Enliven Beverage Deal Podcast Episode #13
“If I go exclusive, won’t my beverage sales suffer?”
The surprising answer: “No!”
On this episode, Monica Harris, Enliven’s Director of Operations, shares a few case studies to show why exclusive or semi-exclusive beverage agreements lead to increased beverage sales and profits.
Listen on Your Favorite Podcast Player:
Related Resources:
Ryan Donovan: How Avera Health Saved 40%+ on Beverage Spend
Won’t My Patients and Nurses Revolt if I Sign a Beverage Deal?
Most Common Healthcare Beverage Deal Myths: #1 – The Savings Estimate Is Too Good to Be True
Transcript:
Tim Harms:
Welcome to the Enliven Beverage Deal podcast, where 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.
Tim Harms:
Hello, everyone. I’m excited today to welcome Monica Harris to the podcast. She is recently promoted to our director of operations here at Enliven. Welcome, Monica.
Monica Harris:
Hi, Tim. How are you?
Tim Harms:
Doing well how are you doing today?
Monica Harris:
Doing well. Glad to be here.
Tim Harms:
Yeah. Well, this is your first time on the show. Welcome and hope you’ll be back. I thought we could start off, I just said you’re recently promoted to our director of operations. Could you tell our listeners kind of what you’ve done for Enliven in the past and maybe in the future?
Monica Harris:
Great. Yes. I started as an account executive and moved my way into the healthcare channel specifically, but I made sure that all of our clients are super happy and supported by the beverage companies, that they’re getting all the benefits of the deal and they’re getting great service and we’re there to help make sure that the relationship is great. Now, moving into this director of operations, we realized that Enliven needed just a little bit more bandwidth to serve our clients even better. And so we’re going to be the resource side, going to be making all those reports that are asked for, just making sure payments are coming in. But you still get that great service, but we’re going to put a resource team dedicated to that to support the account managers.
Tim Harms:
Yes, Monica is incredible at keeping projects on tasks. She is finally attuned to detail. She’s just a great resource we’re actually allowing her to serve all of our clients, not just healthcare clients, which is going to be great. You’re going to love it. Monica, what’s our topic for today?
Monica Harris:
Yes, we are talking about going exclusive with a beverage company, whether it be Coke or Pepsi. That you will see increased sales. I know a lot of you guys think that going exclusive and getting rid of one of them and kicking one out, that your overall sales will decrease because you’re taking away choice from your customers. And that’s just not the case. We don’t see that at all through our clients.
Tim Harms:
Actually when you partner with an exclusive beverage provider, semi-exclusive preferred beverage provider, one of the things that we commonly hear from our clients is a surprise and a delight from the service, increased service level, the creativity, the marketing piece that gets brought to their facility. And from the guests’ perspective, the passengers’ perspective, or the patients’ perspective coming onto your facility, there’s actually some great, surprising, delightful experiences that can happen with a beverage deal. Monica, I know you have some examples here of what’s happened because we can give anecdotal stories. We can give you reasons, but numbers don’t lie. And because of our breadth of expertise and experience in the channel doing beverage deals day in and day out, we actually get to see firsthand what happens from a sales standpoint when someone chooses to partner with one of the major beverage suppliers. Can you go through that for us?
Monica Harris:
Yeah, of course. We at Enliven, we track all of the volume that’s going through. Part of our service that we do is we want to make sure that volume’s reporting correctly so that you’re getting paid correctly, but because we get those reports, we can compare it to what you were doing pre-deal. And on average, our clients typically see five to 20% increase in sales. And so I pulled some numbers for you, Tim. I have a couple of examples of our clients. We have a healthcare client in that South Dakota market, just one of their hospitals alone, they switched from Coke to Pepsi and saw increase of about 40%. A little bit higher than the average that we see, but that’s insane for one hospital.
Tim Harms:
40%, one hospital just going from one brand to another brand, saw an increase in 40%. Wow, that’s huge.
Monica Harris:
Yeah. And they had a lot of concern about getting rid of one beverage and going to this other one since they had a lot of brand-loyal customers. Secondly, we have a healthcare system in Louisiana market who had a mixed environment and they went exclusively Coke and saw an increase of 7%.
