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07.28.2020

The Difference Between Pouring Rights & Beverage Marketing Agreements (…And Why It Matters)

By Rob Waid

Enliven Beverage Deal Podcast Episode #6

 

What’s the best way to attract the most dollars in a beverage partnership? How do you get the attention of the beverage company? What are “pouring rights” and how are they different from a beverage marketing agreement?

Rob Waid, former Vice President of Foodservice Sales at PepsiCo, joins us for part 1 of our 2 part series.

 

Listen on Your Favorite Podcast Player:

Listen on Apple Podcasts

Listen on Google Podcasts

Listen on

 

Related Resources:

How Sports Sponsorships Are Sold [Podcast]

The Best Customer Engagement Companies in the World Adopt Pouring Rights (And You Should Too)

What Happens When You Change Cola Suppliers?

 

Transcript:

Tim Harms:

We’ve got a great show for you today. We’ve got Rob Waid on. You’re going to love it. But before we get there, I wanted to tell you about the Enliven beverage deal audit. And if you have a beverage agreement, a beverage partnership with Coke, Pepsi, Dr. Pepper, you’re going to want to listen because this could save you tens of thousands or hundreds of thousands of dollars. We’ve been negotiating and managing beverage deals for over 15 years now. And one of the things we find when we’re managing the beverage partnerships is often times rebates get underpaid or miscalculated, invoice prices at the local level are actually over contracted price. The volume reports are missing, certain packages or certain locations and wires get crossed and things are just missed. And however you cut it, that translates into lost money for you. And that’s where the Enliven beverage deal audit comes in.

Tim Harms:

In just 15 minutes, you can provide us with all of the information we need to find you underpayments or overcharges. We know where to look. We know which geographies are most likely to have errors. We know which beverage company systems most frequently have errors. We have an audit analyst on our team. We’ve got a proven process and the best part is there is no upfront cost or investment to take part. You only pay us a small percentage of any money that we actually find and recover. It’s a no brainer. Just this week, our team recovered $18,000 for one beverage company client. I’d be genuinely surprised if there were no errors for your business. How do you get started? Go to www.beveragedealaudit.com. That’s beveragedealaudit.com. No risk. It only takes 15 minutes. Do yourself a favor, go there today and sign up. All right. Here’s our podcast.

Tim Harms:

Welcome to the Enliven beverage deal podcast. We’re all about saving and making you money by taking both the guesswork and the legwork out of your beverage partnership and by leveling the playing field, when it comes to negotiating your beverage contracts. I’m your host, Tim Harms. We’ve got a great show for you today. Stay tuned. Well, everyone welcome back. So glad you’re here. We’ve got a great show and we’ve got a great guest this week. He is a friend, has become a friend of mine. His name is Rob Waid. He’s the food service practice leader at Enliven. Hi, Rob.

Rob Waid:

Hey Tim, how are you?

Tim Harms:

Doing well, doing well.

Rob Waid:

Fantastic.

Tim Harms:

You’re in quarantine world?

Rob Waid:

Yes we are.

Tim Harms:

And this is your first time on the show. And I definitely wanted to give our audience just an idea of who you are and how you’ve come to Enliven. Actually the first time that I remember meeting you was in a conference room in Kansas City, and we were about to release an RFP for a big health care client. And you walked in and man, you had your face was all down to business. So Rob was, he joined our team last year, but he spent most of his career at Pepsi and we negotiated against Rob and Rob was a fierce negotiator, and now he has joined our team. And we’re so glad he brings so much energy and knowledge and just a ton of fun to our team, honestly. But Rob, I thought we could start off just by maybe if you could walk through your experience at a beverage company, at Pepsi. And walk through your career, introduce yourself to our listeners.

Rob Waid:

Sure thing. And by the way, I remember that meeting. I remember all of my Enliven meetings and believe it or not, I’ve actually kept track and kept score of my wins and losses with Enliven. And I’m four and three. I won four beverage contracts with Enliven and I lost three. Lost the first two, then I had to test the waters again to see if I could get by with just a little bit more. And I lost the last one before I retired. So I have a winning record with Enliven and I’m always going to claim that. But yeah, so thanks. It’s been great to be a part of this team, but as you mentioned, most of my experience is been 30 years in the beverage world and started out in very humble ways. Sorting 16 ounce bottles on a production line in Cleveland, Ohio, and moved to several different markets, several different roles, over 30 years.

