Success Stories from

Leading Companies

DrinkCo Turn-Around: The three facets of an effective go-to-market strategy

DrinkCo is a market-leading European distributor of wine and spirits, Whale Curve of cumulative SKU Profit Contribution

Cumulative Controllable Contribution ()

serving both Grocery (high volume) and Hospitality (high value) 2M
customers. The company had been suffering stagnating sales and
declining profitability, and therefore resolved to rethink its approach 1.6M
to the increasingly competitive market in an effort to reverse the Value Value neutral
trend. They knew this would require the right portfolio of products 1.2M (minimal impact)
creating Value
to support expansion, as well as an improved sales structure and destructive
800K
skillset to support the shift. But where to start?
SKUs with SKUs with
400K cumulative cumulative
Exploring profitability by customer and product positive value negative value
WP&C Contribution Margin
0
gave cause for concern 0 100 200 300 400 500 600 700 800

DrinkCo was heavily dependent on a few key suppliers and the
majority of sales went to a few major grocery customers. What they
didnt realize was, when profitability was adjusted for complexity
using the Square Root Costing methodology, the majority of SKUs
were actually profit neutral or detracting.
There was significant profit concentration in DrinkCos portfolio, with
25% of SKUs accounting for more than 200% of profit, while 25%
of SKUs had not sold in the last 12 months. Unexpectedly, sales to
supposedly high-value customers in the hospitality segment were
particularly unprofitable. DrinkCos lower-volume, higher-revenue
SKUs were disproportionately burdened with the front-office and
operational costs required to support their sales.
A lack of go-to-market strategy compounded
the issue
With these issues in mind, DrinkCo turned its focus to its sales force.
No clear customer segmentation existed and all customers were
essentially treated the same, meaning small customers were being
over-served while there was no strategy in place to meet the needs of
higher-value customers. Further, the lack of a regional view meant
there was little territory management the sales force following
ad-hoc processes for identifying and approaching new prospects.
As a result, the sales force had limited insight as to how to sell most
effectively in their key channels. Significant revenue opportunities
were being missed, while costs were driven up by overserving
low-value customers.
25% SKUs are value creating
A more focused go-to-market strategy was
key to recovery
It was clear that a significant opportunity existed to improve
profitability through deliberate customer segmentation, supported
by a refocused portfolio, and a corresponding go-to-market
strategy. Therefore, DrinkCo decided to distinctly split their
Hospitality sales force from Grocery, while integrating Grocery sales
with its own wider distribution business to leverage scale economies
and increased commercial weight. This allowed DrinkCo to take a
more specialized approach to capturing the significant opportunity
(and protecting their brand) in the Hospitality segment.
Getting this right required:
1 Developing unique value propositions based on channel and
customer type to better meet their needs, (leveraging a tiered
approach based on needs and value);
2 Shifting from a territorial sales structure, to a channel/customer
alignment to enable focus on profitably delivering the right value
propositions, and
3 Active portfolio management practices, including strategically
managing customers and suppliers, and maintaining alignment
to customers value propositions.

Results
DrinkCo identified opportunities to double revenue and reverse the unprofitable contribution of their Hospitality segment by
improving their value-proposition and sales approach lifting margin by more than 11 percentage points. Further, they identified
the immediate opportunity to remove more than 2 million of stagnant inventory, equating to half of SKUs in the warehouse.

www.wilsonperumal.com Wilson Perumal & Company, Inc.

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Wilson Perumal & Company, Ltd.
Longcroft House, 2/8 Victoria Avenue
contact@wilsonperumal.com Suite 1100 Dallas, TX 75240 London EC2M 4NS, United Kingdom