Q&A with Curt Woods, EVP, Beverage and CPG Executive
1. E-commerce has clearly disrupted the way that consumers shop… How has this changed interaction with retail customers and where do you see these trends headed?
I think it’s important to define E-Commerce first to clearly understand the new digital dynamic of shopping and purchasing. E-Commerce is just the transaction that takes place when a purchase is made digitally. E-Premise is a better way to capture what is happening with consumers and customers alike. We are currently seeing a new “Premise” being created. This “E-Premise” will join the traditional “ON and OFF” Premise as a way of reaching consumers with the brands they know and trust.
E-Premise will have different measures and definitions for Education, Activity, Distribution, and Performance, much like the traditional business is measured in ON and OFF Premise. There are also different classes of trade and segmentation similar to traditional purchasing occasions, each segment and customer has very different objectives, needs, and platforms. Some of these include Pure E-Tailers (Amazon, Jet, Shipt), Click & Collect from traditional Brick & Mortar, and Convenience of Delivery partners (Instacart, Drizly, and Saucey).
With consumers having instant access to brand information, education and availability, brand owners must take lead in developing performance criteria for their brands in a digital economy and manage “Omnichannel” positioning of their brands. Strict management of Digital Assets and Content by the customer will default to the brand owner.
Understanding each retailers business objectives and how they will offer an On-line experience and fulfillment to their consumers will be the key to partnering early. Providing simple and unique Assets, Creative, Content, and solutions to match their platform and strategy ultimately will deliver success within E-Premise.
2. Brick & Mortar remains a key part of reaching people in the beverage business. Where do you see the trends heading and where are the opportunities?
I believe Brick & Mortar will always play a large role in trial and brand building of beverages. The business dynamic of Brick & Mortar, however, will evolve and adjust to the needs and desires of the consumer. I see the initial impacts coming from Click & Collect. On-Line activity and promotion for a brand will deplete in-store inventory quickly, currently, the data is hard to capture as these sales pass through the in-store register. Brick & Mortar will have to create a quality in-store experience or special occasion for the shopper to enter the store versus buying online at home or at work. We may see a day soon where backroom space and inventory is expanded to provide back stock for E-Commerce transactions. Quite possibly underperforming stores could be converted to “Depots” for Pick-up and Delivery options. The largest opportunity in Brick & Mortar will be generating trail and Impulse purchases when consumers do enter a store. There may be different promotions in-store versus online depending on the laws in a given state.
3. We’ve seen the consolidation trend at the distributor level for some time now. What are some of the effects that this will have on the suppliers across the various markets in the US?
Distributor consolidation is happening at a rapid pace. While some synergies do exist, cost-cutting is an underlying motivation and consequence. I believe this consolidation will change the traditional Supplier/Distributor relationship in the very near future. The largest suppliers will continue to demand dedicated resources and a disproportionate amount of the distributors time and resources in exchange for a “National Footprint”. Suppliers of all sizes will have to take on a larger responsibility driving business and execution metrics in ON, OFF, and E-Premise.
The mega-distributor will just not have enough resources and time to implement thousands of brand strategies at the Headquarter level of National and Regional accounts, Thus a successful supplier will most likely need to invest in overlay teams with their own resources to capture activity In-Store, On-Shelf, and On-line.
4. What are some of the most impactful ways in which technology is affecting the Beverage alcohol space? Do you see any potential for AI & machine learning to gain traction in the near term?
The advancement of technology and its usage in Beverage Alcohol is really just at the beginning stages versus other retail categories. Technology, however, has quickly changed the way business is conducted. Relationships are very important in the beverage industry, but with new analytical resources and instant feedback on Execution, Margins, Promotional performance and category and brand performance, buyers now can make fact-based decisions and adjust distribution and promotional activity quickly to adjust to the marketplace.
Advanced technology does offer the supplier a new way of working with distributors. Real-time measurement of numerous causal business factors and data can be collected very quickly and analyzed if the technology is available to gather Display Execution, Feature ad activity, Distribution, Shelf sets, Category and brand performance, Menu mentions and depletions versus consumption data. No longer will a supplier have to wait 2-3 weeks after a program to review results.
AI and machine learning potentially could provide the ability to identify potential buyers for “Affinity Items” or bundling items based on historical purchases and like items. Think about how this is used now in online shopping today in other categories. You search one time for a new TV and every site you visit for the next 3 weeks is suggesting a TV brand to purchase. While the opportunity exists in Beverage Alcohol, the potential for legislation regarding this technology and how it is used with Beverage alcohol will most likely fall to the state level.
About Curt Woods – LinkedIn
Curt Woods is a senior executive in the Beverage business with extensive experience in Beverage alcohol, CPG, and FMCG. Curt talks to us about some of the trends and changes the industry.
Published: 17th August 2018