Rob Waid:

Most of it in sales, some of it in operations. And it’s been quite a whirlwind. And probably one of the most valuable things that I learned was just all the different markets I worked in, all the different cultures, all the different selling strategies, what was important to some clients, what wasn’t and every job I’ve ever had, as much as I could absorb is what I learned. And they were all different and it was just a phenomenal experience. In fact, I would like, before we get started, I want to, the irony of this week, I was going back and I was reflecting a little bit on my career, and the irony of this week, I have a Cola war story for you that taught me a lot of the elements of what I had learned in my career on one weekend.

Rob Waid:

And I will never forget this weekend. It was the 4th of July weekend and it was either in 1992 or 1993. So I was in my late 20s, I had just gotten promoted to territory sales manager and we were in the middle of a retail activation strategy with a Super center Kmart. That’s how, by the way, that’s how far back it goes because Kmart was a very relevant client back then. But I had sold a general manager in, on allowing us to build this huge Pepsi billboard in the front of his store. And we were on sale that week. And he said, “Yeah, by all means, let’s go ahead and do that.” So as we started to kind of build the display, I noticed our competitor Coca-Cola was walking in the door and literally within an hour later, Coca-Cola semi starts pulling up and they start building a display on the other side of the door, which I did not know was going to happen.

Rob Waid:

So here we are. It’s like the Thursday before the Saturday, 4th of July, we had massive amounts of people out there and we’re building these huge 20,000 case displays with the billboard effect. You’ve probably seen those, one with Coca Cola, one with Pepsi, spelling out, Super Kmart. And by that evening, the general manager had come back out and he’d said, he was talking to us. And he said, “Well, you guys, I don’t know why you guys do all this crazy stuff.” But he goes, “The store looks great.” And I remember that I had to do something different for us to have kind of a competitive advantage. And we built, we decided to build a soft drink stage because I had a guy that was working on my team at the time when he was supposed to… He was a bass player in a band and he said, “Hey, I’m supposed to go play at this bar tonight.”

Rob Waid:

And I was like, “Well, hey, you know what? If you stay, I’ll book your band tomorrow to play on this soft drink stage tomorrow in front of the store.” Right. And here’s what happened. The next day, the band shows up. We promoted it, we had a band playing on our soft drink display versus Coca Cola. We had way more consumer engagement, the store manager loved it. And we sold way more product that weekend. I got-

Tim Harms:

At a Super K.

Rob Waid:

Yeah, it was great. I figured out how much it costs me to do all this stuff. I got some operational experience. I figured out what branding was. I figured out what promotional activity was. I had to pay for it and lo and behold in about 48 hours, I figured out what makes this beverage business tick. And it was just a phenomenal, very fun experience. But I learned a lot that weekend on how to get to consumers. So it was great.

Tim Harms:

That’s just a, that’s a great visual, just in a nutshell, how competitive-

Rob Waid:

Oh my gosh, yeah.

Tim Harms:

…Coke and Pepsi are, oh my goodness. A stage. I can just picture it. So you’re literally, the band is literally performing on cases of Pepsi.

Rob Waid:

Yeah. We lay… Literally, I know. The size of the display was, it turned out to end up being like 30,000 cases of product. And then we laid pallets down. We put pallets on top of the product and then we put plywood on top of that. And then the band showed up and they played for like, I don’t know, three hours, and we started serving free soft drinks out there and the consumers that were coming up, they absolutely loved it. And I thought to myself, well, hey, you know what? It wasn’t Beyonce, but man, we were getting the value out of that music. And I thought, hey, is this how this really works?

Tim Harms:

You sowed the seeds for Beyonce right there. It was all your idea.

Rob Waid:

There you go. I should take credit in this.

Tim Harms:

No, that’s great. I love it. And I love actually how that ties into today’s topic, what we’re going to dive into today, which is really the difference between a pouring rights agreement and a beverage marketing agreement. And so they’re two terms, to be honest, I’ve been in this business for a while now, and I didn’t even know the difference between these two when I first started. You hear pouring rights, you’re not in the industry day in and day out, a different term, your beverage marketing agreement. So I thought we could bring you on and you can just walk through the difference between the two concepts, pouring rights agreement and a marketing agreement, beverage marketing agreement. But really, it seems like what you just shared the activation part of it, the marketing part of it, the experience part of it is going to come into play here. So I’ll just start there. Can you explain the basics of the two types of agreements, how they’re similar and how they’re different?

