I wonder about the real value of deals with superbrands such as Coke and Cadbury for newsagents. While I accept that their products are important for many newsagents, the nature of our channel is such that we can never compete with the naional retailers. We do not buy nationally, we do not deliver in-store space at a consistent location and to a consistent level, we do not price nationally (or regionally) and, we are not loyal nationally.
Companies like Coke and Cadbury want to be in newsagencies because we play a role in their retail strategy and while they will make offers from time to time, these offers never equal those made to majors such as Coles and Woolworths. This means we cannot compete on price yet it is around brands such as these that the supermarkets position themselves on price and we get known as being expensive.
There is nothing wrong with being expensive if we demonstrate a reason for that – such as convenience. However, most of us do not play the convenience card.
I think many of us could be better off finding alternative products which do not facilitate easy price comparison. For example, instead of Cadbury confectionery, hunt down a local supplier or a boutique brand. Sure this will not match the chocolate bars and the like – do your research and see what is selling. Then make the assessment as to whether replacing a national brand on which you are price compared with a lesser known brand which provides better margin.
By playing in the big brand space you get the price deals when it suits them. Newsagents will always be the poor cousins in this mix despite what the brands will say. The same happens in liquor – the majors get the deals and the independents are the poor cousins.
I have seen some newsagents take this route with great success.
The fewer opportunities for comparing our offer to others the more we control our business and the greater the opprortunity for our success.
Some time ago, probably in the vicinity of 3-4 years, bill express ventured into a deal with a soft drink company, cannot remember the name though, we changed over our coke fridge and stock for the higher margin new stock (still cannot remember the name) and it was a mistake.
So big a mistake that I could not wait to get it out and get coke back in. I did my assessments at the time and name brands eg coke and cadburys won hands down.
Haley Coke works for some and not others. The key si to think about it. Too many newsagents blindly chase the major brand when an alternative with better margin could work. Probably more so in the confectionery area than drinks.
Mark
The second commandment of marketing is:
Be different or be dead.
(Rest on my blog for those interested.)
I think it starts with understanding what the customer wants – and it will be different for every store because each store will be positioned differently depending on their interpretation of those wants…
I have to agree with Mark’s comment that it is more likelly to work in the confectionary area than drinks.
Non-national brand drinks can be very difficult to pitch. Even in the supermarket industry, pitching new drinks is difficult. There are new drinks released every month – the majority dont last a year before they are either discontinued or removed from the warehouse because they aren’t meeting saes requirements.
With the right product, concept, range and branding confectionary can be much easier. Finding a complete product range that fits is the hard part.
Try adding the Riverport brand to your soft drink range, reduce the rows of CCA drinks and add the riverport brands such as Portello, Double Sars, Ginger Beer and Lime Spider. These are drinks that CCA do not have and the quality is above the CCA brands. the margin is 20% better than CCA
The River Port brand is distributed from Moama in NSW.
Another is Southern Cross Sweets from Curram Downs, excellent quality abd the margins are better
Just a suggestion
how about all newsagents collectivley bargin for a better margin from coke at say 5 cartons per week x 3500 is a lot of coke.we need to become more compliant to get better deals what do you all think ? cheers andy
andy, 5 cartons per week per store is nothing when most large supermarkets are selling around 350 ctns per week not including cans, the pricing you pay has more to do with logistics than anything else
Scott,
Your right. Newsagents aren’t going to get deals anywhere near that of supermarkets – they just aren’t efficient enough in comparison. 5 cartons per week is petty cash to CCA.
Food for thought, if GNS was really working for newsagents wouldn’t they get the big deal catering to the logistics of warehouse drops. Then the buying price would be enough for better margins. Keep in mind we aren’t here to stock 1.5lt to 2lt bottles and how many can give 4 to 5 mtrs of space to this product? Coke in a fridge give’s you a percentage chance of the 18-34 year olds, Pepsi gives you 50 % chance.
Brad
I’ve calculated it’s possible to make a lot more profit by purchasing my own fridge. You can by Coke and Schweppes products cheaper at supermarkets than what you can get from them direct.
So now I’m looking at streamlining the variety I stock for my new fridge. I’m very pleased I won’t be told what to stock and not have to miss out on different oppotunities that come up every now and then.
Brad,
It is unlikely GNS could offer a much better deal than your already getting. Even the major supermarket warehouse doesn’t sell it THAT much cheaper than coke (they have actually been dearer on some products).By the time GNS put any margin on it for thmsevles it may well cost more.
Michael- Personally I think your idea is viable and gutsy!!, As you said you can buy your coke cans at the supermarkets cheaper than they sell to you direct at times, I hope you still keep the 600 Coke.
Its crazy you can get 600ml schweppes sometimes at 99 cents at the supermarket when you get them direct for around $1.40+.
In my personal view Coke is pricing most of their products beyond reasonable, there maybe a time when I also will need to consider purchasing my own fridges.
