Enliven Beverage Deal Podcast Episode #7
What’s the best way to attract the most dollars in a beverage partnership negotiation? How do you get the attention of the beverage company? How do you incorporate beverage marketing into a traditional “pouring rights” agreement in a way that makes sense for your brand?
Rob Waid, former Vice President of Foodservice Sales at PepsiCo, joins us for part 2 of our 2 part series.
Listen on Your Favorite Podcast Player:
Related Resources:
The Best Customer Engagement Companies in the World Adopt Pouring Rights (And You Should Too)
Why Major Brands Love Healthcare [Podcast]
Transcript:
Tim Harms:
Welcome to the Enliven Beverage Deal Podcast, where we’re all about the 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, today we have part two of a two-part interview on the difference between pouring rights and a beverage marketing agreement with Rob Waid, the Foodservice Practice Leader at Enliven, a great, great source of knowledge.
Definitely some tips, practical tips that you can put to use today in this interview, but if you haven’t caught the last episode, part one, you’re going to want to do that. It lays a lot of the foundation and groundwork, so go ahead, re-listen to that, or listen to it if you haven’t yet before you dive into this one. For those who have listened, just a really quick refresher on the difference between pouring rights and a beverage marketing agreement, both are terms that are used when a beverage company partners with an organization, but they mean slightly different things. A pouring rights agreement actually refers to the right of the beverage company to be the beverage served at a property. If you get to a sporting event and they have a pouring rights agreement, when you go to the concession stand, it’s only going to be that company’s products being served, whereas a beverage marketing agreement is much more focused outside of the property, pairing the property’s brand with the beverage company’s brand outside. In that same example of sports stadium, it’s actually when you go into a retail environment, at Walmart or at Walgreens, and you see the beverage brand next to that sports brand.
That’s what a Beverage Marketing Agreement is all about in traditional terms, but Rob was really outlining some really interesting ways to think about it. If done right, the marketing agreement can really benefit the host property, primarily by putting your brand in front of consumers that are not inside the four walls of your property, and therefore expanding your reach. So go back, listen to that foundational episode. In today’s interview, I’m going to focus much more on some of the objections that we hear when we suggest pairing pouring rights with the marketing agreement, or at least elements of that in your negotiation. Without further ado, let’s get to it. Here’s part two of my interview with Rob Waid.
Tim Harms:
I can imagine someone is listening in, and they’re thinking, “I hear what you’re saying, Rob. I am not the NFL. I’m not the Olympics. I own 20 restaurants in a single state in the Southeastern region of the U.S.” How do I actually tap into the marketing, or is that out of bounds for me? Do I just need to focus on the pouring rights only? How would you respond to that?
Rob Waid:
In all honesty, every single account is important to them. The business was built, as I mentioned, back in the early days, it was one six-ounce serving at a time, and it was built in drugstores where a truck shows up and drops off five cases of product, and that’s my … Their core being, their fundamental foundation of how the business was built was started from each of those servings. Every single consumer has to be important to them. The other point of it when we touched base on it in the very beginning, is the competitive landscape between these beverage companies is immeasurable.
In fact, there was many years ago, Coca-Cola had the chance to buy Pepsi and they decided not to, but if you look at the grand scheme of things, it was probably better for the category, the business itself that that never happened. Because of the competitive nature, they both grew the category beyond what most people would consider anything that would have ever existed like that, and that’s why, by the way, if you think about how many servings today the category represents, both Coke and Pepsi and Dr Pepper, they serve almost five billion people per day. That’s like over half the world’s population. That’s how big the categories become, and part of the reason for that is because of the competitive nature of them wanting to make sure that they get their fair share of that, of that consumer. I would go back and say every single consumer that they can get access to and go back, going back to the internal activation point, if they can get to even a 10-outlet restaurant chain, if they can get to those consumers for five years, six years, seven years, and have those 10-minute interactions without any competitor, there’s a real value to them, because they get the opportunity to build their brand.
The reason why that’s so important is that same consumer that might be in Super Duper Burger in San Francisco, by the time they get home, they will have driven past a gas station, or stopped at a Walmart, or went to a movie theater, where the entire footprint of this beverage company exists, if they can build that brand preference in that chain, that’s worth a lot to them, and that’s part of what the value is. Our job is to make sure that that brand value, our client’s brand value is elevated in the right way. I would say every account is important to them.
Tim Harms:
It’s a really interesting point, Rob, because you may be a smaller restaurant chain or may have a property. You don’t think of yourself as having a marketing asset necessarily, but actually, if you’re able to engage with the beverage company in a creative way and offer Coke, or Pepsi, or Dr Pepper some even just a few seconds of exposure or a really creative way that fits within your brand to tie your experience and your product and what you stand for, their brands, and even maybe an organic brand or a juice brand or something new, that actually you’ve just taken, you may only sell X number of cases, but if you can add that experiential piece on it, you’re speaking Coke and Pepsi and Dr Pepper’s language at that point.
