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 am in the planning stage of importing a 750ml/80proof beverage into the US. I understand the break-even and profitability points, and have a 5-year cash-flow model developed. I have researched the target shelf price, know the shipping volumes of competitors, and have suppliers identified. I see my biggest problems as marketing (creating demand) and rights retention (not getting cut out after creating demand). But my questions are: 1) The viability of the business depends on the quality of the numbers, and the numbers vary substantially depending on assumptions. All my assumptions (except the sales forecast) are backed up by sources, but as sources vary wildly, I want your opinion on: likely distributor's markup, likely markup at retail, and is 50% net-30 + 50% net-60 realistic for receivables in this industry. 2) The obvious made clear on the 5-year plan is the cost of inventory, mostly the delta between payables and receivables. Any probable ideas how to pre-sell into channels as much as possible or otherwise cut this down? 3) Ultimately the business won't launch without a sustainable deal or contract with manufacturers. Although I've come to know a lot, I still get blindsided with something I didn't think of. I can't afford to cut a bad deal, and therefore need to have someone advise me during negotiations. I've cast a wide net, but so far have not found anyone with sufficient experience/knowledge. Can you offer support or know someone who can?
ANSWER: Hello. I have thoughts on this, but am unable to give the time for this at the moment; will reply shortly.
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QUESTION: I guess it would be helpful to know how many days is "shortly" so I know when to give up waiting. Thanks.
Answer Dave, apologies. I have an answer and wanted to check with colleagues.
This isn't an easy one in "good times" to find a concurrence of opinions as to what is realistic today. Conditions vary, for example, sales elasticity, brand equity, fixed costs over production runs, the price the market will bear for your product and competitive pricing.
As I don't know your COGs or Carry Costs, I'll work from soft drinks that have brand equity. I'd assume worst case in which distributors would get about 30% of their sales price. This would take into consideration one's buy back/stales, volume discounts, shipping policies. I'd then expect retailers to mark-up by 20% and assume that you're going to have an established Market presence.
Now you'll have to adjust to reflect:-
- you're starting up,
- your product is relatively unknown,
- you're in a narrow market segment
- you have competitive pricing
On receiveables... How much capital can you risk? We're seeing 30 days rising to 90, while 21 to 45 used to be normal. Some manufacturers are able to demand 50% down with higher risk accounts.
The power at the moment is on the side of the established retailer (not the startups). With banks withdrawing credit, all sides are looking for credit from any sources they can find. Obviously the retailers, who capture the "cash" at the point of purchase are looking for the most days possible - and manufacturers are in a bind between Days-of-Stock, Coding out (stales) and warehouse capacity - so they'll flood product in the hope of seeing some return rather than having to destroy their product.
Pre-Selling a channel depends on the knowledge of the brand and your resources; are you talking about long turn around times or 24-48 Hour?
It will be impressive to sign (long term) deals with retailers who'll dedicate shelf space for an imported product. I'd expect 1 facing on average; and put money behind incentive/promotions.
As to the main levers... AP, Carry Cost & AR... Yes, they are factors; but you've also got competitors, innovation, market awareness, market demand, seasonality, capability...
Have you determined your selling story? How you're going to go to market? Train up your sales staff? Your competition current pricing and how they'll react when you launch?
