One of the keys for a supplier seeking a good relationship with a wholesaler is good communications, according to Dhamecha trading director Mukesh Vithlani, and when it comes to the soft drinks category, he says, no one does it better than GlaxoSmithKline.
Wholesalers need to plan ahead and Keith West, the GSK national account manager who deals with Dhamecha, makes sure he keeps Dhamecha fully up to date with monthly category information and gives them plenty of notice of any product launches.
He says there is a routine for introducing new products, such as the latest Lucozade Sport with Caffeine Boost. For Dhamecha, which is a member of the Today’s Group, it begins with a trip to Today’s Scunthorpe HQ to introduce the new product to the soft drinks controller. Once they are happy with the product and the support for it, West then takes the product to Dhamecha to get their views on it. West says these meetings tend to take place three-six months prior to launch, so in the case of Lucozade Sport with Caffeine boost, the first meeting took place in November.
Vithlani says there are a number of aspects to consider. “First we have to consider which target group or groups it is aiming at among our 12,000 customers. Is it for CTNs or off licences or some other group, and will it be successful for them,” he says.
It is also a chance to consider whether the packaging and taste are right, and West says changes at this stage are still possible. Pricing also needs to be at the right level, and Dhamecha will be looking for the right level of promotional support.
When a new product is being launched Dhamecha prefers a multi-buy deal for its customers, to encourage them to stock up on the new product.
Vithlani explains that retailers can be sceptical about a new product and just take a small amount. Multi-buys encourage them to stock up, reducing the risk of the retailer running out of the product before their next visit to the cash and carry and then forgetting to re-stock when they next come in.
West has had plenty of practice in dealing with Dhamecha – he has been visiting them for more than 18 years – and Vithlani says he really appreciates the way he is kept informed. He says that with all the information he receives he is able to forecast, almost to the nearest pallet, how much stock will be required.
The soft drinks category is an important part of Dhamecha’s sales mix, according to Vithlani. He says: “In Sterling terms sales are not as high as tobacco or alcohol, but our customers are involved in the convenience market, which is based on impulse products, and soft drinks are a crucial part of that.”
Sales used to be more seasonal, but with the recent milder winters soft drinks have been selling strongly even in February and there has been less variation.
When there is a hot spell, however, soft drinks fly out of the depot. It is vital to ensure 100% availability, says Vithlani, but some suppliers let the wholesale channel down. “Running out is the biggest problem and ensuring availability is high on our agenda.”
Another problem identified by Vithlani, which affects wholesalers and retailers, is caused by the high level of new product launches in the soft drinks category. With limits on the amount of space that can devoted to the category in depot, and shelf space even tighter in stores, wholesalers and retailers are faced with the problem of where to accommodate new products. Vithlani says: “My walls do not stretch so basically new products tend to replace slower sellers.
GSK trading controller, wholesale, Mark Bowler says: “We are sensitive to space restrictions and take a responsible approach. There is a need to refresh ranges but for instance, when we introduced two new variants to the Lucozade 500ml range, we dropped two others.”
Bowler, says the 100-strong sales force, operated by CPM for GSK, is very important in driving sales. He says: “A few years ago we were very much push only into the depots but now the sales team, working with depot staff and retailers, can help to pull though stock.” The sales team call on retailers, providing category advice and providing information about forthcoming new launches and promotions. They can also provide advice on merchandising, arrange sampling activities, and arrange chillers for retailers.
Chilling drinks is vital in the impulse sector where customers are often intending to consume the product immediately, and GSK provides a range of options. Bowler says: “It’s horses for courses. We’ll suggest a dairy deck if there is space, but many retailers have restricted space and a single door chiller may be all they have room for. We take a responsible category approach to ranging advice, which means including our competitors’ leading products where appropriate.”
Dhamecha provides additional support for members of its retail club with each of the 300 members receiving 500 personalised leaflets to distribute in their local neighbourhood, and window bills highlighting special offers.
Dhamecha believes very strongly in price-marked products. Vithlani says: “We know consumers behave differently in c-stores to supermarkets, and they prefer price-marked products in c-stores because they feel they can trust the price.” However, both Dhamecha and GSK recognise that some retailers want the freedom to set their own prices, for instance if their store is in a high rent area, so they provide price-marked and non-price-marked products side by side in depot. To ensure retailers do not accidentally select the wrong version in depot, GSK puts highly prominent signage on the polywrap informing the retailer whether the case is price-marked.
A striking visual presence in depot is also necessary to attract retailers attention if the product is not already on their shopping list. Bowler says: “The question is how do you interrupt the list they are following. You influence them through high visibility and off fixture display.”
Once a product has made its debut in depot the work is no where near done, says Bowler. He says new products need to be supported and grown with various types of activity, and a good launch can take 12 months to complete. He also points out that although GSK has a particularly strong relationship with Dhamecha, through West, similar work is carried out by GSK with a wide range of other wholesalers.