Rob Waid:
Yes.
Tim Harms:
You’re serving them, and therefore, it may not just be X cases, it’s X plus Y marketing exposure now, and you grow the value of the deal because it’s a true partnership at that point.
Rob Waid:
Yes. Let me give you another example as to why that’s so valuable. Think of what it costs. Last year, I think a commercial on the Super Bowl was like, I don’t know, $5 million for a 30 second spot. Think of the consumer’s experience in that 30 second spot.
Let’s say you’re Pepsi, and you’re looking, and you’re watching a brand Pepsi commercial sitting on your sofa, and you’ve got 30 seconds to engage that consumer. Now, there’s a value to that because there’s brand imaging, there’s things that are happening in their brain, but it’s 30 seconds, and it’s over. If you walk into a restaurant or if you’re in a hospital, or if you’re in an airport, airport’s even a better example, you could be on a layover for an hour and a half.
Tim Harms:
Right.
Rob Waid:
You’re sitting, and you’re waiting by the terminal, and you’re waiting by your gate, and you’re getting bombarded with images for an hour and a half. Now, what’s the value of those images with the consumer that can walk up and purchase that product? What are the brand images worth there, okay, versus a 32nd commercial or a billboard advertisement that you buzzed by on Interstate 80? The value of that consumer engagement inside a restaurant client, or any client as far as that goes, without your competitor is a big value, and that’s why there’s no such thing as too small.
Tim Harms:
Yeah. I mean, I think about movie theaters instantly. I mean, they’ve figured this out.
Rob Waid:
Yes.
Tim Harms:
You go and you’re having fun at a movie theater. Before you go and find your seat, what do you do? You stop by the concessions, you get a soda, and then you’re slurping down the soda while you’re seeing the advertisements on the trailers before the movie, and you’re having a great time doing it, and they’ve just …
Rob Waid:
Yeah.
Tim Harms:
You just have that experience with the soda and the movie for an hour or two hours, whatever it is.
Rob Waid:
Yeah. Yes.
Tim Harms:
It does. There’s something that you connect that positive experience to … When you get out of the language of just agreements, and deals, and contracts, and start talking about partnerships too. I think we always encourage our clients also not just think about what you can offer the beverage company, but what the beverage company can offer you, because as you mentioned, they’ve got partnerships in the local community nationally, whether it’s the NFL, whether it’s the local zoo, whether it’s the concert hall, but they could actually start bringing those assets together in your restaurant with your zoo, or your hospital with another property that they have. They start tying these together in promotions.
There could be some really interesting things that happened that benefits you as a property owner, or you as a brand manager, correct?
Rob Waid:
Yes, and by the way, if you started to do the math on that, and we’ll use restaurants as another example, there’s a pretty high profit margin on those finished gallons, right? If we can grow your sales by 4%, the comparison to what we would save you coming in the backdoor is far greater, right? That’s part of what we want to do, is when we’re having conversations with Coke, and Pepsi, and Dr Pepper, and with our clients, it’s as much about, “What can we provide you on the activation part of it, and also on linking those assets?” As I mentioned, Pepsi, and Coke, and Dr Pepper, they’re everywhere. They have partnerships with virtually almost every business that’s out there.
How do they take those same businesses and drive that foot traffic through the front door? It’s really … We talked about how great they are at building brands. If you think about partnering with your beverage company, you’re kind of hiring them to a degree, and so if you hire them, you want to tap into part of what they do best, and if there’s one thing they know better than anything, is how to get to consumers and how to build brand. You want that same muscle and that same resource working on your brand, on your concept, on your establishment, on your business, because they are so good at doing that, you just got to make sure you have the right conversations and to bring all of that energy into that agreement because you want foot traffic.
Ultimately, you want your brand built by people that really know how to build brands, and that sometimes, sometimes that gets lost in the interpretation of what we’re negotiating, but it’s always in our agreements. We want to make sure that addressing foot traffic becomes a priority to make sure that your business is going to thrive with this partnership.
Tim Harms:
On the other side of the spectrum, I could imagine someone listening in and thinking, “Gosh, I hear what you’re saying, but I don’t want my dining room. I don’t want my hospital. I don’t want my airport looking like a NASCAR vehicle with advertising everywhere, and a huge Coke or Pepsi billboard as you walked in.” Can you speak to that a little bit? Is that a valid fear or do the beverage companies work through that with the partners?
Rob Waid:
Yeah. I mean, marketing in most cases is very specific, right? It has to tie to your brand and what you’re about. For example, if you’re a hospital, you may not want to see big red and blue coolers, and billboards, and all that stuff, and by the way, Pepsi, and Coke and Dr Pepper assume the same thing. That’s why they have evolved their businesses into better for you, innovative products.