I will share some info with you if it may help. I was going to go Michaels way. I am now on a trade agreement with coke which entitles me to 15% off any 4 coke products that I stock (That is after I said no to 10%), I chose the cans, all 600ml, Poweraides & 600ml Mt Franklins, this came about because I was stocking schweppes in the Coke fridge. When push came to shove I was straight up with the Coke Rep and told him his products were getting out of reach for my customers if I was going to make a living and I had no choice but to offset with integration with Schweppes products. He was the one who suggested the Trade agreement, I thought he was going to say “Its the highway or my way” I believe Coke may be changing its attitude and are open to negotiation instead of losing a customer? I would encourage you business people do the same and approach thir Coke reps.
This will allow my business to go another couple of years with selling Coke products, but their will be a time where I will have to integrate again. Coke will have to either reduce their prices or have a price freeze because small business like mine cannot survive on Cokes small margins alone. This is my personal view.
A great way to play in the confectionery space is to offer big brands with free gift wrapping – sure you’re more expensive, but people love the convenience. I recommend looking closely at your margin to ensure you make money from the wrapping (incl labour and ribbon).
Jarrod no kidding. Michael’s plan is exactly what I have done. Buying a drinks fridge and using the supermarket as a warehouse has seen much bigger profits and better control of supply. The 600mls can still be brought but cans are the better velocity product. The reference to GNS is purley a note to show that there is much more they could be doing and passing on to us in retail.
Brad
Brad,
Im just saying that it may not be so viable for GNS or newsagets. Coke don’t like to play by anyone’s rules but their own. They own the soft drink market and because of this they have more leverage than most suppliers.
Im supprised that you find cans the better product. We sell far more 600mL bottles – with better GP$ than cans.
If you do the maths, you’ll realise that when you HAVE to buy drinks direct even at a discount the price difference is around enough to rent a fridge, which is what Coke/Schweppes are essentially doing.
Providing you with a fridge which you are paying rent 924919for, then getting 75% of their product in. If you buy or rent a fridge and buy soft drink when the specials are on and have a good mix of Coke/Schweppes/V etc, you should dramatically increase profit and have regained some control of your business back.
what exactly is 924919for?
Mark will disown you if you comments start to become too mysterious
After being with both Coke first and the Cadbury Schweppes using their fridges for around 5 years, i iit the bullet and purchased a new fridge for $1200 about 6 months ago and haven’t looked back.
I carry what brands i want and am no longer dictated to by whatever company i had using their fridge in regards what percentage of space i have to use for their products and the minimal space i could use for a competitors product. i am allowed use in regards to stocking a competitors product.
I still use both companies to get certain drinks from that i can’t get at a cheaper price anywhere else, but for the most part i get my stock for the supermarket, Campbells cash and carry etc and much cheaper than what i could get it from Coke or CS.
I couldn’t be happier with having my own fridge, i buy what i want, when i want it, no specific ordering days, no minimum orders, i'[ve never had a bigger range of drinks (i’ve never been allowed to) and probably one of the biggest plusses out of the whole thing is i don’t have to deal with un-announced visits from the annoying reps.
The only regret i have about going out on my own so to speak is that i didn’t do it years earlier.
the same with us too, ditched Shweppes and got our own fridge more than 1 yr ago.
Trouble free now not having to deal with the dictating reps.
We buy what we can sell from whoever is cheaper, have our own mix, etc.
No regrets whatever having to front up the money to buy our own new fridge.
Hi all,
I have found that a good way to compete in the confec/drinks space is to promote companion sales between the two. I have my POS system set up with “Group Sells”, which allow the customer to buy, say a Coke and a Mars Bar for $4.50 instead of $4.90 (normal retail of both items combined). The staff just have to scan the items, and the computer looks after the rest, automatically giving the discount price if both items in a “group sell” are scanned.
As far as being different goes, we have our own fridge, and found that stocking schweppes products as well has really helped. We are one of the only retailers in town that sells Pepsi, etc. individually!
Cheers.
How long before Coke products are out of range for our customers if you sell them at the convenience price?
As a company they need to have a price freeze for 18 months on all their products.
I dont think they treat the majority of small business’s well. This January’s price rise in my business was absorbed because $3.20 per bottle is really expensive for eg 600ml pet bottles and secondly because of the economical climate.
Example: Cost price is about $2.00 for 600ml Pet bottles. Approx $48 inluding gst per 24 if you do not have a discount.
Example Cost price for 24 coke cans including GST for me is $16.50 direct.
Cost price in Woolworths (next week I think) is $12 per 24.
I will be adopting a new strategy by buying 1.25 Litres of Coke products for Major Supermarkets, they are regularly cheaper than the 600ml pet coke products I get direct. A dedicated shelf will be allocated to 1.25l bottles.
I am sure some business’s may not be as concerned with this post as I am due to it being more of a upsell and may sell their products somewhat lower than I do.
I guess what I am saying is it is getting out of reach of the customer.