning sustainability: your interpretion is correct. it was all about volume, consumption and that the product sustains itself. No worries if you cannot give an input there. i will see to speak with a marketing specialist regarding this issue.
I will get back to you concerning the cost issues asap. thanks again for your help.
Constantin
Answer Thanks for the guidance on sustainability. From a "high level" vantage a product is sustainable when the costs can be covered by sales, returning more that one would normally expect for the cost of capital (if lodged, say with a bank).
If you work this back to more basic levers - of which a business would have many then the model would consider costs of production, warehousing, marketing, facilities, staffing, insurance, fleet, etc.
If you're trying to look at a key sales number (e.g. I have to sell x hectolitres per month) I'm afraid there's no "number." The value will change depending upon costs, competition, payroll, insurance, market size, days of stock, tax, local economic factors (e.g. corruption), demand, years in operation. I know of several businesses that sell millions of cases per month and don't make a penny; and then next door, one sees a local cola company that only operates 4 months out of the year and lives quite comfortably. Why? Demand, infrastructure, cosy position with local authorities, not an international brand and therefore not subject to the same quality, tax rules, etc.
You can see this not just in beer, but in most industries. If there's anything I have learnt is that the profitability comes about through longevity. On the other hand, during the intial years a company could be profitable but all its money gets pored into expansion so it loses money. The only impact of the volume is to lure more capital. And as if to negate my basic tenet (re long term), I've seen several businesses who as they grew attracted higher cost staff (and hangers on) who zapped the profitability.
If you're building a cash flow, you need to play with your assumptions to find the breakeven point. And even when you think you've got it, you need to go back and re-test the assumptions. E.g. are Raws going to really be 25% of the sales price? Can I really get a Marketing campaign for as little as "X" to get my "y" sales?
Hope this makes sense (as to why there's no magic number).