Rob Waid:

Sure thing. Great question. So in a nutshell, if you think about pouring right agreement and what it means to a beverage company, and by the way, everything with them is about activation. They want to activate every 24 hours, seven days a week. So-

Tim Harms:

When you say the word activation, too, I mean, can you even dive into that? Because I know that’s a phrase that isn’t even always known outside of the beverage industry. What do you mean by activation?

Rob Waid:

Their brands, right. How did they portray their brands in front of consumers? And they want access to consumers. And so how did they market and brand their specific product lines in front of consumers? And in a pouring right agreement, you would define it more as internal, meaning how many consumers does a certain property provide a beverage company so that they can get their products in front of them? And some of the examples that we have in our business, whether it’s a healthcare client or an airport or a restaurant, there’s a certain number of consumers that will come in those front doors every single day. And that beverage company has an opportunity to market and brand their products directly to those consumers within the four walls of those locations. And it’s more of like an internal activation.

Rob Waid:

So pouring right agreements, I would even go as far to say pouring right partnerships, depending upon how aggressively a beverage company wants to market internally, is how I would kind of paint that picture. A pouring right agreement would lean more in on that side. Marketing is more about the branding externally. How can a beverage company take that same property? And we’ll use an example of the Chicago Cubs as an example. They’re going to take that brand and they’re going to try to externally activate that property to other retail chains, retail outlets. And if they can monetize it, you’re starting to get into some of the marketing, advertising investment strategies.

Rob Waid:

And that’s where that external activation comes into play. So if you’re thinking about pouring right, it’s about how do they get access to the internal part of that equation within the four walls of a property. And then external is what can they do outside of those four walls? And there’s several examples of that. But really I’ll be honest with you, the best properties are the ones where you can leverage both. And for the most part, that’s always our goal at Enliven, is how do we take advantage of both of those aspects?

Tim Harms:

So you brought in the example of the Chicago Cubs, so pouring right would be inside the stadium. The drinks that are served are going to be Pepsi or Coke or Dr. Pepper, whatever beverage partner they go with. But a beverage marketing agreement would be outside of the property. When you go into the supermarket, you see a display that puts the Coke brand or the Pepsi brand alongside Dr. Pepper.

Rob Waid:

Correct. Yeah. Where do you start to link the value of those two assets. The beverage companies are really, really, really good at doing that. But it’s a whole different philosophy on what that return on investment is. And that’s why it gets a little tricky at times, to try to access both. But there’s a value. There’s two separate values there, but anytime you can try to link the two together, it’s beneficial to our clients.

Tim Harms:

So how does the beverage companies think about this, about the two types of agreements? Is one more valuable than the other? Are they both valuable, but just separate? Are they trained to go grab both? Give us some insight into how they view.

Rob Waid:

So one example I would say where a pouring right agreement is valuable, if you think about restaurant clients, right. Restaurant customers. Pouring right agreements are very important, would be the majority of the value because so much of the revenue and profitability that a restaurant will generate comes from that pouring right agreement. So whether it’s negotiated lower cost equipment platforms that the beverage companies provide service that goes into it. There’s so much revenue that is provided to that restaurant client that pouring right agreement is critical for them to be a profitable entity and to be a profitable brand themselves. You always want to try to figure out a way to introduce kind of the branding strategies that a beverage company can provide. And so that even an external marketing strategy would play a part in that. But from a restaurant perspective, you would want to make sure that that pouring right agreement is really solid. And then I would say on the opposite end of that, most of your large marketing agreements don’t even pour beverages.

Rob Waid:

An example would be, Coca Cola has a partnership with the Olympics. And what a big, great event that is, but they don’t really buy anything, right? They’re leveraging the Olympic brand to activate in the retail marketplace to drive revenue, but the Olympic committee, the Olympic games, they don’t really purchase anything. The same could be said for Pepsi’s example to that would be their partnership with the NFL. Technically the NFL doesn’t purchase a case. All of those contracts are negotiated with each of the teams separately in all of those stadiums. But there’s a real brand value to the NFL and what they can do externally in the marketplace. So you can see where they’re two different philosophies, but if you can kind of figure out a way to kind of blur the line or a beverage company can take advantage of both. That’s kind of a match made in heaven. And those are the kinds of proposals that we like to work on.

