THE BATTLE FOR ON-PREMISE POURING AGREEMENTS November 12 2015
Around the world at any one time 10,000s of on premise accounts are looking to either tender or re-tender their speed rail business to a dominant Liquor Company.
The process occurs every 1 -2 years involving a roller coaster ride of posturing as Liquor Company’s vie or die for business.
Prospective bar brides sit patiently on the throne waiting for liquor beaus to make lucrative offers, turning the process into a total Dutch auction.
Is this circus really worth the effort long term to a Liquor Company when one considers some of the unintended consequences.
- Liquor Companies invest in huge amounts of time, effort and money into retaining or gaining business, diverting staff and resources from more profitable activities
- Reduced margins from discounted pouring agreements necessitate cost cutting down stream usually reflected in reduced head count. The standing few are left to pick up the slack of the near departing, placing additional stress on the already stretched.
- Supplier/customer relationships are reduced to a transactional game based on “cost per shot (nip)”, where it’s questionable whether sustainable loyalty is really created between bar and Liquor Company.
Is it possible to change pouring agreements and transition them from 1-2 year sugar fixes to more orderly 3-5 year deals (with allowances for reasonable cost increases)? Can relationships be re calibrated around the “value” to a business of a sole relationship with one company rather than essentially a “zero sum game” based on a "cost per shot" game of roulette.
Is follows that greater business certainty creates longer more beneficial outcomes for bar and Liquor Company creating with it potentially positive impacts on long term profits.
Imagine how 3-5 year contracts would change the structures of Liquor Companies as reduced venue churn, reduces back office staff time working out deals, BDM’s refocusing time to building sustainable relationships based on "value to a venue “rather than cost of a shot".
Ultimately a rethought strategy would open up new possibilities creating new win/win scenarios for brand, bar and the totally forgotten party in this game of thrones: the guest.
Organisation focus misdirected towards short term plays takes focus away from the bigger picture allowing smaller craft brands to seep through the cracks or wedges created by behemoths bucking it out!
Maybe it’s time for a rethink!