A beverage producer was facing the challenge of recovering and cementing their competitive position in the Italian market within the modern trade channels. Key challenges included:

• They were market leaders in the past, over 70% market share (MS), with most of their sales coming from a single SKU; sales and distribution were done through an exclusive distributor.

• Our client had recently lost their MS, primarily because of price increases.

• Other challenges faced were limited innovations, low focus on in-store execution and limited usage of more modern consumer touchpoints (e.g. digital touchpoints).

Objective: Identify growth opportunities and define the optimum execution strategy to capture growth across key consumer occasions and channels, while answering the following questions:

• What are the volume and value opportunities by consumer occasion and sub-channel and what are the price and portfolio adaptations needed to capture those opportunities?

• What are the key activities to be performed to bridge the execution gap? How should we implement those activities through our distributor partner?

Several activities were performed to address those questions.

• Shopper research and conjoint analysis, including:

  • Pricing research (conjoint analysis) via online survey (1.600 shoppers) to understand shopper preferences for different SKU propositions and sensitivity to different price points

  •  Analysis of shopping missions and key shopper purchase drivers

• Outlet audits across Italy covering multiple regions and sub-channels to understand in-store execution of our client and competitor brands.

• Interviews with management to gather market insights and understand strategic objectives and challenges.

• Interviews with the distributor to understand market and consumer trends along with opportunities to achieve mutual growth for both our client and their distribution partner.

• Route-ridings with distributor sales force to understand market opportunities, areas of influence at the outlet, and opportunities to improve in-store execution.

• Simulation of different product formats and packaging scenarios using conjoint analysis (e.g., upsizing, downsizing, new product variants, new format types and multipacks, etc.).

The approach delivered several key insights:

·         Consumer profiles: Profile of target consumers (age, gender, region split, brands and formats consumed, etc.).

·         Brand perception of both our client and competitor’s brands.

·         Shopping missions by sub-channel.

·         Main in-store elements influencing shopper behavior.

·         Consumption occasions: Relevance of different consumption occasions by product category and age group.

·         Market share by consumption occasion.

·         Key product formats and products preferred by occasion.

·         Willingness to pay based on consumer type and product format.

Two main solutions were proposed based on the identified insights:

1.     Package diversification: Introduction of newer product formats to address specific consumer types, occasions, and sub-channels.

2.     In-store execution focus: Definition of key in-store activities, outlet coverage objectives, service levels, profile type needed, etc., to ensure in-store execution, and influence key shopper touchpoints.

·         Identified opportunities to grow volumes ∼15% and improve margins ∼20%.

·         Additional benefits included:

• Data-driven approach towards understanding consumer and shopper behavior.

• Increased alignment of objectives with distributor partner.