Tim Harms:

It’s interesting because when I think about pouring rights, in some ways the beverage company is purchasing in volume, in essence. There’s a return that they can measure. They can look at their finance people and say, “I’m spending this.” And because of that, there is an estimated volume of X that’s going to come back. In a marketing agreement, it seems to me that there’s not a clear line between what the return is on that investment, but it also seems that when you’re talking about the Olympics and you’re talking about the NFL, I mean, there’s huge dollars in those types of agreements. So can you speak to that dynamic a little bit? How do the beverage companies value marketing versus how they value actually just acquiring volume?

Rob Waid:

Because they build, if there’s one thing that they’re really, really, really good at, and I think most consumers, most customers don’t view it in this way. But they view themselves as, they’re brand developers. These are companies that have been around for over 130 years. They have been through pandemics. They have been through world wars. They have been through depressions. They’ve been bankrupt. They have faced more challenges in the world and they build their business, literally, one eight ounce serving at a time. And so consumers ultimately is what drives their business. But they have to get to a lot of consumers in order to be profitable. And so if you’re in the consumer business, it’s about mass quantity, right? And so investment strategies have to account for that. And that’s why they’re willing to partner with the NFL.

Rob Waid:

That’s why they’re willing to partner with the Olympics or Beyonce that we had mentioned earlier. So there’s a number of different strategies that they lean into to try to maintain that relevance on top of, think of all the different brands. And most people don’t associate Pepsi with… They literally have 22 $1 billion brands. Think of how hard it is to build one brand to $1 billion. But they’ve got 22 of them. I think Coke has 12. Nestle has like 29 $1 billion brands. It’s difficult to do that, but you can’t do that unless you’re making significant investments into getting to consumers and building that awareness. And if you’ve been around for as long as they have they’ve figured it out, bu it’s so critical to them that it’s dollars well spent in their mind.

Tim Harms:

That’s such a critical point in that Coke, Pepsi, Dr. Pepper on one hand, yes, they are beverage companies. They distribute beverage products. But really what they do is create and innovate and market brands. I mean, especially in today’s world. I mean, obviously all of them have the iconic flagship brands, whether it’s Mountain Dew, or whether it’s Diet Coke, whether it’s 7UP. These great brands, but in today’s world where so much of the innovation is in juices and teas and organic sodas and all of these other innovative categories, I mean, brand development is even more critical now than it was. It’s even more critical now is to claim the new ground, I guess.

Rob Waid:

Correct. Correct. Because the consumers have changed. And again, this goes back to their expertise as the business has evolved, right. They’ve had to keep up. And when I started in this business, literally it was like over 32 years ago now, we carried 70 different total SKUs in the warehouse. 70. Seven zero. When I retired, there was over 700. Okay. And by the way, beverage companies don’t do that because they’re bored. Okay. Because they had to keep up with the times and the changing consumer and look, I mean, look at how big water has become, look at how big sparkling water has come. You had mentioned it, natural products. They’re building brands every single day. And that’s where the investments go, that’s where the investment strategies go. But at the same time, they have to always be looking two, three, four years out. What’s coming next. And that’s how you survive as long as they have.

Tim Harms:

Thanks everyone for listening in. Hope you found that informative. That was part one of a two part series we have exploring the difference between pouring rights and a marketing agreement and how you can merge the two together. Tune in next time, as we’re going to explore some of the common objections to this train of thinking, including what to do if your property doesn’t rise to that prestigious level of the NFL, the Olympics, at least in your mind, it doesn’t. Or what to do if you’re concerned that your facility is going to end up like a NASCAR vehicle with ads plastered all over it. We’re also going to talk through how you get started down this path. You won’t want to miss it. Tune in next time.

Tim Harms:

And hey, before we sign off, I want to remind you that you can take both the guesswork and the legwork out of your beverage partnership. You can level the playing field in your beverage negotiations, and you can save or make your company millions through a new or an improved beverage agreement. The first step is a free beverage opportunity analysis, which will tell you just how much you can save, or you can make. Sign up for your free beverage opportunity analysis at enlivenpartnership.com and by cooking three savings estimate. On behalf of everyone here at Enliven, thanks for listening in.