In fact, they’ll get aggressive on co-branding images so that you’re 100% comfortable on exactly what brands are being promoted. The advantage again, it goes back to if you’re PepsiCo, and you’ve built 22 $1 billion brands, you have a lot of options to promote within that internal activation strategy with any client. By the way, in most cases, it’s not brand Pepsi and it’s not Coke. It’s all the other products that they have developed, that they’re also trying to develop internally, and so it gets very targeted as it should be, and that’s what they do. It’s really never about “Big soda” because there’s so much beyond that right now, and there’s a value to them of getting Xs, because they want to build those better for you brands. That’s really what they’re about, so it can be very targeted as it should be.
Tim Harms:
Great. Fantastic, and so if you wanted to get started down this path in expanding from a pouring rights relationship into a true beverage marketing agreement, how does this get started? Would you advise a client to spend a little time dreaming up some potential ways that a beverage company could partner with the brand in a way that makes sense? I mean, is there a sales role for the customer to actually bring the Coke and Pepsi and Dr Pepper, to let them envision what could be possible, or do you come with a blank slate and let Coke and Pepsi propose what that could look like? How would you get started doing-
Rob Waid:
It really comes down to educating the beverage supplier, the beverage company on your brand, on what’s important to you, right?
Tim Harms:
Yeah.
Rob Waid:
Also, and selling your brand. Talk more to them about consumers, the number of consumers, how long a consumer interacts within your brand. Talk to them about those conversations, okay? This is not about a volume play. As I mentioned, they sell hundreds of thousands of millions of cases every single day, but they built that business off of interacting in small ways, and so what they really want to know is, “Tell me about your brand.”
Then, and the second thing is, that I would make sure that that’s important is, because they sell brands so well, you also have to make sure that you are the center of the plate, meaning the client, okay? Beverage companies are going to come in. They’re going to say, “Well, you have to have my brand because I have all this brand share recognition,” but that’s not really what drives the business. You want a partner that’s going to come in and recognize who you are as the client, and that’s part of … By the way, that’s also part of what we do.
We would make sure that your brand is elevated appropriately so that you get that recognition in that investment strategy, that would be so important. Ultimately, how the beverage company wins is if more foot traffic comes through the front door, they’re going to sell more product, so the two go hand in hand. It’s just making sure that those strategies are tied together.
Tim Harms:
Got it. From the customer standpoint, you do your job on educating the beverage company and your consumer, how they engage with your brand and the value that your brand can bring to their partners, and you let the beverage company then come back with which of their brands matches your demographics, which of their brand would fit your moments, and let them come up with some of the creative ideas of how their brand could actually elevate your own business, and then you both win, to your point.
Rob Waid:
Yeah.
Tim Harms:
You get more consumers in the door, get more passengers enjoying and purchasing more beverages.
Rob Waid:
Right.
Tim Harms:
They’re going to have a better time at your airport or at your property, and you’re going to get more money. They’re going to get more money, so it’s a win for everyone.
Rob Waid:
Yep, and that really summarizes it very well, which is I don’t care who you are or what your brand is. They have a strategy for it, and they know how to engage that consumer for you and with you.
Tim Harms:
Excellent. Excellent. Well, this has been such a good conversation, Rob. Thanks so much for coming on and sharing just the difference between pouring rights versus beverage marketing agreement. Is there any last final thoughts that you would have to leave with the listener who’s listening in right now?
Rob Waid:
Yes. You know what I would say? I would say go back and listen to all of the podcasts, okay? I mean, what a … I mentioned this several times, I’ve been in the beverage business for over 30 years, but this team is so talented, and Enliven, and whether it’s Heather, or Michael, or Martin, and the leadership, Mr. Harms yourself.
I mean, it is quite a model that really supports our clients in ways that you can’t even imagine. I’ve learned a lot just being a part of this team over the last several months, and it’s been educational to me, but what a value Enliven provides to clients. It’s been a fun ride. Really fun ride.
Tim Harms:
Well, thanks, Rob. We did not pay him to say that, so ..
Rob Waid:
You did not.
Tim Harms:
Yeah.
Rob Waid:
You did not pay me to say that.
Tim Harms:
Well, I’ve really appreciated it and thanks. I feel like there’s a lot of knowledge here that you’ve laid out. If any of this, if you want to learn more, you can just go to our website, enlivenllc.com. There’s a place there to contact us, and it’s really fun for us to dream up of ways that we don’t just beat up Coke and Pepsi, we don’t just try to get a good deal, but actually, to create these win-win partnerships. That’s just our sweet spot, so we would love to connect and think about ways that a beverage company could benefit your brand and you could benefit the beverage company, and everyone wins at the end of the day.
Rob Waid:
That’s exactly what we do.
Tim Harms:
Well, thank you, everyone. Thanks, Rob.
Rob Waid:
Thank you.
Tim Harms:
Thanks, everyone for listening in. Hope you found that informative. If you have a burning question about your beverage negotiation or partnership, we’d love to hear from you, and answer it on this podcast. Reach out to us by emailing podcast@enlivenpartnership.com. 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 clicking Free Savings Estimate. On behalf of everyone here at Enliven, thanks for listening in.
