Why you have to check out today’s podcast:

• Learn the factors to consider when building a distributor pricing strategy 
• Find out the uniqueness of the spirits industry and how pricing decisions are made taking into consideration all the concerned parties involved 
• Discover the process of how the product in the spirits company go through different distribution channels and ultimately brought to the end-consumers 

 

Karl Petersson was the Director of Commercial Performance at Bacardi. He had worked in the spirits industry on both the supplier and distributor side. He also has 12 years executive experience in commercial strategy development and people management.  

He managed a Finance and Pricing responsibility for a $300-million consumer packaged goods business improving profit by +$6 million. He has  4 years of experience managing the P&L of a consulting business and grew the revenue 50% with increased profitability while expanding the organization to 25 project managers and engineers in the US and Europe. He was responsible for initiatives optimizing $9 billion of revenue for Fortune Global 1000 companies generating $400 million in profit improvement. 

In this episode, Karl shares how pricing is done in the spirits industry taking into consideration the end retailers and distributors’ margin goal. 

 

“If you want to really push pricing all the way through and make it hit your bottom line, work and coordinate across all players that are relevant for that decision.”

- Karl Petersson 

 

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Topics Covered:

01:18 - Karl’s journey into Pricing. 

02:45 - How pricing looks like in the spirits industry? Do they sell through a distributor? 

04:06 - How is pricing done at the consumer level, at the grocery store or at a nightclub? 

05:03 - Thoughts on treating the grocery stores and end-retailers as customers, Bacardi as a loss leader 

08:02 - What dictates the volume produced? 

08:30 - How do they get to influence pricing beyond the distributor 

12:06 - Bacardi’s pricing strategy  as they work with their retailers taking into consideration the competitors 

13:57 - What’s interesting to know about the spirits industry when it comes to raising prices? 

15:01 - Can they set prices and sell directly to consumers in other countries other than the US? 

16:10 - How do they work with distributors on pricing when they have a margin to meet? 

19:07 - Taking a look at nightclub pricing 

21:13 - Do you pay for shelf space in an outlet if you are trying to build your brand? 

22:14 - Does it make sense to use price endings for drinks? 

23:49 - His pricing advice that would impact other people’s business 

24:33 - Does size matter when it comes to pricing when coordinating with other concerned players? 

 

Key Takeaways: 

 

“An interesting part of the negotiation is do you have a brand that's strong enough to make a chain compress on their own margin just to get that hot price point?” - Karl Petersson 

“In Europe, you can set the pricing to your customers, so you don't have to sell for that distributor tier. You can go and sell directly to your customers, groceries, nightclubs, etc.” - Karl Petersson 

“Pricing with nightclubs, you will be bucketed on-premise on nightclubs, hotels, restaurants, bars. And for those accounts, you will see some interesting stuff like it's not only about the price, and that comes with a super low acquisition cost, and then someone buying a ton based upon it.”  - Karl Petersson 

“When it comes to coordinating pricing with different channels it's not that you're a small company, it's just that you might have a brand that doesn't have a lot of value. That will change the kind of negotiation you can do.” - Karl Petersson 

 

Connect with Karl Petersson: 

• LinkedIn  

 

Connect with Mark Stiving:    

• Email: [email protected]    
• LinkedIn    
• Twitter    
• https://www.championsofvalue.com