 

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07.28.2020

The Difference Between Pouring Rights & Beverage Marketing Agreements (…And Why It Matters)

By Rob Waid

Enliven Beverage Deal Podcast Episode #6

 

What’s the best way to attract the most dollars in a beverage partnership? How do you get the attention of the beverage company? What are “pouring rights” and how are they different from a beverage marketing agreement?

Rob Waid, former Vice President of Foodservice Sales at PepsiCo, joins us for part 1 of our 2 part series.

 

Listen on Your Favorite Podcast Player:

Listen on Apple Podcasts

Listen on Google Podcasts

Listen on

 

Related Resources:

How Sports Sponsorships Are Sold [Podcast]

The Best Customer Engagement Companies in the World Adopt Pouring Rights (And You Should Too)

What Happens When You Change Cola Suppliers?

 

Transcript:

Tim Harms:

We’ve got a great show for you today. We’ve got Rob Waid on. You’re going to love it. But before we get there, I wanted to tell you about the Enliven beverage deal audit. And if you have a beverage agreement, a beverage partnership with Coke, Pepsi, Dr. Pepper, you’re going to want to listen because this could save you tens of thousands or hundreds of thousands of dollars. We’ve been negotiating and managing beverage deals for over 15 years now. And one of the things we find when we’re managing the beverage partnerships is often times rebates get underpaid or miscalculated, invoice prices at the local level are actually over contracted price. The volume reports are missing, certain packages or certain locations and wires get crossed and things are just missed. And however you cut it, that translates into lost money for you. And that’s where the Enliven beverage deal audit comes in.

Tim Harms:

In just 15 minutes, you can provide us with all of the information we need to find you underpayments or overcharges. We know where to look. We know which geographies are most likely to have errors. We know which beverage company systems most frequently have errors. We have an audit analyst on our team. We’ve got a proven process and the best part is there is no upfront cost or investment to take part. You only pay us a small percentage of any money that we actually find and recover. It’s a no brainer. Just this week, our team recovered $18,000 for one beverage company client. I’d be genuinely surprised if there were no errors for your business. How do you get started? Go to www.beveragedealaudit.com. That’s beveragedealaudit.com. No risk. It only takes 15 minutes. Do yourself a favor, go there today and sign up. All right. Here’s our podcast.

Tim Harms:

Welcome to the Enliven beverage deal podcast. We’re all about saving and making you money by taking both the guesswork and the legwork out of your beverage partnership and by leveling the playing field, when it comes to negotiating your beverage contracts. I’m your host, Tim Harms. We’ve got a great show for you today. Stay tuned. Well, everyone welcome back. So glad you’re here. We’ve got a great show and we’ve got a great guest this week. He is a friend, has become a friend of mine. His name is Rob Waid. He’s the food service practice leader at Enliven. Hi, Rob.

Rob Waid:

Hey Tim, how are you?

Tim Harms:

Doing well, doing well.

Rob Waid:

Fantastic.

Tim Harms:

You’re in quarantine world?

Rob Waid:

Yes we are.

Tim Harms:

And this is your first time on the show. And I definitely wanted to give our audience just an idea of who you are and how you’ve come to Enliven. Actually the first time that I remember meeting you was in a conference room in Kansas City, and we were about to release an RFP for a big health care client. And you walked in and man, you had your face was all down to business. So Rob was, he joined our team last year, but he spent most of his career at Pepsi and we negotiated against Rob and Rob was a fierce negotiator, and now he has joined our team. And we’re so glad he brings so much energy and knowledge and just a ton of fun to our team, honestly. But Rob, I thought we could start off just by maybe if you could walk through your experience at a beverage company, at Pepsi. And walk through your career, introduce yourself to our listeners.

Rob Waid:

Sure thing. And by the way, I remember that meeting. I remember all of my Enliven meetings and believe it or not, I’ve actually kept track and kept score of my wins and losses with Enliven. And I’m four and three. I won four beverage contracts with Enliven and I lost three. Lost the first two, then I had to test the waters again to see if I could get by with just a little bit more. And I lost the last one before I retired. So I have a winning record with Enliven and I’m always going to claim that. But yeah, so thanks. It’s been great to be a part of this team, but as you mentioned, most of my experience is been 30 years in the beverage world and started out in very humble ways. Sorting 16 ounce bottles on a production line in Cleveland, Ohio, and moved to several different markets, several different roles, over 30 years.

