Revenue growth management in off-trade

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.

 

THE 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 purchasing occasions and the role of different packages
and price elasticity when making decisions in different store formats.
For the latter aspect, a specific conjoint study was conducted, 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 purchasing occasions allowed us to identify value opportunities
that could be exploited together with the retailers through "smart"
occasion-focused promos, breaking the perverse value-destruction dynamic
derived from general price promotion practices.