Spirits company efficiency strategies

𝗧𝗵𝗲 𝗾𝘂𝗶𝗲𝘁 𝗮𝗱𝗺𝗶𝘀𝘀𝗶𝗼𝗻 𝘁𝗵𝗮𝘁 𝗰𝗵𝗮𝗻𝗴𝗲𝘀 𝗲𝘃𝗲𝗿𝘆𝘁𝗵𝗶𝗻𝗴. 𝗗𝗶𝗮𝗴𝗲𝗼'𝘀 𝗻𝗲𝘄 𝗹𝗲𝗮𝗱𝗲𝗿𝘀𝗵𝗶𝗽 𝗷𝘂𝘀𝘁 𝘁𝗼𝗹𝗱 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀: 𝘁𝗵𝗶𝘀 𝗶𝘀𝗻'𝘁 𝗮𝗯𝗼𝘂𝘁 𝗽𝗿𝗶𝗰𝗲 𝗿𝗲𝘀𝗲𝘁𝘀. Beginning of March in New York. Sir Dave Lewis and CFO Nik Jhangiani met with investors at a Citi event. The message was clear. Every spirits board is asking: "When do we cut prices to win back volume?" ↳ Wrong question. Sir Dave is Asking: 𝘏𝘰𝘸 𝘥𝘰 𝘐 𝘶𝘯𝘭𝘰𝘤𝘬 𝘨𝘳𝘰𝘸𝘵𝘩 𝘵𝘩𝘳𝘰𝘶𝘨𝘩 𝘴𝘮𝘢𝘳𝘵𝘦𝘳 𝘱𝘰𝘳𝘵𝘧𝘰𝘭𝘪𝘰 𝘴𝘦𝘨𝘮𝘦𝘯𝘵𝘢𝘵𝘪𝘰𝘯? ↳ Diageo isn't slashing prices. ↳ They're capturing white space competitors own. 𝗧𝗵𝗲 𝟰 𝘀𝗶𝗴𝗻𝗮𝗹𝘀 𝗳𝗿𝗼𝗺 𝘁𝗵𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝗺𝗲𝗲𝘁𝗶𝗻𝗴: 𝟭. 𝗖𝗮𝘁𝗲𝗴𝗼𝗿𝘆 𝘀𝗲𝗴𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻, 𝗻𝗼𝘁 𝗽𝗿𝗶𝗰𝗲 𝗿𝗲𝘀𝗲𝘁𝘀 ↳ Pricing repositioning is limited to a few brands. Primarily Casamigos. ↳ Missing price points = money left on the table for competitors. ↳ The priority: sharper portfolio segmentation. 𝟮. 𝗠𝗮𝗿𝗴𝗶𝗻 𝗱𝗶𝗹𝘂𝘁𝗶𝗼𝗻, 𝗴𝗿𝗼𝘀𝘀 𝗽𝗿𝗼𝗳𝗶𝘁 𝗲𝘅𝗽𝗮𝗻𝘀𝗶𝗼𝗻 ↳ Winning at missing price points. Building under-indexed categories. ↳ Headline margins may dilute. Absolute gross profit grows. ↳ Improving RGM: pack architecture and lower ABVs ↳ That's the strategic shift. 𝟯. 𝗥𝗧𝗗𝘀 𝗴𝗼 𝗼𝗿𝗴𝗮𝗻𝗶𝗰 ↳ Recruitment lever, not side bet. ↳ No acquisition play. Organic innovation. ↳ Higher gross profit per serve than spirits. ↳ RTD consumers are 3x more likely to trade into the parent brand. 𝟰. 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗺𝗼𝗱𝗲𝗹 𝗿𝗲𝗱𝗲𝘀𝗶𝗴𝗻 ↳ Beyond the $625M savings plan. ↳ Better alignment, not heavy investment. ↳ ~65% of global orders are still taken manually. ↳ Digitise order capture. Improve fulfilment. ↳ Overly localised processes: IT systems, payroll to be centralised. 𝗧𝗵𝗲 𝟯 𝗶𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝘀𝗽𝗶𝗿𝗶𝘁𝘀 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆: First: Growth in Spirits isn't only about price cuts. ↳ It's about owning occasions you're currently losing. ↳ Portfolio gaps are revenue leaks. Second: Efficiency funds the transition. ↳ Centralisation and digitisation create headroom. ↳ Productivity must fund growth when premiumisation stalls. Third: Momentum won't arrive until FY27. ↳ Stock may be range-bound near term. ↳ The path is clear. Execution takes time. 𝗧𝗵𝗲 𝗵𝗮𝗿𝗱 𝘁𝗿𝘂𝘁𝗵: 𝘋𝘳𝘢𝘴𝘵𝘪𝘤 𝘋𝘢𝘷𝘦 isn't cutting prices. He's reshaping how Diageo competes. For 20 years, premiumisation was the playbook. Now it's category management. Sharper segmentation. Smarter execution. The quiet admission? The old playbook won't return. The question for spirits leaders: Are you still waiting for premiumisation to normalise? Or are you capturing the demand space you've been ignoring? __ For more depth >> https://lnkd.in/dQPHZ4w4 Missing on FMCG Intelligence? >> https://lnkd.in/dBda2aNi