Rob Waid:

Most of it in sales, some of it in operations. And it’s been quite a whirlwind. And probably one of the most valuable things that I learned was just all the different markets I worked in, all the different cultures, all the different selling strategies, what was important to some clients, what wasn’t and every job I’ve ever had, as much as I could absorb is what I learned. And they were all different and it was just a phenomenal experience. In fact, I would like, before we get started, I want to, the irony of this week, I was going back and I was reflecting a little bit on my career, and the irony of this week, I have a Cola war story for you that taught me a lot of the elements of what I had learned in my career on one weekend.

Rob Waid:

And I will never forget this weekend. It was the 4th of July weekend and it was either in 1992 or 1993. So I was in my late 20s, I had just gotten promoted to territory sales manager and we were in the middle of a retail activation strategy with a Super center Kmart. That’s how, by the way, that’s how far back it goes because Kmart was a very relevant client back then. But I had sold a general manager in, on allowing us to build this huge Pepsi billboard in the front of his store. And we were on sale that week. And he said, “Yeah, by all means, let’s go ahead and do that.” So as we started to kind of build the display, I noticed our competitor Coca-Cola was walking in the door and literally within an hour later, Coca-Cola semi starts pulling up and they start building a display on the other side of the door, which I did not know was going to happen.

Rob Waid:

So here we are. It’s like the Thursday before the Saturday, 4th of July, we had massive amounts of people out there and we’re building these huge 20,000 case displays with the billboard effect. You’ve probably seen those, one with Coca Cola, one with Pepsi, spelling out, Super Kmart. And by that evening, the general manager had come back out and he’d said, he was talking to us. And he said, “Well, you guys, I don’t know why you guys do all this crazy stuff.” But he goes, “The store looks great.” And I remember that I had to do something different for us to have kind of a competitive advantage. And we built, we decided to build a soft drink stage because I had a guy that was working on my team at the time when he was supposed to… He was a bass player in a band and he said, “Hey, I’m supposed to go play at this bar tonight.”

Rob Waid:

And I was like, “Well, hey, you know what? If you stay, I’ll book your band tomorrow to play on this soft drink stage tomorrow in front of the store.” Right. And here’s what happened. The next day, the band shows up. We promoted it, we had a band playing on our soft drink display versus Coca Cola. We had way more consumer engagement, the store manager loved it. And we sold way more product that weekend. I got-

Tim Harms:

At a Super K.

Rob Waid:

Yeah, it was great. I figured out how much it costs me to do all this stuff. I got some operational experience. I figured out what branding was. I figured out what promotional activity was. I had to pay for it and lo and behold in about 48 hours, I figured out what makes this beverage business tick. And it was just a phenomenal, very fun experience. But I learned a lot that weekend on how to get to consumers. So it was great.

Tim Harms:

That’s just a, that’s a great visual, just in a nutshell, how competitive-

Rob Waid:

Oh my gosh, yeah.

Tim Harms:

…Coke and Pepsi are, oh my goodness. A stage. I can just picture it. So you’re literally, the band is literally performing on cases of Pepsi.

Rob Waid:

Yeah. We lay… Literally, I know. The size of the display was, it turned out to end up being like 30,000 cases of product. And then we laid pallets down. We put pallets on top of the product and then we put plywood on top of that. And then the band showed up and they played for like, I don’t know, three hours, and we started serving free soft drinks out there and the consumers that were coming up, they absolutely loved it. And I thought to myself, well, hey, you know what? It wasn’t Beyonce, but man, we were getting the value out of that music. And I thought, hey, is this how this really works?

Tim Harms:

You sowed the seeds for Beyonce right there. It was all your idea.

Rob Waid:

There you go. I should take credit in this.

Tim Harms:

No, that’s great. I love it. And I love actually how that ties into today’s topic, what we’re going to dive into today, which is really the difference between a pouring rights agreement and a beverage marketing agreement. And so they’re two terms, to be honest, I’ve been in this business for a while now, and I didn’t even know the difference between these two when I first started. You hear pouring rights, you’re not in the industry day in and day out, a different term, your beverage marketing agreement. So I thought we could bring you on and you can just walk through the difference between the two concepts, pouring rights agreement and a marketing agreement, beverage marketing agreement. But really, it seems like what you just shared the activation part of it, the marketing part of it, the experience part of it is going to come into play here. So I’ll just start there. Can you explain the basics of the two types of agreements, how they’re similar and how they’re different?

