Revenue growth management in off-trade

  • Europe
  • |
  • Denmark
  • Revenue growth management

Impact

Potential increase of +15% in volumes and +190% in EBIT in the off-trade, linked to brand & package innovations and the adoption of the optimal price-to-consumer strategy.

Issue

The extreme concentration of retailers in the country's off-trade landscape, combined with their intense use of price-promotions, led to the erosion of the profitability of all manufacturers operating in the category. This was the case for our client, who requested our help to enhance the value of their portfolio in the off-trade channels through pricing.

Approach

Extensive research was conducted at shopper level to understand purchase occasions and the role of different packaging and price elasticity when making decisions in a variety of store formats. A specific conjoint study was therefore performed, paying special attention to reactions to new product introductions or to changes in the way promos were presented. Price elasticity was later used to model volume and profit impacts under multiple pricing scenarios that included competitor reactions. This analysis was combined with a robust understanding of the category dynamics and the retailer landscape.

Outcome

The result was the identification of specific innovation opportunities and the definition of an optimal pricing policy, detailing the target price levels by brand and package, and the strategies to be followed against competitor promotions. Moreover, insights related to shopper behavior in key purchase occasions allowed us, together with the retailers, to identify value opportunities that could be exploited through "smart" occasion-focused promos, breaking the perverse value-destruction dynamic derived from general price promotion practices.