Bump Williams Consulting shared the results of the firm’s annual 3 Tier Growth Strategies Survey, and there were “multiple aligned growth plans” across the tiers unlike in past years.
Among the highlights: Williams noted that it’s not a “sin” to look across CPG to the “best and brightest” leaders outside of the beer category to navigate supply chain issues, out of stocks, packaging shortages and other headwinds. Additionally, every successful company should “be dedicating a lot of time, effort, and their best people in looking at and understanding the backyard sales opportunities that exist with the Hispanic community,” the firm added.
“Having the right product for the right consumer in the right store is going to be an ‘ace’ in the hole for those eager and dedicated to cashing in,” Williams wrote.
Here’s a summary of this year’s survey by tier.
Brewers and RTD Makers Could Look to Partner, Seize DTC Opportunities
The 346 brewers and RTD companies surveyed said they will be focused on “getting their financial house in order, even if it means taking on a partner they’ve kept at arm’s length for a very long time,” Williams wrote.
Suppliers surveyed called 2020 and 2021 “devastating,” leaving them “walking a tightrope to make ends meet when COVID struck” and the virus has “acted as an accelerant in closing some doors or making some knee-jerk/bad decisions,” Williams wrote.
Many brewers were late in hopping on trendy innovations, which led to retailers not allocating shelf space for what they viewed as “‘me too’ type products,” Williams continued. As brewers chased consumers with these products, they lost focus on their core brands, which led them to lose their identities and with it their “loyal consumers,” according to Williams.
Meanwhile, packaging shortages “hemorrhaged” some brewers who weren’t able to jump into single-serves such as the popular 19.2 oz. cans to meet demand in the convenience channel, which led to lost “spots in the cold vaults due to constant out of stocks or simply being MIA,” Williams wrote.
“Brewers lost share of mind with their distributors who were off looking for the next ‘golden ticket’ and ultimately, we saw inventory levels on fast-movers fall to critical stages and ultimately PODs [points of distribution] were lost – wasted opportunities and lost sales can never be recovered,” Williams added.
Looking ahead to 2022 and even 2023, manufacturers are looking to direct-to-consumer sales.
“It’s a sound strategy to try and recapture their own backyard and get some lost consumers back into the fold,” Williams wrote.
Distributors On the Hunt for ‘High End’ Products via Beyond Beer Segments
The 318 beverage wholesalers surveyed said they’re looking for more “high end” beverage products — those commanding more profit per case than traditional offerings — and not necessarily in traditional beer, Williams wrote. Wholesalers are looking for non-alc brands and ready-to-drink offerings, whether that’s “spirits, wine, malt, energy, hybrid, health and wellness and yes – cannabis-based.” They’re also focused on “ethnic beverages with a genuine/authentic branded story.”
“The distributors who are looking at the niches in their backyard using the micro-marketing approach to store-level sales opportunities will be the ultimate winners,” Williams wrote.
The chase for high end products may cost wholesalers “but the profit/CE will certainly more than offset those lost cases,” Williams continued.
Meanwhile, Williams predicted that “the big will get bigger and more diverse in their portfolio offerings to retailers,” which the latter will embrace “like never before.”
“The vendor partners who fail to recognize the strategic and tactical growth plans of their distributor partners will soon be on the outside looking in at warehouse spots that used to be theirs but are now being dedicated to a new age of beverage offerings,” Williams wrote. “I am really impressed with the distributors who are using single-serve offerings across a diverse portfolio of beverages to rebuild their lost c-store business and help those retail partners recapture lost shopping occasions.”
Williams also declared c-stores “back” and single-serve offerings as “the ticket into the cold box” for suppliers.
Nevertheless, Williams wrote that wholesalers — much like other businesses — are struggling “to keep/attract a competent workforce across all areas of business – drivers, sales reps, merchandising, warehouse, operations, re-pack, and retail account managers.” Those issues likely won’t “be resolved in 2022 or in this decade.” However, “automation and logistical efficiencies” may provide some relief.
“The real smart folks are looking outside of the beverage industry and seeking counsel from other industry experts across CPG,” Williams concluded.
Retailers Willing to Showcase ‘Hot Brands,’ Focused on Keeping Shelves Stocked
For the 126 retailers surveyed — which includes all classes of trade, including e-commerce and on-premise — their growth strategies fell into four “buckets,” Williams wrote.
1. To showcase “hot brands” as well as sub-styles/products, retailers are willing to open up their “shelves, display space, secondary and tertiary placement locations across the store (perimeter),” Williams wrote. This is all with an eye of making it easy for customers to load their baskets with “high-ticket products.”
“[H]igher market basket rings will be a critical performance indicator for them when they measure success next year,” he added.
2. To keep their shelves stocked, retailers also want to ensure they understand the future of supply chain management and operational efficiencies, Williams wrote. Out of stocks are a surefire way to getting discontinued and replaced by other packages, brands or categories, Willaims warned. Any space up for grabs will be sought after by spirits, wine and non-alc beverages with a health and wellness bent.
“Communications will be a critical success factor for ‘winners’ in 2022 and beyond. If you don’t know your retailer, then update your resume because you won’t be around long,” Williams added.
3. Retailers are also placing a “strong emphasis” on aggressive “speed to market” strategies in order to increase “consumer trips, improve store store loyalty, drive impulse sales and to use as a vital point of differentiation from their competitive retailers in the neighborhood,” according to Williams.
Miscommunication or a lack of communication with suppliers has led to some retailers missing “great portfolio enhancements,” Williams added. If buyers don’t know about new products or success stories, they’re not going to give suppliers additional points of distributions.
“So make it a point to get to know your buyers, what their growth platforms are, how they measure ‘success’ and make sure they know about your portfolio,” Williams cautioned. “Don’t depend on someone else to do your job – your future should be in your hands and not someone else’s hands.”
4. Suppliers and wholesalers should also be paying attention to neighborhood stores given the loyalty shown by “certain demographic groups (Hispanic in particular).”
“Retailers are looking for ethnic brands with a genuine heritage that their guests will identify with and look to buy,” Williams wrote. “Flavors, package size, package type, images, marketing, branded story, and POS is what retailers are going to leverage to capture more of these purchase occasions.”
Additionally, Williams predicts several new companies will enter the U.S. market in 2022 “to take advantage of this monstrous sales opportunity – that’s assuming we can solve our transportation and logistics challenges for imported products.”