Trade deals are commonly used in sales and pricing negotiations. As a consequence, the leverage to stand out is the activity and the experience that a brand can generate. Partnering with the sales, I created format of sales to generate volume and bring value for the customer.
🔍 Background
Destination Beverage has been a beverage importer and supplier in Singapore since 2013. Specialising in foreign brands, the start-up is also the agent for 11 brands, meaning that they have exclusive distribution and a mission of brand development on the Singapore market.
A medium to improve depletions is often negotiating a trade deal, which is giving a certain amount of bottles for free for a minimum of purchased ones, lowering the cost per bottle.
Exemple of trade deal: "3+1" for a bottle with a unit price of $50.
For 4 bottles, the trade deal allows you to pay $150 instead of $200, aka $37.5 per bottle instead of $50.
It is a sensitive argument for outlets, where the pricing of the final drink is determined according to the cost per drink. However it is also a commitment for them to take since they have to ensure they actually sell the drinks. Therefore, on top of the cost, outlets are often interested in marketing actications the brand can bring: masterclass, DJ, guest bartender, entertainer... It is all about providing a quality experience to the patrons, who will spend money on drinks, spread the word about the venue and become regulars. This is especially true for cocktail bars and hotel bars - not necessarily all beverage selling points.
One of the first agencies I have worked with at Destination Beverage was a premium gin from Belgium called Copperhead Gin. In Singapore and in the South-East Asian region overall, gin is quite popular. As a matter of fact, the best bar of Asia in 2019 was Atlas Bar, renowned for having the largest gin collection on the world. The global trend is therefore an market overflowed with gin newcomers every year.
Source: destinationbeverage.com
🧭 Problem Definition The objective given by the sales manager was to have the brand listed in the most relevant outlets in town first and then expand to other outlets from then. Combining both pricing leverage and marketing assets, the mission was to build attractive bundles.
📝 Contingencies
Respecting the brand guidelines. The marketing team from Copperhead Gin had a clear branding landscape, with product storytelling, tasting suggestions, and merchandise. The edge they demonstrated was providing an "an alchemist experience" - in alignment with history of gin discovered as a medicine. Where most of the brands of gin promote themselves as a basis for the perfect Gin&Tonic, Copperhead Gin is the only brand to have its own bitters, granting 4 different possible Gin&Tonic variations.
Guaranteeing the positioning. The brand is set as premium which is reflected in the cost per bottle. With such a product, moving large volumes is not realistic right away. The relevant leverage to pursue is the listing as a spirit or in a cocktail, which would ensure regular volumes. From then on, it would be easier to upsell and offer the other expressions of the brand. Nevertheless, we still need to lower the cost per bottle as an entry, while still maintaing a relavant brand image.
🗺️ Solution
Defining a relevant trade deal. If the trade deal was the obvious most optimal option, it was important to conduct a a market survey to make sure that the final pricing decided was coherent to its competitors.
Using the agency leverage to create marketing mix. Because Destination Beverage is the agent for the brand, I was able to increase the value of the trade deal by offering:
Staff training: from the content sent by the brand, I created a 45min presentation format including the tasting, dedicated to the staff of the outlet (from bartenders to floor staff). That way, the teams get to enrich their personal knowledge and are more enclined to promote the brand to the patrons. It is not necessarily about clashing the other brands, but explaining where does your brand fit in and give a set of references for the end customer.
Create an experience: during the training, we recommended a selling pattern using the branded 'alchemist experience' and the merchandise: generating demand by displaying the gin trolley at the entrance of the outlet; during peak hours, bringing the trolley in the room or the gin tray to the tables; offering a customed Gin&Tonic to the guest letting him/her adding the chosen bitters. Overall, it enhances the the customer relationship and the diner experience.
Guestshift: the passed year, Destination Beverage had organised a national competition, whose winner got to enter the brand's international competition in Belgium. As a result, the Singaporean winner became a local informal ambassador. He therefore agreed to perform punctually guestshifts, creating cocktails featuring Copperhead Gin. Outlets are keen of this kind of initiative because it creates a unique experience and brings crowds - especially if the bartender is reputed.
Masterclass: performed by the Copperhead Gin Singapore Champion or by Destination Beverage, this training is intended for end customers - as opposed to the staff training. This is relevant especially for hosting, relying on regular customers or hotel guests, providing them entertainment. If they like the product, they can purchase it at the bar either in a drink, or most likely, get their own bottle which they can leave at the bar under their name.
Instagram contest: after creating a local Instagram account for the brand @mrcopperheadsg, we launched an Instagram contest. The goal was to enhance both brand awareness of the gin but also the outlet. That is why the rules included taking a picture of a Copperhead cocktail at the bar, and tagging Copperhead's and and the bar's Instagrams. The picture with the most likes would get a free gin bottle.
Eventually, all of this assets were available if the outlet accepted to do a Gin or Spirit of the month promotion with the trade deal of 6+1. The adjustments were done according the average gin consumption of the outlet: indeed the cocktail bars can guarantee 60+ bottles per month, smaller might not be able to reach that level - which does not mean they are out of the picture, but it still requires to balance the resources deployed.
Source: @cincinbar
✅ Assessment
Out of all the outlets who accepted the trade deal as a trial, the conversion rate of listings was about 80%.
This was supported by the brand which understood the plan, and sponsored the free bottles of the trade deals.
Highlights:
Publications about the promotion: both in Honeycombers and Coconuts Singapore, local references in the media
Bartender exchange between Singapore and Belgium: leveraged to send a bartender to Belgium to the Copperhead Gin distillery following his commitment for a 3-month promotion and consequent volume
It was a good exercise to understand the contingencies of the different outlets. Hotel bars are sensitive to the argument of guest experience, while bars are more focused on promotional entertainment - from events to menu inserts and posters.
A point of improvement is the management of the Instagram account: it is a continuous work, and the contest was a good boost but not enough. It takes time and regular posting to build a solid social media credibility and audience.
References:
Lynam, R., 2019, Gin's still the in thing, Asian Hotel and Catering [September, 17th] [LINK]
Raguraman, A., 2019, S'pore's Atlas named Best Bar in Asia; Manhattan drops 8 spots to No. 11 on World's 50 Best Bars list, The Straits Time [October 4th] [LINK]