I just watched a craft RTD brand land distribution in 15 states then quietly disappear from shelves eight months later. Not because their liquid was bad. Not because they couldn't get initial placements. Not because their packaging didn't pop. They failed because they invested everything in getting distribution and almost nothing in the operational backbone required to actually scale. The invisible line between brands that survive and those that thrive in 2025: 1. Data integration that drives action Survivors: Collect depletion reports quarterly and react to problems. Thrivers: Build systems where distributor data flows directly into their decision engines. I recently watched a small spirits brand identify and fix an out-of-stock issue before their distributor even noticed. 2. Reorder velocity tracking Survivors: Celebrate first orders and wonder why momentum stalls. Thrivers: Focus relentlessly on second and third orders. From what I've observed, nearly half of craft brands fail to secure reorders in at least 40% of their initial placements. 3. Distributor relationship automation Survivors: Rely on periodic market visits and hope for mindshare. Thrivers: Create digital tools that make it absurdly simple for distributor reps to access sales materials, inventory status, and marketing calendars from their phones. One craft vodka brand increased rep engagement by 70% after implementing a simple mobile portal. 4. Cross-market standardization Survivors: Let each market operate in its own unique way. Thrivers: Build consistent operational processes that scale across markets, allowing them to expand without proportionally expanding headcount. 5. Selective technology investment Survivors: See all tech as an expense. Thrivers: Calculate the ROI on each operational tool. A non-alc brand I consulted with last month traced $320K in prevented lost sales to a $40K investment in inventory management integration. The three-tier system isn't changing anytime soon. But the brands succeeding within it certainly are. Which side of the invisible line is your brand on? Are you just surviving distribution or truly set up to scale? Need help building the operational systems that transform distribution relationships into actual growth? That's exactly what we do at BevAssets. Or catch more insights on scaling beyond initial distribution on DrinkUp Podcast. Truthfully, Sam #distibution #truth #rtd #business

Pernod FY Report: When Margin Defense Beats Revenue Growth I know, everyones been waiting for a rant. But sometimes the smartest move in business isn't chasing every dollar of revenue - it's protecting what you've built while positioning for the next wave. Pernod Ricard demonstrated this principle pretty well. Net sales fell 3% organically, yet they expanded operating margins by 64 basis points and grew free cash flow by 18% to €1.13bn. In a year when US distributors destocked and China's premium spirits market cratered, that's not just resilience - it's strategic discipline. The headline number (-3% organic growth) masks a fascinating split. Strip out the US and China, and Pernod actually nudged into positive territory. While Diageo's US-heavy portfolio took body blows from the destocking cycle, Pernod's diversification (US at 19% of sales, China at 8%) provided natural hedging. China fell 21% as Martell and premium Scotch suffered, but India grew 6% with strong premiumization trends. That's the difference between having all your agave in one field versus multiple harvests across regions. What actually worked (and what didn't): The stars: Jameson returned to positive sell-out in Q4. Absolut held steady and is tripling down on RTDs - a €3bn US market opportunity they're attacking aggressively. The efficiency engine delivered €900m in savings, with another €1bn targeted through 2029. The struggles: Martell volumes down 20%, Royal Salute down 18%. When China sneezes, Cognac catches pneumonia. The contrarian insight: While everyone obsesses over top-line growth, Pernod played defense first and offense second. They cut structure costs by 4% organically, optimized working capital, and used strategic disposals to boost margins by 260 basis points. Sometimes retreating to higher ground is the smartest strategy. Their Q1 FY26 will likely disappoint - management is already warning of weakness in China duty-free restarts and US inventories. But that's transparency, not weakness. They're setting up for a second-half recovery while maintaining the discipline to protect profitability. Three lessons for any business facing headwinds: Geographic diversification isn't just risk management - it's opportunity arbitrage (We've gone thru this before with Suntory in a previous post) Efficiency programs pay for innovation (their €1bn cost target funds their RTD expansion) Sometimes the best growth strategy is knowing when not to grow. The spirits industry offers a masterclass in cycles. Unlike tech where disruption is binary, spirits brands can endure decades of ups and downs if managed correctly. Pernod just showed how to navigate the down while positioning for the up. Bottom line: Pernod chose margin protection and operational security. Not sexy, but when the cycle turns, they'll have the ammunition to attack from a position of strength. That's how you play the long game in any industry - protect the foundation while others chase the headline.

Do you really need all those salespeople on payroll? Or are you just buying into the myth that more people = more sales? The truth: headcount is not performance. In fact, I’ve seen too many wine & spirits companies load up their SG&A with bodies when what they really needed were the right people, in the right roles, doing the right work. Here’s the hard truth: Most sales teams are bloated and top-heavy. Many are structured for a world that no longer exists. And yes, a lean, properly designed team will outperform a large, inefficient one almost every time. It’s not about activity. It’s about outcomes. It’s not about geographic coverage. It’s about key account coverage. It’s not about paying for “presence.” It’s about paying for results. The modern sales team doesn’t need a small army of people “managing distributors.” That model is dead. Today, you need: A) Business Unit Managers with the acumen to oversee multiple distributors and states. B) Distribution Specialists on the street, building relationships and opening the right accounts. Get the ratio right (1:3 is ideal), and suddenly you don’t need as many people to achieve far better results. Add in accountability, CRM discipline, and the courage to cut loose your bottom 20% performers, and you’ll watch your SG&A shrink while sales accelerate. So ask yourself: 👉 Do I have the right structure? 👉 Do I have the right roles? 👉 Do I have the right people in those roles? If you’re still clinging to the old model of "managing" distributors, you’re paying for waste. And in today’s competitive market, that’s a luxury you can’t afford. If there were ever a time to boost sales performance while reducing SG&A, this is it.