Beer Business Daily (by: Harry Schuhmacher)
Tamarron results are in, but we donâ€™t have any big winners to single out this go â€™round.
Nope, instead of conducting the typical survey, in which distributors rank suppliers on a variety of topics, Tamarron changed things up this year to â€œfocus on supplier/brewer adaptation and execution during the Covid-19 era.â€
The survey was conducted over June 2020, and received responses from 132 distributors, many of those being â€œtop/mega distributors.â€Â
The questions to distribs focused on a â€œreduced setâ€ of six key suppliers â€“ Anheuser-Busch, Boston Beer, Constellation, Heineken USA, Molson Coors and Sierra Nevada â€“ and asked them to rate the suppliers with each query a scale of â€œConsistently, Often, Sometimes, Rarely, Neverâ€ to â€œbetter identify the consistency with which brewer leadership, sales and supply chain teams demonstrate the desired business traits.â€
Weâ€™re not going to dive into all the results, but weâ€™ll bring you the highs and lows, and other interesting tidbits from the other side of the aisle (more on the supplier side in story below).
WHERE BREWERS HAVE BEEN CONSISTENT. The most consistent behavior seen from suppliers over the COVID era, according to distribs, were â€œpolicies for anticipated out-of-code on-premise kegsâ€ â€“ i.e. the suppliers have â€œclearly communicated policies for handling anticipated out-of-code kegs, including extended code dates on kegs, collecting out-of-code packages from on premise/venues, recommended decanting procedures, keg return logistics, etc.â€
The survey notes that distributors also handed out favorable tallies to brewers for their management of â€œbrewer organizational changesâ€ as well as â€œmarketing & media re-allocationâ€ â€“ â€œa nod to quick re-tooling of advertising & social media campaigns, messaging and spending,â€ per survey.Â
WHERE THEY HAVE WORK TO DO. The â€œleast consistentâ€ behavior demonstrated by suppliers over the COVID time frame dealt with â€œenhancing revenue/offsetting lossesâ€ meaning there have been little â€œdiscussions to generate ideas to help distributors enhance revenue streams/margins and offset losses.â€
Distributors also â€œlooked less favorably upon brewers for their ability to â€˜capitalize on E- commerce trends,â€™â€ according to the results.
Communication to distributors â€œremains a big opportunity/area of concern,â€ per results. Then â€œsupply chain transparency, production and flexibility,â€ were listed as other opportunity areas for suppliers as well.
AND THE MOST FASCINATING FINDINGS. But perhaps, some of the most fascinating takeaways from this yearâ€™s survey came when Tamarron asked distributors about their various responses to COVID, and what kind of lasting damage they foresee to some of their on-premise accounts.
When asked about organizational changes in response to COVIDâ€¦
Beer Business Daily (by: Harry Schuhmacher)
Continuing the previous story on Tamarronâ€™s COVID-time survey: they also conducted a suppliers-side rating of distributorsâ€™ performance and â€œadaptabilityâ€ during COVID.Â
The main consensus here: â€œOverall, distributors have done a phenomenal job of adapting to the COVID 19 challenges in the following areas: establishing and adhering to safety protocols for their employees and customers; adapting service levels for off premise customers; and staying up to date on the evolving regulations, restrictions and re opening strategies of their local territories.â€
Distributorsâ€™ strongest suit, it seemed, was â€œon public health and safety precautions,â€ where they scored â€œoverwhelminglyâ€ and â€œextremely high.â€
Notably, 94% of suppliers also said the vast majority of their network was adapting service levels admirably for off-premise customers, by things like shifting personnel and efforts to keep high velocity skus (and shelves) stocked.Â
Distributors also largely scored well in certain types of communication, particularly sales and operations communication, with â€œnearly 80% of supplier responses acknowledging that more than 75% of their networks were consistently performing wellâ€ there.Â
Wholesalers scored just slightly lower than that on their ability to â€œ[re-establish] service to on premise, making temporary organization changes and adjusting short term objectives.â€Â
â€œThe least consistent behavior related to servicing accounts on E commerce platforms.â€
ALIGNMENTS/MISALIGNMENTS. The survey then cross-referenced theÂ distributor and supplier responses to determine where both parties could do better, and where they seemed to be â€œmisalignedâ€ in efforts.Â