Rob Waid:

Sure thing. Great question. So in a nutshell, if you think about pouring right agreement and what it means to a beverage company, and by the way, everything with them is about activation. They want to activate every 24 hours, seven days a week. So-

Tim Harms:

When you say the word activation, too, I mean, can you even dive into that? Because I know that’s a phrase that isn’t even always known outside of the beverage industry. What do you mean by activation?

Rob Waid:

Their brands, right. How did they portray their brands in front of consumers? And they want access to consumers. And so how did they market and brand their specific product lines in front of consumers? And in a pouring right agreement, you would define it more as internal, meaning how many consumers does a certain property provide a beverage company so that they can get their products in front of them? And some of the examples that we have in our business, whether it’s a healthcare client or an airport or a restaurant, there’s a certain number of consumers that will come in those front doors every single day. And that beverage company has an opportunity to market and brand their products directly to those consumers within the four walls of those locations. And it’s more of like an internal activation.

Rob Waid:

So pouring right agreements, I would even go as far to say pouring right partnerships, depending upon how aggressively a beverage company wants to market internally, is how I would kind of paint that picture. A pouring right agreement would lean more in on that side. Marketing is more about the branding externally. How can a beverage company take that same property? And we’ll use an example of the Chicago Cubs as an example. They’re going to take that brand and they’re going to try to externally activate that property to other retail chains, retail outlets. And if they can monetize it, you’re starting to get into some of the marketing, advertising investment strategies.

Rob Waid:

And that’s where that external activation comes into play. So if you’re thinking about pouring right, it’s about how do they get access to the internal part of that equation within the four walls of a property. And then external is what can they do outside of those four walls? And there’s several examples of that. But really I’ll be honest with you, the best properties are the ones where you can leverage both. And for the most part, that’s always our goal at Enliven, is how do we take advantage of both of those aspects?

Tim Harms:

So you brought in the example of the Chicago Cubs, so pouring right would be inside the stadium. The drinks that are served are going to be Pepsi or Coke or Dr. Pepper, whatever beverage partner they go with. But a beverage marketing agreement would be outside of the property. When you go into the supermarket, you see a display that puts the Coke brand or the Pepsi brand alongside Dr. Pepper.

Rob Waid:

Correct. Yeah. Where do you start to link the value of those two assets. The beverage companies are really, really, really good at doing that. But it’s a whole different philosophy on what that return on investment is. And that’s why it gets a little tricky at times, to try to access both. But there’s a value. There’s two separate values there, but anytime you can try to link the two together, it’s beneficial to our clients.

Tim Harms:

So how does the beverage companies think about this, about the two types of agreements? Is one more valuable than the other? Are they both valuable, but just separate? Are they trained to go grab both? Give us some insight into how they view.

Rob Waid:

So one example I would say where a pouring right agreement is valuable, if you think about restaurant clients, right. Restaurant customers. Pouring right agreements are very important, would be the majority of the value because so much of the revenue and profitability that a restaurant will generate comes from that pouring right agreement. So whether it’s negotiated lower cost equipment platforms that the beverage companies provide service that goes into it. There’s so much revenue that is provided to that restaurant client that pouring right agreement is critical for them to be a profitable entity and to be a profitable brand themselves. You always want to try to figure out a way to introduce kind of the branding strategies that a beverage company can provide. And so that even an external marketing strategy would play a part in that. But from a restaurant perspective, you would want to make sure that that pouring right agreement is really solid. And then I would say on the opposite end of that, most of your large marketing agreements don’t even pour beverages.

Rob Waid:

An example would be, Coca Cola has a partnership with the Olympics. And what a big, great event that is, but they don’t really buy anything, right? They’re leveraging the Olympic brand to activate in the retail marketplace to drive revenue, but the Olympic committee, the Olympic games, they don’t really purchase anything. The same could be said for Pepsi’s example to that would be their partnership with the NFL. Technically the NFL doesn’t purchase a case. All of those contracts are negotiated with each of the teams separately in all of those stadiums. But there’s a real brand value to the NFL and what they can do externally in the marketplace. So you can see where they’re two different philosophies, but if you can kind of figure out a way to kind of blur the line or a beverage company can take advantage of both. That’s kind of a match made in heaven. And those are the kinds of proposals that we like to work on.