Tim Harms:
Oh my goodness. They were a mix serving multiple brands and they partnered with one and they saw 7% increase. Just by focusing on one brand, saw an increase in sales of 7%. All right, what else you got?
Monica Harris:
I got one more example for you. And this is one of our airport clients. They were also mixed and switched to Pepsi and saw an 18% increase in volume.
Tim Harms:
18% increase in volume, which at an airport translates directly to sales, helps the bottom line at the airport. Across the board we see this, restaurants, hospitals, airports, you name it. When you switch from a mixed environment or one to the other, beverage sales always an increase. It’s sounds counterintuitive, Monica. I don’t believe it. Why would this happen?
Monica Harris:
Well, I have two reasons why this happens and it goes back to the choice and effort. Let’s talk about choice first.
Tim Harms:
Yeah, because you’re taking away my Mountain Dew, you’re taking away my Diet Dr. Pepper, you’re taking away my Diet Coke. How could sales and volume possibly increase when you’re taking away choice?
Monica Harris:
Well, you might think you’re taking away choice, but you’re not. And that is because when you have a mixed environment, you’re only able to carry the core brands of each beverage provider, so you don’t really get to offer anything else other than like for like items from each brand. But when you get rid of one of those companies, you’re able to expand your options and source new products that you weren’t able to carry because you didn’t have the space. And actually Coke and Pepsi, they have huge portfolios. They’re constantly innovating. They focus on consumer trends so they know what people want. They know what consumers are drinking. You get access to their full portfolio. It goes beyond just those core brands and you get to carry those innovative products that you didn’t have space for before. Actually, you’re giving your consumers even more choice than ever before.
Tim Harms:
Yeah. That’s a great point because you think about the footprint of your facility. If you’re listening in, thinking about the footprint of your facility, you have finite space. You can’t just add infinite amount of coolers or infinite amount of fountain machines. It’s really important that you maximize the space that’s there. And you want to make sure that as our world is changing, as demographics are changing, as trends and consumer behaviors are changing, that you have the right facings, the right products to meet consumer demand. It’s no longer as much about red versus blue as it is about LIFEWTR and Smartwater and Hubert’s Lemonade and KeVita kombucha, isn’t it? There’s so many different beverages out there right now. It can be overwhelming. But if you partner with one that can manage that channel for you, they can do the analytics. They understand what is buying in a specific market. And they can make sure that you’re optimized to have the right flavors, the right choices, the right packages for the people that are coming through your property.
Monica Harris:
Yeah, that’s exactly right. And I do want to say, to not get hung up on Coke versus Pepsi because they both have just a wide range of products and overall, when you really break down, they have roughly equivalent market share. One isn’t going to outperform the other.
Tim Harms:
That’s interesting. Counterintuitive for sure but to your point, we see it again and again and again. All right, so that was the choice argument. You’re taking away my beloved soft drink. Well actually, you’re going to have access to a lot more and you may find a new flavor that you love. What’s the second argument that you mentioned?
Monica Harris:
Great. And it’s effort. When you sign an exclusive deal or a semi-exclusive deal with Coke or Pepsi, they’re going to give you money and it’s because they are excited to be your partner and they see value and benefit in partnering with you. But when the beverage companies give you money, they have to figure out a way to get that money back and to profit from this partnership. In order to do so, the beverage companies have to put in that effort to increase those sales, because if they don’t put any effort in, they aren’t going to benefit from the deal at all. When they put in this effort, things come out like merchandising and they build specific planograms to ensure that your products are placed in the right spot. They know consumers better than anybody else so they’re going to work their magic to make sure that you are optimized in your space to make sure that the beverages are in the right spot.
Monica Harris:
Another benefit is that you get new equipment. You have some old cooler sitting in your retail space. Well guess what? When you go exclusive, you get new upgraded equipment and they can do signage that’s co-branded with the beverage company. And it’s just really great and the space looks really nice. There’s so many benefits that the beverage companies have to do so that they can get their profits back too.