ALIGNED â€œOPPORTUNITIESâ€ where both could do better:
-â€œEnhancing revenue / offsetting losses,â€ or how the tiers are working together to develop plans to make up for lost revenue or increased costs.Â
â€œKeg reimbursements and co-op funds may be considered here.â€
-â€œCapitalizing on E-Commerce trends was the 2nd lowest scoring question for brewers and the lowest for distributors.â€
And â€œlast, but certainly not least, is the opportunity around inventory management â€“ production, forecasting, ordering, etc.â€
Both also scored in the lower levels for re-establishing the on premise.Â
MISALIGNMENTS. As for areas where performance is misaligned:Â
Regarding handling out-of-code on premise kegs: â€œBrewers received their highest score, while the distributor score was ranked 13th with only 65% of responses indicating that 75% of the networks were doing this consistently.â€
â€œRelative to strategy & support communication at the leadership levels, brewers also outscored distributors â€“ the brewer score ranked 4th among all questions, while the distributor score ranked 12th.â€
Finally, â€œwhile distributors excelled at adapting off-premise service levels, brewers were slower to adapt their priorities in the off-premise. This question ranked 2nd for distributors and 9th for brewers.â€
INSIGHTS Express (by: Beer Marketer's Insights)
While distribs gave top supplier partners â€“ AB, MC, Constellation, HUSA, Boston Beer, Sierra Nevada â€“ top marks for proactive approach toward out-of-code beer reimbursement, many still felt suppliers could be doing more to help enhance revs and offset losses due to temporary closures of on-premise, latest Tamarron Survey on Covid-19 period shows. Part of offsetting losses also has to do with â€œongoingâ€ evaluation of keg reimbursements, as â€œmanyâ€ distribs indicated reimbursements were â€œinsufficient to cover their costs,â€ also asking for â€œreduce[d] co-op spending and inefficient marketing spending.â€ Â At same time, brewers also received best grades on making accommodations for temporary workforce reductions and ability to shift marketing messages â€œto be relevant to consumers in COVID-19 era.â€ But communication â€œacross most supplier functions,â€ supply chain â€œtransparency,â€ production and â€œflexibilityâ€ and â€œunderstand[ing] and adapt[ing] to the new normal at local levelsâ€ were other oppys for improvement. Among lengthy list of recommendations, distribs seek better communication from both senior leadership and local teams on adapted 2020 and 2021 plans as well as supply availability, learnings from other mkts and more.
Tamarron surveyed 132 distribs of all shapes and sizes. About half of â€™em were under $75 mil in annual revs and the other half over $75 mil, including 25% between $25-50 mil and 21% between $75-$150 mil, 17% less than $25 mil, 15% between $150-300 mil, 13% over $300 mil, and 9% between $50 and $75 mil.
E-Commerce is Biggest Oppy for Improvement, Sez Suppliers; Inventory Mgmt a Two-Way StreetÂ Suppliers highlighted ability to service e-commerce platforms as biggest area for improvement among distrib networks, via separate Tamarron survey of suppliers conducted in Jun. Just 29% of suppliers felt their distrib networks were mostly (75+%) â€œaware of accounts that participate in their own or third-party e-Commerce applications and has ramped up efforts to ensure accounts have sufficient service and inventory to accommodate growth of e-Commerce during the COVID-19.â€ Separately, just 38% of suppliers felt most of their distrib networks adequately â€œincreased usage of automated services with customers without impacting their overall service to customers (e.g. automated payments, online ordering, remote/video sales calls, etc.)â€ And suppliers rated distribsâ€™ inventory forecasting among one of the lower-scored areas as well, with just 56% of suppliers saying that â€œat least 75% of their networksâ€ have â€œeffectively adjusted and clearly communicatedâ€¦forecasting and logistics strategy to account forâ€ Covid-19 impact.
Over Half of Distribs Expect Anywhere from 11-30+% of On-Prem Accounts to â€œPermanentlyâ€ CloseÂ While 40% of 132 distribs expect less than 10% of on-premise accounts in their mkts to close permanently, remaining 60% expect anywhere from 11-30+%, Tamarron showed. About 35% of distrib respondents expect between 11-20% accounts to close permanently, 21% of distribs expect 21-30% permanently closed and just a handful of distribs (4%) expect over 30% of on-premise accounts in their mkt to permanently close.
Brewbound (by: Justin Kendall)