How to drive category consumption by focusing on the shopper: 6 recommendations for success

Communication is key for liquor suppliers facing stock challenges

With liquor shortages expected over the festive season, the Advantage Group has some suggestions for suppliers. 

There have been unprecedented supply challenges for the liquor industry over the past three years. These range from the war in Ukraine and other global geo-political issues to international logistics headaches, from the economic crisis to poor harvests, and still looming large in the South African consumer’s memory are the Covid lockdowns and alcohol bans.

At the same time there exists in South Africa what some refer to as the “revenge party” phenomenon - where one might expect consumers to tighten their belts over the festive season due to financial constraints, the opposite often occurs. There are indicators that consumers will continue to desire premium but look for value, and the dichotomy in the market will highlight escapism and excess versus pennywise celebrations. Premiumisation continues, while the value consumption market also continues to grow.

What does this mean for B2B partnerships and engagement in the SA liquor industry?

“South African firms are good at rising to face a crisis and working together to find collaborative solutions,” says Dylan Piatti, Managing Director of Advantage Group Africa. “The ability to be agile and respond to changing needs and environment comes through as an overall strength of the market. Global socio-political and economic conditions will continue to put a strain on trade terms as suppliers and retailers navigate stock availability, increasing costs, discerning consumers, and price vs value competition. While there is a strategic play beyond the festive season, this is still going to be a critical time for liquor trade.

“From our conversations with liquor suppliers and retailers, they identify managing stock availability is their primary concern. As a result, if you are not able to compete on stock, where can you focus? We have seen that those that lean into customer centric strategic engagement, are able to manage this challenge more effectively than others, and more often than not, emerge in a better position for trade partnerships beyond the festive season.”

Unlocking growth and advantage

The Advantage Group helps businesses unlock growth by highlighting how they can strengthen their relationships necessary for success. The program continuously monitors and provides feedback on the cooperation of both parties through the mutual evaluation mechanism between the platform and the brands. This helps suppliers and retailers identify advantages and opportunities and indicates the industry's latest development trends.

Suppliers and retailers are measured in the Advantage framework, which is composed of four drivers: Partnership, Execution, Reputation and Vision, which encompass 26 competencies of strategic partner engagement. Competitive benchmarks are available across each competency (table 1: VoC (Voice of Customer) Retailer feedback to suppliers).  

Working with their clients and collaborators in the industry, Advantage is able to measure the health of B2B relationships at multiple levels, including communication, trust, and ease of doing business, pinpointing areas that can be improved for increased market share and future growth, while also providing a competitive benchmark. While suppliers and retailers receive detailed feedback and results, Table 2 is an overview of the Retailer feedback evaluation framework.

 Top performing Liquor Suppliers and Retailers

According to retailers who participated in the group’s Advantage Report for 2021, the liquor suppliers that ranked top for Overall Performance and for Trust were Pernod Ricard #1 Supplier 2021, and Heineken #1 Trusted Supplier. While the Retailer results (Voice of the Supplier liquor program) showed Makro as #1 Trade Partner (Wholesale and Retail), Ultra Liquors #1 Retailer, and Norman Good Fellows #1 eCommerce Retailer. 2022 results will be available in detail to the market December 2022, and high-level to the public in February 2023.

(For access to the full scope of the 2021 results, visit https://www.advantagegroup.com/advantage-awards/sa2021-awards/  

Piatti, who counts AB InBev, Heineken, and Diageo amongst his clients, says it has been interesting to note the growing gap between those suppliers with strong relationships and dynamic systems, and those who continue to take a reactionary approach to customer management. Some of the questions Advantage is exploring with clients include:

Are you customer and partner obsessed? How does this translate into commercial value?Where are your pockets of excellence and competitive differentiation?What is the ‘golden thread’ linking support functions, operations, customer and partner facing teams that enhance customer engagement?Do your teams do the ‘not-my-job’ and buy-in to a partner-centered environment?How do you improve your engagement and performance with your partners to increase your share of investment, innovation and resources?

“These and many more questions are what we are helping our supplier, retailer and distributor partners unpack and turn into actionable insights.”

How to win with Retailers - The Advantage Group’s 6 key recommendations to liquor suppliers

The Advantage Report helps suppliers and retailers deepen their collaboration, highlights connection issues, and aids them in finding new and improved ways of working together, ultimately leading to commercial success. The latest report surfaced six recommendations that Piatti says can help retailers and suppliers, including those in the liquor industry:

Collaboration – Collaborate on innovation with your retail partners and bring them into the process as early as possible to foster consensus and investment. Connecting with your partners helps you both co-develop strategies, align on messages, and more effectively meet the needs and wants of shoppers together.

Objectivity – Being objective in your assessments removes your bias and emotions and generates trust with your partner. It sends a message that you are interested in cultivating a healthy and successful partnership. Use fact-based data and present strategies that drive consumption, benefitting both supplier and retailer.

Help – Offer help, even on issues that appear insignificant. Actively ask your partners what they need. This will show a genuine interest and attempt at mutual, not independent, growth.

Leadership – Continue leading on expertise. It’s a privileged identity to have established, so do not take it for granted, actively seek to maintain it through consistent engagement. Lead with your knowledge and insights of the local market and your products. Bring a different and relevant perspective. This will position you to actively engage around what the market might want or need and that your category development solutions reflect that.

eCommerce – Every aspect of the business needs to be assessed through the lens of eCommerce. Make sure your development plans consider eCommerce platforms, integrated systems, offline-to-online (O2O), and current and evolving trends in the digital world. Be mindful that this also includes and may depend on the digital needs of consumers who are steadily becoming more reliant on technology to satisfy their shopping needs.

Agility – As much as possible, try to be more agile. Retailers are frustrated with what they perceive as inefficient decision-making within companies. Empower your teams to make decisions that they are confident in by aligning on retailer strategies down to a category level and keeping consistent communication lines open.

Piatti believes that suppliers will find that a focus on value-driven engagements, e-commerce, agility in planning and logistics, and reassessed value drivers will be predictors of success in managing the challenges around maintaining stock levels and keeping retailers happy through the coming festive season and beyond.

ABOUT ADVANTAGE GROUP

Advantage Group International is the leading advisor in business-to-business engagement solutions globally. Trusted by many of the world's leading brands, Advantage Report™ has become the gold standard for improving performance between suppliers and retailers in over 40+ countries. Established in 1988 and headquartered in Canada, Advantage Group acts as an integral link between supplier and retail partners, using data, feedback, and strategy consulting to illuminate opportunities for mutual growth, strengthen relationships and provide invaluable

insight.

Dylan Piatti, MD Africa: This email address is being protected from spambots. You need JavaScript enabled to view it.

Thando Ntshinga, Operations; Program Director SA: This email address is being protected from spambots. You need JavaScript enabled to view it.