Indies are the lifeblood of NPD

Guy Dodwell, Diageo's sales director for GB off trade and Natalie Briggs, business unit director for impulse and wholesale, tell George Simpson how important the independent channel is to the business.
The independent retail channel has been the “lifeblood” of new product development for drinks giant Diageo, according to Guy Dodwell, the company's sales director for GB off trade.
The business has got a significant share of its GB operation, share and revenue in the independent, impulse and wholesale sector, making the channel “vitally important” to the company. 
Diageo has built teams and programmes that are bespoke to the sector rather than just having single off-trade executions. 
“Whether through different pack sizes or more accessible price points, we often innovate and create products that are designed to work in the more impulse alcohol sector first,” said Dodwell. 
It is only after products have been trialled in the independent channel that Diageo looks for scale-up opportunities in some of the broader on-trade or multiple off-trade part of the business.  
“We are pleased with our record but we are not complacent,” he added. “We recognise that a lot of the retailers in this sector have some challenges that we have to work with and overcome, around either space or ranging or the level of spirits penetration.”
In terms of penetration, two in 100 baskets in a small shop have spirits in them, says Natalie Briggs, Diageo's business unit director for the impulse and wholesale channel. 
“While we are doing well in that we have grown our share massively over the last few years, to think we are still only reaching two in 100 shoppers makes us all really excited about the opportunity that exists here,” Briggs said.
That number is significantly higher in grocery, meaning there is a huge opportunity for growth within the independent channel. 
Diageo has an entire team dedicated to the impulse and wholesale channel. While this diverse team includes some established talent, Diageo also sees it as a place to bring new talent in. 
The company also has a “massive” field sales operation covering around 14,000 convenience stores. 
“It's not that easy to win in this sector and we know our customers need a high level of support to get things all the way through the chain,” Briggs added. “Our job is to educate and influence our customers and their customers and to provide brilliant consumer marketing to make sure consumers are walking into retailers' outlets and demanding our products.” 
Briggs hopes with some of Diageo's innovation in price marked packs which is “absolutely specific” to the independent sector and with some of the small size spirits that “we have done a really good job and we are starting to come up with some bespoke solutions that a few years ago were very grocery focused. That is definitely not the case now. We have some great customer relationships.”
Briggs says Diageo is continually evolving the field sales team. The team is now not only calling on convenience stores but also on wholesale depots. 
With so many licensed retail outlets in the market, Briggs claims Diageo's job is to influence as many of them as possible. 
“Our field team call on small shops and we also call on wholesalers so I think they have got a pretty good reach,” she added. The team has a heavy programme of calls to wholesale depots over the course of the year so “we will often see our own sales team actively selling, merchandising, ensuring amazing availability in-depot. Or they will be building displays as big as possible,” Briggs enthused. 
During the recent rugby tournaments Diageo had a massive presence in-depot, supporting the wholesalers to sell through products to give retailers great margins. They used that as an opportunity to talk to retailers about new products, such as Hop House 13 or the Guinness Porters range. 
This played on the natural connection between Guinness and rugby and helped educate wholesalers, giving them a great opportunity to make incremental sales. 
“It is like any sort of retail,” explained Briggs. “You just want to get people and when they are in, you want to get them to spend as much as possible. The Rugby World Cup and the Six Nations are really big plays for us.”
On average each store will receive a visit from the field sales force about quarterly. The more progressive independent retailers will receive a call far more frequently.
Diageo has a programme called My Store Matters in which the company takes some of the country's best retailers and does more bespoke initiatives in order to find the future of what the firm wants to do. 
“There are some incredible pro-active retailers and wholesalers,” Briggs exclaimed. “We are trying initiatives with those guys through quite intensive callage. We filter those out once we have got some great testimonials because we know retailers are driven by the advocacy of their peer set. So we have a very mixed callage pattern, depending on what are the targets and the focus brands or what kind of support that outlet needs.”
Diageo produces a lot of price marked packs.
“We were one of the earliest spirits businesses into price marking,” Dodwell claimed. “We have learned a lot along the way about how to do it properly. We recognise there is a role both for price marked and non-price marked packs.” 
The company consults heavily around the shared margin position on PMPs, making sure retailers see them as attractive. 
“We know shoppers consistently say they like them but we need to make sure retailers are motivated to stock them,” Dodwell added. 
The firm has a PMP range of more than 20 SKUs across spirits and beer, from smaller sizes right up to the bigger 70cl pack sizes. 
“So we are pleased with what we are doing on price marking but we recognise that in order to have that strategy land correctly we need to have accessible non-price marked packs as well and we need to pay attention to the shared margin,” said Dodwell.
Briggs says it is important to be “disruptive” within wholesale because “we know the majority of retailers will walk in with their trolley and be on auto-pilot.”
She added that it is also important “to see the channel with this new word 'omni-channel', meaning retailers aren't just walking into a depot any more, they are buying via the Bestway app or using other forms of technology.” 
Diageo does a lot of end of aisle activity, investing heavily in point of sale in-depot. 
“It is very clear communication about here is the benefit of choosing this brand, here is how much you will make from it,” explained Briggs. “It is really clear communication to the retailer. But we also try to match that all through the line. So we make sure our online presence is the same as the depot and we have the same principles of making it easy to understand why you should pick this brand and how you should merchandise it.”
In terms of merchandising advice, wholesalers should think about who their end customer is, Briggs suggests. 
She claims 53% of retailers are on a top-up mission in the cash & carry, topping up three times a week but not visiting all the aisles, making availability vitally important. 
“There has to be a healthy mix of best sellers and innovation on aisle ends,” she said. “Really simple communication is absolutely vital.” 
In-depot, 77% of retailers use brochures to influence their shopping list and 69% of them take note of communication. 
“So it is about thinking about the journey the retailer goes on through the wholesale environment and making sure we match up to all the touch points there,” Briggs added. 
Diageo has worked recently on range. “We felt within the majority of sectors, not just within spirits, range can be very proliferated,” Briggs explained. “It is really difficult for a retailer to understand when he sees 500 SKUs, when only 70 of them generate any value.” 
One of the things Diageo is working hard on with its retailer and wholesale customers is getting the right range in situ, Briggs claimed. 
“There has been a tendency over the years for wholesalers to want to stock everything,” she added. “There are still big distribution gaps across every category. That poses a massive opportunity for the sector to go back to basics in terms of our retailers' customers. They are looking for a specific, basic range. They are looking for new and interesting too but the core range is the essential part of any sales mix.”
Diageo has done a lot of consultancy work which Briggs claims has been very beneficial with noticeable sales uplifts following the work done on the core range.
Dodwell says the big message on ranging for stores that have got limited space is stock the big brands in multiple different formats and pack size so you can meet the pricing expectations of shoppers. 
“At the same time keep the range fresh with new innovation that is coming in, that is helping to power the sector,” he said. “If you can do those things, stocking the big signpost brands in multiple sizes and stocking innovation early on in its life cycle so that innovation can be a big part of a store's sales mix then that's the opportunity, rather than necessarily stocking lots of brands in the same category or multiple different choices in the same category.”