What challenge(s) do our clients face?
Against a backdrop of changing consumer demands, established traditional businesses are locked in a battle against new entrants. We are witnessing new sector innovations creating a favorable environment for new entrants to conquer more space leading to a shift in the balance of power.
The market trends and drivers for beverage consumers have been steadily changing in the last decades; for example, the shift towards healthier products and a tendency to look for convenience among different products, occasions and channels. In this new context, to develop sustainable growth companies must identify and understand these new habits considering the particularities from one geography to another. Through our experience, an accurate customer segmentation and Go-to-Market model enables a balance of distribution and in-store execution that are key to creating competitive advantage.
Beyond the change in consumer demands, the beverage industry needs to innovate in the way that it works. From a channel perspective, new requirements are emerging for on premise and off premise channels, as well as new opportunities such as events and the rise of e-commerce making this sector even more competitive. Structuring a channel strategy and optimizing the logistics network is therefore fundamental for improving results.
How do we help?
Integration has conducted more than 250 different projects for the beverage industry in multiple geographies, from local, regional and global perspectives, which has allowed us to develop an in-depth knowledge of the sector. Our experience consists of projects with a huge diversity of challenges in both the non-alcoholic and alcoholic categories.
We are proud of our partnership with one of the leading global players in spirits. We have supported them in over fifty projects, from strategic ones, such as developing route-to-market (RTM) for different countries, to tactical challenges, such as reviewing commercial policies. Our partnership has enabled our client to create competitive advantage by sharing best practices across countries, optimizing sales through different channel approaches.
Our partnership with one of the leading global players in energy drinks also has given us the opportunity to work on more than sixty projects globally in the supply chain and marketing and sales areas, driving brand differentiation and sustainable growth. In the US market, for instance, we designed a complete and comprehensive diagnosis of the business, developing a Go-to-Market strategy which drove significant revenue improvements.
We have worked with clients in different categories, geographies and positions along the value chain:
The bottler for a leading global non-alcoholic beverage company sought to increase revenues and optimize operational expenses in Brazil.
The two main challenges were to identify:
- revenue opportunities by mapping “white and grey” areas of the market and improving distributor performance
- the main cost reduction levers for increasing operational efficiency and therefore profitability
The first step was to truly understand our client’s context, through internal and external analysis. We analyzed the P&L and interviewed their whole leadership team.
We then created a map of all the opportunities on the table and defined the qualitative and quantitative criteria for prioritizing them, supported by financial simulators.
Finally, we structured a Revenue Chain Management (RCM) process to allow our client to continue to take advantage of the methodology used.
The project showed how essential revenue management is for increasing revenues. We mapped several key opportunities for revenue management:
- Captured margins in the value chain by adjusting commercial policies
- Optimized profitability and revenue per POS by proposing a new mix focus by channel and region
- Replaced distributors to capture more market share
- Managed the cooler park and related costs better through a reallocation of these high value fixed assets
- Optimized trade investments by refocusing them on high potential clients
This delivered an expected increase of over 12% in EBITDA after the full implementation of all initiatives.
A leading energy drink company faced increasing market competition due to the aggressive growth of a major competitor in the US.
There were two main challenges:
- Identify all possible revenue opportunities, not only from a geographical perspective but also from a brand image perspective.
- Create a “How-to-Win” strategy based on a Go-to-Market approach, in order to develop sustainable, organic growth.
We divided our approach into three main phases:
- A deep understanding of the US energy drink market, channel segmentation redesign and restructuring of the sales department. During the first phase we analyzed market data of competitors, consumer and channels, as well as visited more than fifty distributors in order to truly understand the reality and particularities of each channel.
- The outputs of this first phase showed us an opportunity to re-segment the channel in order to boost revenues. In order to prioritize all the initiatives mapped with data-driven solutions, we also developed a size of the opportunity simulator to estimate opportunities in terms of numeric distribution, VPO and market share for every region and channel.
- Lastly, together with the client we designed a new Go-to-Market for the US, with new service levels, a reshaped distributor network and restructured sales and trade marketing areas.
As a result of this project, our client was able to maintain market share and increase revenues.
We helped them not only to manage the right balance between direct and indirect channels for each region, but also identified opportunities in the current (convenience, supermarkets, etc) and alternatives channels (catering, military bases, airport, etc).
At the end of the project, our client had a clear roadmap and visibility of the size of the business opportunity, allowing them to implement a strategy to double the business in 5 years.
A leading UK beverage company wanted to enter the Brazilian market due to its size and growth potential.
The challenges were to:
- Understand the dynamics of the local market which were unknown to the buyer
- Identify potential red flags in the operational and commercial areas
- Calculate synergies with the mother company and build the business case for return on investment
- Prepare the company to be the platform for global brands.
Post-acquisition support was needed for the technical and cultural integration of both companies, as well as for supporting the commercial area to capture the expected results and synergies.
- The first step was the development of the business case and investment thesis in order to evaluate the attractiveness of the opportunities on the table. It was important to analyse not only quantitative measures, such as P&L scenarios, but also qualitative measures, such as cultural differences and the strategic case for entry.
- After we had defined the assuptions behind the business case, commercial and operational due diligence was the next step. A deep dive into RTM and operating strength were essential to knowing if the acquisition would deliver the expected value.
- Once we understood the real added value, the third step was coordinating the post-merger integration, supporting both the technical and cultural fronts. Deep field work, and our hands-on and practical approach were fundamental to maximize the value of the operation
We delivered a design for the revised GTM model and an implementation plan to deliver the expected top line results.
We also supported the integration of both companies leading to a successful commercial and cultural integration considering the local capabilities of the acquired company as well as the HQ needs.