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"He who wins the foodservice channel wins the world" is a common mantra among alcoholic beverage marketers. This underscores that the foodservice channel—encompassing hotels, Western restaurants, Chinese restaurants, hotpot spots, BBQ stalls, bars, and pubs—has always been a strategic battleground for beverage brands.
Why Should Beverage Companies Develop the Foodservice Channel?
The foodservice channel is the best venue for consumers to discover brands and experience products. Those in the alcohol industry know that the definition of "terminal" differs from that of other food and beverage companies; alcohol companies only refer to foodservice outlets as "terminals." Why? Because the terminal is where consumers ultimately consume the product—only in foodservice settings do consumers directly drink the beverage. In hypermarkets, convenience stores, or street kiosks, they don't consume on the spot. Thus, the foodservice channel is ideal for brand exposure and product trial.
It is also the best place to promote new products and cultivate taste preferences. As the saying goes, "Try before you buy, and you'll know if it's good." Eating and drinking are the purposes of visiting foodservice outlets. Therefore, conducting new product promotions centered on "free samples, tastings, and giveaways" is most effective in the foodservice channel, without fear of rejection.
Moreover, the foodservice channel is crucial for generating sales and capturing market share. With rising health consciousness and rational consumption, coupled with new traffic regulations and government restrictions on alcohol, the beverage market faces constraints and significant sales pressure.
How to Develop the Foodservice Channel
Leverage Distribution Networks. As is well known, a successful new product launch requires building channel members through distributor recruitment. When recruiting distributors for the foodservice channel, beverage companies should select partners based on product positioning. For ultra-premium products, choose distributors of high-end red wines and imported spirits; for mid-to-high-end products, select distributors of strong local baijiu; for low-end products, opt for beer distributors. Utilize their existing foodservice networks to quickly enter the market and distribute products. For example, JDB, now a market leader, was confined to Dongguan, Shenzhen, and southern Zhejiang before 2003, with sales of only 180 million yuan in 2002. From 2003, Wanglaoji segmented its sales channels, using the "fear of getting heaty" selling point, and quickly developed a dedicated foodservice distributor to launch the market. This led to explosive growth: surpassing 1 billion yuan in 2004, 2.5 billion in 2005, 4 billion in 2006, and 12 billion in 2008, making it China's "No.1 can."
Incentivize Shelf Placement. To activate the foodservice channel, you must complete distribution and shelf placement. How? First, for star-rated and A/B-class hotels, negotiate the lowest entry fees to get products in. Second, for mid-to-high-end restaurants, implement tiered purchase incentives. Third, for small and medium eateries, offer small rewards like a free bag of laundry detergent for each case purchased. During my earlier work with Taishan Beer, we launched a major shelf placement campaign with the theme: "Bullish! First order of 39,000 yuan wins a 7-day Hong Kong-Macau tour! Prosperous! First order of 28,000 yuan gets a Lenovo computer!" The campaign not only placed products in 279 restaurants and hotels but also generated over 5 million yuan in sales—a double win.
Incentivize Staff with Cap Rewards. Product recruitment and shelf placement are just the first steps; the key is staff promotion to drive sales. How to motivate staff? First, incentivize warehouse keepers with a commission per case to ensure your product isn't held back. Second, motivate bartenders with gifts and commissions to secure prime shelf space and larger displays. Third, offer cash rewards to waitstaff in private rooms and main dining areas; they play a crucial "final kick" role in sales. Huiyuan Juice, China's top juice brand, started through the foodservice channel. Their 750ml 100% juice, exclusively for foodservice, used a "cash for caps" promotion: waitstaff received 3-5 yuan per cap for each box recommended. As the saying goes, "Heavy rewards bring brave men." This strategy drove Huiyuan to become the leading juice brand, with a 52% market share in the 100% juice segment, according to AC Nielsen, achieving market dominance.
Engage Consumers for Repeat Purchases. "Repeat purchases depend on interaction." In an era of abundant goods, the shortage economy where "manufacturers produce, merchants sell, and consumers buy" is gone. How to conduct consumer interactive promotions in the foodservice channel? First, free samples, tastings, and product giveaways. In April 2004, Coca-Cola's Minute Maid Pulpy Orange had poor sell-through, with aging stock at terminals. To quickly clear it, the Qingdao branch distributed samples in small restaurants, university cafeterias, and canteens, reviving the product through "clearance" tactics. Second, brand image building. Wanglaoji invested in foodservice branding materials like store signs, menus, table tents, toothpick holders, and chopstick holders to constantly remind consumers: "Afraid of getting heaty? Drink Wanglaoji." Third, use "buy one get one free," "purchase lucky draws," and "quiz prizes" to help consumers understand and experience the product, fostering brand loyalty and taste preference.
With the growth of the tertiary industry and changing consumer venues, the foodservice channel will become a "high ground" for beverage companies to build brand image, launch new products, and generate sales. Are you, as a beverage company operator, ready to develop and activate the foodservice channel?
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