When it comes to pouring rights at airports, misconceptions abound. Unfortunately, these misunderstanding can lead to missed opportunities for revenue generation and passenger satisfaction — costing airports millions and leaving them behind peer airports which are currently implementing these agreements.
In this article, we’ll debunk common myths surrounding pouring rights agreements, providing airport executives with the clarity needed to make informed decisions and unlock the full potential of these agreements.
Note: This article is part of a 12-Part Series — all focused on pouring rights in the airport industry. If you missed it, make sure to review our series opener, “Why Airports Are Implementing Pouring Rights Now“.
Misconception #1: Pouring Rights Reduce Customer Choice
A common myth is that pouring rights agreements limit beverage options for passengers. In reality, these agreements increase beverage choice by optimizing available space and offering a broader selection of beverage categories.
By consolidating duplicative beverage offerings under a select number of brands (e.g., offering both Coke Zero and Pepsi Zero, or Smartwater and LFEWTR), airports can free up valuable real estate. This space can then be allocated to a wider range of beverages like sparkling waters, craft sodas, kombuchas, smoothies, and teas. This approach enables airports to cater to diverse tastes and preferences, enhancing the overall passenger experience.
Airports typically see an increase in beverage sales per passenger after entering into pouring rights agreements, demonstrating that passengers often find new beverage products they couldn’t before.
Misconception #2: Pouring Rights Hurt Beverage Sales
Another myth is that pouring rights agreements negatively impact beverage sales. On the contrary, these agreements often lead to increased sales by leveraging the strength and reach of leading beverage brands.
The winning beverage company will have invested significantly in the airport partnership, thus being highly motivated to grow beverage sales. This motivation translates into efforts to optimize merchandising, provide tenants with promotional resources, invest in experiential marketing, and ensure machines are always stocked and functional. A key account manager will be assigned to your airport, compensated partly by how well they can grow beverage sales.
Our airport clients typically see year-over-year increases in beverage transactions per passenger, resulting in higher revenue for tenants and higher rent payments to airports.
Misconception #3: Pouring Rights Deteriorate the Passenger Experience
Some believe that pouring rights agreements diminish the passenger experience within airports. However, these agreements actually enhance the passenger experience by offering a diverse range of beverage options and creating engaging marketing activations and promotions.
Providing access to popular beverage brands positively impacts passenger satisfaction and perception of the airport, enhancing the overall ambiance and vibrancy of the environment. Beverage companies, known for their consumer-centric approach, bring exciting experiences into the airport, such as appearances and autograph signings by local celebrities, giveaways, and promotions to local attractions, and incorporating local institutions into merchandising signage and vending encasements to improve the “sense of place.”
Misconception #4: Pouring Rights are Controlled by Concessionaires
Some believe that concessionaires control pouring rights agreements. In reality, pouring rights agreements can be negotiated directly between airports and beverage companies, with concessionaires often benefiting from lower costs and additional support provided by beverage companies. Airports can maintain the right to negotiate and implement pouring rights agreements.
Airports are the only industry that concedes pouring rights to their foodservice operators.
Universities, sports stadiums, museums, zoos, convention centers, hospital systems, shopping malls, and hotels all frequently outsource their food and beverage services to third-party operators, but never concede the right to negotiate pouring rights.
Misconception #5: Pouring Rights are Dictated by Restaurant Brands
Another misconception is that restaurant brands on campus dictate pouring rights agreements. While restaurant brands may have national agreements with certain beverage partners, these agreements often contain clauses allowing exceptions when the restaurant is operating on a property with a master pouring rights agreement. Individual restaurants typically have the flexibility to accommodate the pouring rights of the airport.
For example, at Philadelphia International Airport and Washington Dulles Airport, passengers will receive a Pepsi when they order a soda at Chick-fil-A, despite Chick-fil-A’s longstanding partnership with Coca-Cola in the U.S.
Misconception #6: Pouring Rights will Cover the Terminal in Beverage Advertisements
Some fear that pouring rights agreements will inundate the terminal with beverage advertisements, akin to a “NASCAR” automobile. In reality, airports have control over the extent and placement of advertisements within their terminals. They can limit the brands highlighted to those that align with the target passenger demographic, ensuring that advertisements enhance rather than detract from the airport experience.
Well-structured pouring rights programs facilitate frequent marketing planning sessions, allowing the airport to provide thought-starters and a wish list of initiatives on which beverage companies can focus. Their marketing activations are directly responsive to the needs and desires of the airport, ensuring that the partnership improves the environment that the airport aims to create.
Misconception #7: Pouring Rights will Hurt Concessionaires
There’s a misconception that pouring rights agreements will harm airport concessionaires. In reality, these agreements often benefit concessionaires by providing lower costs, capped price increases, improved service and service level agreements, new and energy-efficient equipment, employee engagement programs and training, and merchandising and promotional programs to increase beverage sales.
These benefits are particularly welcomed by ACDBE and small business merchants, who often don’t have the negotiating power or leverage of larger operators.
Airports can also protect concessionaires within their pouring rights program, ensuring that the beverage company continues to pay existing rebate programs and either matches or beats the pricing currently received.
Misconception #8: Pouring Rights will Impede Sustainability Initiatives
Some believe that pouring rights agreements will impede airport sustainability initiatives and promote single-use plastics. However, these agreements can include provisions for funding sustainability initiatives, commitments to reduce single-use plastics, and the promotion of environmentally friendly products.
When structured correctly, pouring rights agreements can drive sustainability initiatives within the beverage category, incentivizing collaboration with beverage companies to achieve environmental goals. Collaborating with an engaged beverage supplier can help airport sustainability initiatives benefit from the resources of sustainability and package innovation teams within beverage companies.
Conclusion
Dispelling misconceptions surrounding pouring rights agreements is crucial for airport executives to make informed decisions and maximize the benefits of these agreements. By clarifying common myths, airports can unlock the full potential of pouring rights agreements to enhance revenue generation, passenger satisfaction, and sustainability initiatives. Stay tuned for more in our upcoming series, where we’ll delve deeper into the negotiation and optimization of pouring rights agreements, providing actionable insights for airport executives.
Key Takeaways:
- Increased Beverage Choice: Pouring rights agreements enhance passenger beverage options by optimizing space and offering a broader selection of beverage categories.
- Boosted Beverage Sales: These agreements often lead to increased sales by leveraging the marketing strength and reach of leading beverage brands.
- Enhanced Passenger Experience: Access to popular beverage brands and engaging marketing activations improve passenger satisfaction and the overall airport ambiance.
- Concessionaire Benefits: Concessionaires benefit from lower costs, better service, energy-efficient equipment, and promotional programs, particularly aiding ACDBE and small business merchants.
- Support for Sustainability: Properly structured agreements can fund and promote sustainability initiatives, reducing single-use plastics and driving environmental goals in collaboration with beverage companies.
Related Articles:
Do Pouring Rights Hurt My Concessions Partners?
Why You Should Re-Think Your Approach to Vending
3 Reasons Beverage Companies Want to Partner with Airports
