"Distributor sales will not increase if you don't increase pull through." - Sven C. Risom
Not only does the survey demonstrate the leadership of such companies as Tyson, General Mills, PepsiCo, by presenting how manufacturers and operators rank each other, it also allows distributors to understand some of the major drivers behind successful foodservice marketing, explained Sven C. Risom, partner at Cannondale Associates.
In a recent interview with ID Access, Risom said the new third segment of the survey offers distributors information about how quality, brand differentiation, innovation, added-value services affect foodservice transactions.
"As for those distributors that have been entrenched in private label programs, the study allows them to start to understand whether to launch a private label program or not," Risom noted. "There are certain areas of a restaurant, such as back of the house, where private label would be fine, whereas there are front of the house areas where distributors would do better to leverage the brand strength of their products which is seen as a clear patron benefit."
Suggesting that the survey could be beneficial in category management analyses, Risom observed that some distributorships incorrectly use category management as a substitute for SKU optimization or elimination exercise.
"Category management should be about how to better optimize a category or set of products to better meet consumer and operator needs," Risom opined.
Furthermore, he noted, some manufacturers, who are not savvy about dealing with distribution category management, are regarding SKU optimization as a serious inventory and marketing process. A better approach, he said, would be to offer distributors demographic statistics and programs so that the DSRs can add value to the sales and marketing initiatives.
"My fear is that in the void of information and data, distributors can say that they have a ranking report of sales, look at each duplicate item and then kill the bottom. That may not be right," Risom said. "Category management is much more about what the patron wants and to deliver increased distributor sales by increasing operator sales. Let's be clear, distributor sales will not increase if you don't increase pull through."
'COMPANIES MUST MASTER THE BASICS'
The survey shows that leading manufacturers and operators as they "layer growth, innovation, profit and insights on top of tactical excellence," Risom said. "To keep up, companies must master the basics and build a foundation to ultimately provide value added solutions."
McDonald's remains the leading operator for the third year in a row, with 31.5% of manufacturers ranking it within the top three operators. This was a gain of 3.9 points over last year. Wendy's took the number two spot with a composite ranking of 21%, up 1.2 points versus last year.
Other operators' rankings in descending order are: Subway, Starbucks, Applebee's, Darden, Burger King, Olive Garden, Aramark and Chick-fil-A.
On the manufacturer side, 30.1% of operators ranked Tyson as the obvious industry leader, up 3.1 points versus last year. Coca-Cola maintained its second-place ranking at 17.3%, down only 0.1 points. General Mills remained number three at 15%, up 0.3 points. Pepsi-Cola continues to close the gap with the top three manufacturers and remains a strong fourth at 14.9%, up 2.9 points.
Other manufacturers' rankings in descending order are: Sara Lee, Kraft, Frit-o-Lay, Kellogg's, Schwan's and ConAgra.
VALUE-ADDED SERVICES LEAD THE WAY
Overall, according to the survey, top manufacturers and operators lead the industry through value-added solutions. They leverage and integrate all key functions to provide innovative solutions for success. The survey found that the leading companies have learned how to work together in order to deliver the best programs and growth platforms.
As for their interaction with consumers, the study discovered that leading manufacturers and operators regard highly consumer insights and strong customer relationships. They listen and work with their trading partners and have identified the insights that are most important to drive profitable growth and have formed strong and lasting relationships beyond the transaction.
Finally, consistent product quality and exceptional customer service is the hallmark of long-standing exceptional performance, the survey showed. They provide immediate, action-oriented responses when issues arise and they deliver superior service and logistics and supply support.
The manufacturer ranking is based on 10 measures including: Clearest company strategy
Best combination of growth and profitability
Best products or brand names
Best business partners
Best sales force or broker teams
Most innovative marketing
Leading information providers
Category management leaders
Best customer service
Best new products