When it comes to securing an exclusive pouring rights deal with either Coke or Pepsi, accurate volume, pricing, spend, commission and rebate numbers are surprisingly hard to get. Especially surprising is the fact that your existing, trusted, long-time business partners are often the least willing or able to provide you with accurate numbers.
Most multi-hospital systems have one or more outsourced cafeteria operators. All have broad-line food and beverage distributors, vending machine operators and GPOs.
Over the ten plus years we’ve been securing and managing exclusive pouring rights agreements for our hospital system clients, we’ve learned that none of these business partners can be relied upon to provide us or our clients with complete and accurate beverage volume, price, spend, commission and rebate numbers.
Why? How can that be?
The short answer: it’s complicated.
Most of the time, the reason your existing beverage ecosystem partners cannot provide accurate numbers is because they simply don’t have them. Their own systems and procedures are not set up to accurately capture and report the numbers.
However, it is also the case that oftentimes your existing beverage partners have an economic incentive to NOT provide accurate numbers. Bluntly put, if they can obscure or hide certain volume numbers and certain rebates being paid to them by Coke and/or Pepsi, then they can keep those rebates for themselves.
It’s important to note here that the particular individuals who interact with you and your facilities on a daily basis—the account executives, on-site cafeteria managers, even local market area managers for these beverage ecosystem business partners—are most often fine, upstanding people who really are doing their best to provide you with great service and accurate numbers. The problem is that their corporate bosses collect more money at the corporate office as long as beverage volumes and beverage rebates are first and foremost accurately counted and collected at the corporate office. That’s the priority. And, so, these local market, on-site individuals often simply are not provided with the systems, tools and reports that are required to accurately track and report to you on key beverage business metrics. This is especially true when it comes to back-end rebates.
All this to say, you won’t know how much money you’re leaving at the table by not doing an exclusive pouring rights agreement until you know the numbers they’re not telling you. (You can read more about all this in an earlier blog post here: “Can hospital systems really save “millions” with an exclusive or near-exclusive beverage partnership?”)
Significant savings and cash payments
The money we’re talking about here—the net savings and the incremental revenue–is potentially significant. One of our clients, a system with 20+ acute care centers, saved north of $2 million in the first year of their exclusive pouring agreement negotiated and managed by us.
We make it easier to get the numbers because we know what the numbers are (or should be) before we even start gathering them. We have developed proprietary databases and metrics over the last 10 years of working in the field and after reviewing almost $100 million in hospital beverage spending nationwide.
So, rather than relying on your “partners” to give you all the pieces of the beverage spend puzzle, we can help you quickly finish the puzzle because we know what the end result typically looks like.
We can fill in the missing pieces of the puzzle by using our proprietary metrics, by thoroughly analyzing your actual beverage invoices and by working with our contacts at Pepsi and Coke. The good news is that Coke and Pepsi do typically have very accurate volume reports for all of their customers. We are very experienced in working with them and their systems to compile accurate numbers. They won’t have all the non-Coke and non-Pepsi volume information, which can be significant, but we can usually fill in those gaps, too.
Once we get the numbers
Once we know your beverage volumes and beverage spend, we get to work:
- Comparing your numbers to figures from other leading hospital systems
- Organizing our results into a RFP for Pepsi and Coke
- Managing a competitive bidding process
- Helping to finalize your contract with Coke or Pepsi
- Overseeing the implementation of your new exclusive partnership, and
- Delivering, auditing and allocating the savings to you (we’ve delivered $26 million to hospital systems so far)
On average, hospital systems reduce their beverage spending by 24% in the first year of an exclusive pouring agreement. Depending on the size of your hospital system, you’ll probably see anywhere from $1 million to $12 million or more in savings during a five-year contract term.
As long as your hospital system has four or more acute care hospitals, 1,200 or more staffed beds and 6,000 or more employees, we can generate significant savings for you. And, as an added benefit, we always bring much greater accuracy and transparency with respect to your beverage spend than you’ve ever gotten from your existing “partners.”
Let’s go get the numbers they’re not telling you. Contact us and find out how we can help.