Tim Harms:
Yeah, that’s right. Coke and Pepsi and Dr. Pepper, they’re not nonprofits. And so they’re really excited to partner on an exclusive or preferred arrangement. And there’s some financial incentives that go along with that, but they’re wanting to turn a profit on that there. When they have a choice of whether to send the service trucks to a property that is mixed or not, a great partners in their eyes or send the service trucks to the new property that just inked for lots of dollars, lots of zeros, who do you think they’re going to route that service truck to? Who do you think they’re going to put their best key account manager on? Who do you think they’re going to try to do the product samplings at and do these really fun, creative marketing activations at? That’s a great point. Do you have any specific examples of really fun or something that’s happened at a facility that you’ve seen recently that just demonstrate what beverage companies are willing to do when they have a partner?
Monica Harris:
Yes. I think the one that really comes to mind is this Hug Me machine that Coke has, that is great for in healthcare systems, because you can hug this vending machine and it’ll spit out a drink and it’s just such a friendly thing to have.
Tim Harms:
You literally just hug the machine.
Monica Harris:
Right. It’s kind of a weird concept.
Tim Harms:
That’s great. Just fun things, they’re not going to do that with a property that they’re not in a strategic partnership with, but doing a pouring rights deal or beverage deal enables and opens up these really surprising experiences. If you’re walking into a hospital, you’re not expecting the Hug Machine and get a free Coke, but man, you remember that experience, don’t you?
Monica Harris:
I have another one for Pepsi since we gave Coke some love, we should get Pepsi some love too. But they have this new sparkling water that you might’ve heard of or had called Bubly.
Tim Harms:
Bubly.
Monica Harris:
Bubly if you like to call it that.
Tim Harms:
If you watched the Super Bowl ad from a couple of years ago. Yep.
Monica Harris:
Well, another healthcare example and they have all these different colors. And so one of the local promotions that they’ve developed for this hospital system is around cancer awareness. They’ve picked different flavors to create a whole promotion around cancer awareness. In their cancer centers, they’re able to bring these promotions and just bring a little bit of joy. These cans are so cute and so fun that you can’t help but smile when you see them. And so they’re just bringing so much joy too, to these hospitals and bringing great awareness around all these different cancers for each month so that people are aware and they get to enjoy a delicious sparkling beverage.
Tim Harms:
Yeah, great examples. It makes sense. I’m going to put you on the spot here. You’ve been doing this for many years. You’ve converted so many different systems from mixed to one or from one to the other, the fear that is in everyone’s mind, if you’re a manager thinking about, or a leader, an executive thinking about bringing your organization a strategic beverage partnership or switching providers, you just fear that backlash, you fear that email, you fear the social media complaints. You fear. These are real, it’s real concerns. We’re making light of it but for some of our listeners listening in, beverage sales, they can’t keep the doors open without beverage sales in doing this. Have you encountered clients that actually have that big backlash that gets social media complaints, that have campaigns rallied against them for taking away their favorite beverage?
Monica Harris:
You think that you’re going to get some really big backlash and you might get a few comments, a few emails at the very beginning, but within the first month of converting and things are finally transitioned and life is back to normal, those comments go away too, because it just becomes the norm and nobody really remembers that they had other things there that they no longer have.
Tim Harms:
Yeah. And they’re getting so much more as we’ve just talked about. Well, thank you so much, Monica, for coming on. This has been great. And the data speaks for itself. Five to 20 to 40% increase in revenue. That is meaningful when you’re talking about the environment that we’re currently in right now. But it’s meaningful anytime. Anytime you can make a simple decision, get a strategic partner, and grow revenue by double digits, that’s huge growth. Thanks for coming on and sharing and hope we can scheme some more to figure out ways to bring these moments of delight to our customers through beverage deals. It’s quite a fun thing to see. To see that customer get a smile on their face after they hugged a vending machine, got their free beverage, that’s amazing. Well thanks, Monica, appreciate it.
Monica Harris:
Thanks so much, Tim, for having me. I really appreciate it. It’s been great.
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. 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 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.
