3 Critical Questions About Your BTG Program to Determine On-Premise Wine Sales Profitability
So, how do you know if your on-premise wine sales BTG promotions are worth the investment?
In this blog, we’ll walk through the intricacies and complexities of determining if your BTG program is profitable or if you need to make some strategic tweaks by upgrading how you approach trade spend and data management.
The Lure of BTG Lists
For the reasons alluded to above, getting your wine on BTG lists is incredibly appealing. Essentially, the restaurant markets your wine for you, and hundreds of new eyes can see your wine daily. Get in a national on-premise account, and the opportunities increase exponentially.
That’s a ton of potential wine-lovers that could fall in love with your product and become bottle customers at the grocery.
While BTG lists can seem like an excellent passive marketing opportunity, they’re not free marketing by any means. The trade spend on discounts and incentives with distributors can eat into your profits if you’re not tracking them, measuring the results, and adjusting your trade programs. Also, the price point at which your wine is offered to distributors, then purchased by the on-premise accounts and offered on BTG lists can vary wildly if not properly controlled, impacting your down funnel success and delivered brand experience.
Challenges Understanding Your BTG Program Spend, ROI, and Profitability
While the wine industry is embracing technology and starting to track more numbers and data, developing relationships is still a critical part of sales. Finding the balance between handshake deals and getting all the data you need to make decisions about trade spend and on-premise wine sales can be challenging.
Using manually managed spreadsheets to track depletion allowances, incentives, and distributor deals has downfalls, mainly that there is never one central, up-to-date, accurate repository of all the latest information about every deal with a governed pricing grid. Because everyone has downloaded a version of it and started updating it themselves, those updates often don’t get back to the finance team. And let’s not forget about the bar napkins, post-it notes, and inbox negotiations that never made it to the ‘spreadsheet’ to begin with.
With these common challenges in front of you, it’s nearly impossible to answer the question, “how much am I spending on our BTG programs?” Understanding your BTG program ROI to adjust your trade spend programs accordingly is likely not possible, especially if your sales and finance teams are working from different playbooks and pricing grids.
To Calculate BTG Program ROI and Profitability, You Need Accurate Data
Between pricing fluctuations, ad hoc deals, unauthorized discounts, unverifiable bill backs, and depletion allowances, determining a trade program’s profitability is often a guessing game for wineries. It’s not uncommon to “think” a program is working well. But, when the data behind program spend is able to reveal the actual margins and the correlation to increases or decreases in regional off-premise sales, winery executives are often surprised by the true results. Turning the right dials through your on-premise wine sales and BTG programs comes down to having one key asset: accurate data.
A centralized pricing and trade spend management system accessible across your sales, finance, and IT teams is the solution to tracking, obtaining, and leveraging the data you need. Instead of throwing spaghetti at the wall to see what sticks, you can pull up the exact numbers and know right now whether your trade spend for on premise wine sales is delivering the results you need.
See a 5-Minute Overview of Centralized Pricing Management: WATCH NOW
3 Most Important Questions to Ask About Your BTG Program
Evaluating your BTG programs (or any other trade spend program for that matter) is a valuable activity for identifying improvement opportunities and ensuring you get results from your investments. When you evaluate your BTG program for profitability, there are three essential questions you’ll want to answer. They Are:
- Is the spend driving the intended lift?
In-restaurant BTG sales may be up, but is that your ultimate objective? If your BTG program’s real intent is to increase grocery sales and you do not see a boost in off-premise sales after you’ve rolled out BTG discounts, the program may need to be reevaluated.
- Are the restaurants the only customers buying at the BTG pricing?
In some cases, distributors may pass BTG discounts onto other customers or channels. With no streamlined way to review the discount offerings, distributors may be giving away your profits unnecessarily and altering your brand value and perception in the market.
- Are the distributors staying true to the intent of the incentive?
There are multiple situations where workarounds on incentives can occur. Consider this scenario: you decide to offer a mixed case discount, allowing restaurants to purchase multiple varieties of your wines. Do you know that the distributor only allows mixed cases with your wines specifically? Or could they be bundling your wines with the wines of your competitors to make a full case?
How to Get Accurate BTG Trade Spend Data
As we established earlier, if you want to evaluate and improve the ROI for your trade spend effectively and answer the questions above, you need accurate and up-to-date data about your sales deals, incentives, pricing grids, bill backs, and DAs. In theory, all that data exists somewhere, but you need to be able to access it in a meaningful way. Your whole team needs to work from a central data set, a single point of truth.
Endless spreadsheets with infinite versions will no longer cut it for deal and discount tracking or insightful analysis of your three-tier activities. You need a pricing and trade management solution that integrates with your ERP system and is designed specifically for the wine industry.
There are some options out there for tracking various metrics relevant to beverage and alcohol producers, but nothing designed explicitly for wineries and wine importers until Tradeparency. The wine industry faces unique challenges, and it’s imperative to cover the gap in third-party depletion data and ensure you can get the complete picture on gross-to-net and track promotions in real-time.
Tradeparency is designed by people who work in the industry and understand wine importers’ and producers’ unique needs, goals, standards, and regulations. Tradeparency centralizes and tracks all your pricing and trade data, from contracts to spend to pricing grids, taxes, and regulations. It integrates with your existing ERP and pushes data updates automatically, so everyone on your team is working with the same information.
Tradeparency also includes automated, tailored workflows for discount approvals and numerous reporting and analytics functions so that you can keep close track of your BTG discounts for on premise wine sales and the rest of your trade promotions. Your finance team can verify bill backs against the actual contracts so that they won’t be writing off profits with uncertainty every month.
Level Up Your BTG Program
Take the next step for your winery and get all your trade spend under control by giving yourself the ability to accurately evaluate and improve your BTG program for maximum profitability and brand impact. Besides the three questions above, several other things can help you develop a more robust program that delivers excellent ROI and enables you to reach your on-premise wine sales goals.
To start, download the whitepaper, “How Much Am I Spending on My Wine By-the-Glass (BTG) Program?”. It will walk you through all the things you should consider when evaluating your program, how to ensure you’re getting transparency across all your trade spend, and thoughtful questions to consider when tweaking your programs.