Tim Harms:

It’s interesting because when I think about pouring rights, in some ways the beverage company is purchasing in volume, in essence. There’s a return that they can measure. They can look at their finance people and say, “I’m spending this.” And because of that, there is an estimated volume of X that’s going to come back. In a marketing agreement, it seems to me that there’s not a clear line between what the return is on that investment, but it also seems that when you’re talking about the Olympics and you’re talking about the NFL, I mean, there’s huge dollars in those types of agreements. So can you speak to that dynamic a little bit? How do the beverage companies value marketing versus how they value actually just acquiring volume?

Rob Waid:

Because they build, if there’s one thing that they’re really, really, really good at, and I think most consumers, most customers don’t view it in this way. But they view themselves as, they’re brand developers. These are companies that have been around for over 130 years. They have been through pandemics. They have been through world wars. They have been through depressions. They’ve been bankrupt. They have faced more challenges in the world and they build their business, literally, one eight ounce serving at a time. And so consumers ultimately is what drives their business. But they have to get to a lot of consumers in order to be profitable. And so if you’re in the consumer business, it’s about mass quantity, right? And so investment strategies have to account for that. And that’s why they’re willing to partner with the NFL.

Rob Waid:

That’s why they’re willing to partner with the Olympics or Beyonce that we had mentioned earlier. So there’s a number of different strategies that they lean into to try to maintain that relevance on top of, think of all the different brands. And most people don’t associate Pepsi with… They literally have 22 $1 billion brands. Think of how hard it is to build one brand to $1 billion. But they’ve got 22 of them. I think Coke has 12. Nestle has like 29 $1 billion brands. It’s difficult to do that, but you can’t do that unless you’re making significant investments into getting to consumers and building that awareness. And if you’ve been around for as long as they have they’ve figured it out, bu it’s so critical to them that it’s dollars well spent in their mind.

Tim Harms:

That’s such a critical point in that Coke, Pepsi, Dr. Pepper on one hand, yes, they are beverage companies. They distribute beverage products. But really what they do is create and innovate and market brands. I mean, especially in today’s world. I mean, obviously all of them have the iconic flagship brands, whether it’s Mountain Dew, or whether it’s Diet Coke, whether it’s 7UP. These great brands, but in today’s world where so much of the innovation is in juices and teas and organic sodas and all of these other innovative categories, I mean, brand development is even more critical now than it was. It’s even more critical now is to claim the new ground, I guess.

Rob Waid:

Correct. Correct. Because the consumers have changed. And again, this goes back to their expertise as the business has evolved, right. They’ve had to keep up. And when I started in this business, literally it was like over 32 years ago now, we carried 70 different total SKUs in the warehouse. 70. Seven zero. When I retired, there was over 700. Okay. And by the way, beverage companies don’t do that because they’re bored. Okay. Because they had to keep up with the times and the changing consumer and look, I mean, look at how big water has become, look at how big sparkling water has come. You had mentioned it, natural products. They’re building brands every single day. And that’s where the investments go, that’s where the investment strategies go. But at the same time, they have to always be looking two, three, four years out. What’s coming next. And that’s how you survive as long as they have.

Tim Harms:

Thanks everyone for listening in. Hope you found that informative. That was part one of a two part series we have exploring the difference between pouring rights and a marketing agreement and how you can merge the two together. Tune in next time, as we’re going to explore some of the common objections to this train of thinking, including what to do if your property doesn’t rise to that prestigious level of the NFL, the Olympics, at least in your mind, it doesn’t. Or what to do if you’re concerned that your facility is going to end up like a NASCAR vehicle with ads plastered all over it. We’re also going to talk through how you get started down this path. You won’t want to miss it. Tune in next time.

Tim Harms:

And hey, before we sign off, I want to remind you that you can take both the guesswork and the legwork out of your beverage partnership. You can level the playing field in your beverage negotiations, and you can save or make your company millions through a new or an improved beverage agreement. The first step is a free beverage opportunity analysis, which will tell you just how much you can save, or you can make. Sign up for your free beverage opportunity analysis at enlivenpartnership.com and by cooking three savings estimate. On behalf of everyone here at Enliven, thanks for listening in.

 

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