GUIDE
Declining sales have a cause, and the cause decides the fix.
Before cutting price or adding promotion, split the decline into four parts: distribution, rate of sale, price and mix, and customer concentration. Often one or two of them explain most of the fall.
A practical guide for UK food and drink brands.
Discuss your challengeDIAGNOSE
Split the fall into four parts before acting.
MATCH
Each cause has a different fix.
AVOID
Discounting before the cause is known.
The usual response to falling sales is more promotion or a lower price.
If the cause is lost distribution, neither helps. If the cause is a price gap, a promotion treats the symptom and teaches the customer to wait for the next one.
Find the cause first. Then act on it.
Distribution. Is the product in fewer places? Count lost listings, ranging cuts, delisted lines and lost foodservice accounts.
Rate of sale. Where the product is still sold, is it selling more slowly? Compare sales per store per week, or per outlet per month, against the same period last year.
Price and promotion. Has the price gap to competitors or own label widened? Has promotional frequency or depth changed? Keep volume and value apart. A price rise can lift value while volume falls.
Mix and concentration. Is one customer or channel hiding growth or decline elsewhere? A single retailer's range reset can account for most of a fall, and a new channel can hide a weakening core.
Lost distribution. Rebuild the case for the range. Retailers review categories on a cycle, so timing and evidence decide the outcome. Bring rate-of-sale data, margin contribution and a proposal, not a request.
Slow rate of sale. Look at range, pack size, price architecture, in-store visibility and the product's role in the category. Changing one of these tests faster than a relaunch.
Price gap. Rework the price and pack ladder so that an entry price point exists, instead of discounting the core line. Check what each promotion actually returned.
Concentration. Reduce reliance on the weakest customer or channel. Foodservice, wholesale, convenience and export can each add volume that does not depend on one buyer.
Compare like for like. Seasonality, the timing of Easter and Christmas, and the weather all move food and drink sales, so a year-on-year comparison needs the calendar allowed for.
In many categories own label sets the price a branded product is measured against. The question is often whether the brand still earns its premium, rather than why shoppers have left.
A price rise made to recover input costs can reduce volume. That is a decision to examine against margin, not a failure.
When the data does not show the cause, when the team is too close to see it, or when the fix needs a route to market the business does not have, a senior commercial professional can review the numbers and propose the next step. Options run from a fixed-price review to fractional or interim commercial leadership.
The usual causes are lost distribution, slower rate of sale, a widening price gap, and dependence on one customer or channel. Each has a different fix, so identify how much of the decline each explains before acting.
Compare the number of stores or outlets selling the product with the sales per store or outlet. If the first fell, it is distribution. If the second fell, it is rate of sale. Often both moved, and the split decides where to act.
It depends on the cause. Price and promotion changes show in the sales data more quickly. Rebuilding distribution depends on retailer review cycles and can take months. A review of the numbers shows which timescale applies.
Discuss your challengeThe Commercial Diagnostic reviews channel mix, range and sales capability against the business's own numbers, and scores each. It costs £950 and is delivered five working days after the documents arrive.
See the Commercial DiagnosticRelated guide: How to improve margins in a food or drink business
Related guide: How to increase profit in a food or drink business
Related service: Retail and wholesale growth
Related service: Foodservice growth and route to market
Related service: Export and international growth
Related service: Fractional commercial director
