Business development
For owners, chief executives and general managers of food companies supplying grocery retail, the foodservice channel and traditional trade, .
The margin on a product is built
across purchasing, production, price and channel.
The work covers the economics of the channel, before and after the negotiation. The negotiation stays with the company, which comes to it with the numbers already built.
Trade allowances, agreed trade promotions, returns and logistics land on lines that the product P&L rarely separates. Rebuilding them is the starting point. The scope covers margin per customer, the terms the company can sustain, and the organization that serves the channel after the entry.
Who it is for
Companies supplying grocery retail
Branded food manufacturers dealing with the retail chains, which need to know what is left after allowances, promotions and returns.
Companies selling through foodservice and traditional trade
Producers serving wholesalers, distributors and direct customers, where margin depends on delivery frequency and order size.
Companies producing for the customer’s brand
Manufacturers with a share of private label, where price, risk and committed capacity follow different rules from own brand.
The situations the engagement starts from
The listing is there and the margin is not
The product is in, volumes are growing, and on actuals the margin comes out lower than the one set in the budget.
Terms are negotiated before the numbers are built
The company enters the negotiation with the price list and the industrial cost, while the number that would decide it is the margin per customer, net of everything that customer absorbs.
The price list has as many exceptions as it has customers
Every deal has added its own derogation, and the average realized price has drifted away from the list without any decision having set it there.
Promotions repeat without their return being known
The promotional plan is confirmed out of habit, and the incremental volume each action produces is never set against the cost it absorbs.
The channel portfolio formed by accretion
Grocery retail, foodservice, traditional trade and private label coexist with very different margins, and nobody has established which one deserves capacity and attention.
After the entry the organization cannot hold the service
The volume arrives, and with it the delivery frequencies, returns, penalties and working capital that the commercial and logistics organization was not sized to absorb.
What the work covers
The P&L by channel and by customer
Fully loaded cost, allowances, trade promotions, returns, logistics and working capital traced back to the single customer, so that margin is a figure instead of an estimate.
The lines that never appear on the invoice are the ones that move the result: on-invoice and off-invoice allowances, the cost to serve by delivery frequency, days of collection. Each has to be rebuilt before two customers can be compared. Management control and margin →
The economic preparation of the negotiation
The terms the company can sustain, the threshold beyond which the deal destroys margin, and the counterparts worth more than a discount.
The threshold is built across scenarios: expected volume, half the volume and the volume missed, with the margin that results in each case. It is the figure that allows a no with a reason behind it, and a yes with full sight of what has been given away.
Channel selection and priority
Which channels deserve production capacity, capital and commercial attention, and in what order. When the channel is a network of franchisees, the scope moves to franchise network development →
Priority holds together margin per unit of capacity committed and cash absorption: a high-margin channel that saturates the plant can be worth less than a lower-margin one that fills it in the empty periods. Manufacturing operations →
The commercial and service organization
Roles, customer coverage and service level sized on the value each channel produces.
The sizing starts from the number of customers one person can follow at the frequency that channel requires, and arrives at the cost of the commercial structure set against the margin it oversees.
Pricing policy and price lists
A price architecture by channel, consistent across customers and sustainable over time.
The architecture sets the rules by which exceptions are granted: on what condition, against what counterpart and for how long. Without those rules the price list drifts back into per-customer terms within months.
Control of the terms after the fact
The check that what was negotiated matches what is applied, SKU by SKU.
The comparison between the agreement and the invoicing is a periodic procedure with an owner, because the gaps accumulate quietly and surface at year end, when raising them with the customer is already difficult.
What the company has to put in
A channel engagement consumes time from the commercial management and from whoever holds the sales data, and the point is written into the proposal.
Three things are needed. Access to sales by customer and by SKU, to the trade agreements in force and to the credit notes, in whatever form they exist. Some hours from the people who follow the customers, who know the commitments made verbally and never recorded. And one person inside the company who can close the pricing policy when a long-standing derogation has to be reopened.
Where a fully loaded cost per SKU does not exist, rebuilding it enters the scope and is quantified before work begins: it is work that stays with the company after the engagement ends.
What the client is left with
- The P&L by channel and by customer, on real data
- The negotiation threshold for each relevant customer, across three volume scenarios
- The priority order of the channels, with the economic reason behind it
- The price architecture and the price lists by channel, with the rules for exceptions
- The sizing of the commercial organization by channel
- The procedure for verifying the terms applied
The experience the engagement rests on
The person who leads the engagement has taken products to market with responsibility for the result. As Managing Director of the Italian subsidiary of KellyDeli, with full P&L responsibility and ownership of the market entry strategy, the network was built inside the grocery retail banners: from zero to ninety-five corners and from zero to 65 million euro in three years, with a market share of up to 30% according to Nielsen. As CEO Italy of EatHappy, with responsibility extended in 2022 to France and the Netherlands, the same product was negotiated across three markets with different channel terms.
Among AC Retail Advisory engagements, at Cappellini the guidelines for the sales network in traditional trade, the industrialization of the pricing model for modern trade, traditional trade and foodservice, and the opening of the modern trade channel. In the founder’s track record, the Fiorital project for the first store inside the Coop of viale Sarca in Milan, closed with ten sites opened with the banner.
Who works on the engagement
The engagement is led directly by Andrea Calistri, founder of AC Retail Advisory, from the first conversation to delivery.
