I am in the process of being wheeled out by our sales team for key customer meetings this month. Joint business plans are the name of the game. We share our brand plans with retailers and they then tell us how much it is going to cost to secure their participation.
Linked to this is an ’over-rider’ structure, whereby we write them a further cheque at the end of the year for doing very little other than what they had already promised to do.
These bonus compliance metrics include such challenging items as the retailer actually selling our products in the same number of stores that the head office buyer has promised, and affording us the privilege of implementing a number of price cut promotions where we fully fund the discount on offer.
Money for old rope some might say, though if you are running an FMCG business in the UK these days, you haven’t got a very big business unless you play ball with the influential big four.
“Welcome to the brave new world of innovation and brand building in the grocery sector”
I found myself having to bite my tongue in a meeting with one particular buyer this week. The brand we were discussing has experienced tremendous year on year growth. In fact, it alone delivered the entire growth within this category. This is a well-established brand in a well-established category and the reason for growth is clearly identifiable as the new pack design. Rarely have I seen a change of packaging make this kind of impact.
The buyer acknowledged that our figures were indeed the same as hers. Good start. Then came the killer blow: “Yes, I have to say it has been a good year for this brand. We have grown it for you by more than a third. You do understand that we need to agree some kind of compensation to reflect the growth we have delivered for you.”
I couldn’t help but raise a smile at the embarrassing lack of shame shown by the buyer. Despite her fancy title, it is clear that her role has little to do with category management, and much more to do with supplier extortion. My point was further demonstrated when we moved onto a presentation of our new products. The buyer advised that she did not wish to try any of the products, but would list them anyway if we agreed to a further cheque.
Welcome to the brave new world of innovation and brand building in the grocery sector.