Retailers: Quit Playing The Slots

OVER THE COURSE OF THE years, I’ve written about many issues that comprise the dynamic of the beverage industry. I’ve covered price, packaging, promotion, placement, and route to market. I’ve extolled the virtues of trade shows and the importance of trade associations. I’ve covered innovation, or lack of it, time and time again. I’ve encouraged risk taking and fiscal responsibility, boldness and timidity. I’ve even attacked the essential business tool of today, the Blackberry. I’ve encouraged more family time, better employer-employee relations, and I’ve written about marketers I admire and strategies for retailers to implement. In essence, I’ve covered about all I can cover over these 19 years.

But here’s the one issue I feel I haven’t really addressed in a very long time – and it’s become one of the most crucial ingredients of beverage marketing: slotting fees.

An equitable relationship between the retailers, the marketers and distributors is crucial for a brand to succeed, and the ongoing struggle forpower and dominance has been one of the most intriguing and constantly shifting aspects I’ve observed over the years. While each party has had the upper hand as dictated by times and economics, throughout it all, the trump card, heavily played, has been slotting.

There are no guarantees in business or in life, but when the retailer ultimately controls a brand’s success by selling them shelf space it means that too often it’s merit-be-damned, just pay to play. I’ve heard all the arguments about the risks and costs involved with taking on a brand. That is true, but that risk should be shared with the marketers and wholesalers.  It is not fair to be exempted on the backs and wallets of your partners.

Retailers, if you are presented with a viable brand, one with a well considered marketing strategy and support in the field, then make a decision whether to take it on based on that. If you don’t think it’s viable, then take a pass. These are tough times, and putting an extraordinary burden on them to buy your partnership is inherently wrong, as there is no incentive to make the brand work: if it doesn’t sell, you’ve already been paid, and you are free to await the next desperate brand’s dollars.

Over the past year, I’ve heard more sad stories of brands, excellent ones, that have not gotten placement because they couldn’t or wouldn’t pay for space. It is the dominant theme in conversations I have with all three camps.

It is time for the practice to end, or at least be turned down many notches to a more reasonable pay structure. We’re all in this together. Let a brand have its opportunity to make it or fail based on merit.  Long term, we’re all better off.