Local Brewer Crafts Plans to Regain Market Share
LOCATION: Nigeria
Despite several new products making it to the shelf, a Nigerian-based brewery could have tapped out after “ex-beer-iencing” no measurable gain in retail sales value (inflation adjusted) during the latest quarter in future consumption outlets. Since the two main multinational competitors were able to grow their sales, the brewer asked Middlegame to craft a plan utilizing its CIA® proprietary software our strategic insights to help raise the bar and regain market share.


SITUATION REVIEW
Identifying the Ingredients of Sales Success
Middlegame applied our decomposition of sales (DOS) model to pinpoint the source of differences in ₦ Naira (local currency) retail sales in the YOY results between the local brewer and its competition.
All the new products in the latest year were evident given a +10% to Average Items Carried (AIC), the items available × retailer stocking rate, by retailers. However, the turns per item stocked fell -7%. The decline was likely related to the focus on selling slightly larger litres per unit at +3% while trying to entice imbibers with an inflation-adjusted decrease of -5% in price per litre.
Relying on larger sizes was the exact opposite strategy of the two main competitors. They grew their businesses despite -2% less AIC. Unlike their beer, turns per item stocked for these brewers was flat, but focusing on smaller packs in the current inflationary conditions with lower litres per unit and a higher price per litre created +6% in ₦ value.

OPPORTUNITY ASSESSMENT
Cheers for Incrementality!
Shoppers appeared to be gravitating to competitors because they relied less on larger size packages like the numerous multipacks the local brewer offered.
Middlegame used the CIA® modelling engine to estimate how the current SKUs in the assortment contribute to the incrementality of the total portfolio and the category across different outlet types. Of the 120 items available in the latest quarter (33.2 total points of distribution), only 59 generated a higher share of profit incrementality than they represented as a share of distribution costs.
As expected from the DOS, profit incrementality for the portfolio was dominated by a limited number of products with smaller size packages offering a higher price per litre. Most of the worst under-performing SKUs were larger packages taking up precious space on the delivery truck as well as the store shelf.

SCENARIO DEFINITION
The Right Pairing for Shopper Tastes
Middlegame leveraged the incrementality results as well as price elasticities distilled from CIA® to design a new price-pack architecture (PPA) that reduced the items by -65% from 120 to 42.
Input from stakeholders on the commercial and operations teams was combined with the incrementality results. Only 11 of the current 15 brands were required for the consumption occasions facilitated by these outlets. Those same occasions were also translated into just six of the 22 packs currently being shipped to retailers and shopkeepers.
The revised packs were organized into Entry, Frequency, Upsize, and Upscale roles directly aligned with the Point-in-Time Assessment (PITA) model. These roles reduced confusion associated with all current price points across the portfolio. Decreasing the complexity and leveraging the elasticities offered an increase to price per litre of most items. The average suggested retail price (SRP) rose +17%.

EXPECTATION ANALYSIS
Wow, This Round Is on Us!
The CIA® scenario planner was leveraged to estimate the category-wide impacts of modifying product assortment and price with several competitor reaction alternatives.
The revised price-pack architecture (PPA) is admittedly a “radical change” to ferment the full potential of the portfolio. However, providing focus and clearly defining the roles of each item is forecasted to result in an incredible leavening of +15% increase in Retail Sales and +25% in gross profit. Further taking price would push those outcomes to +23% and +17%.
Middlegame advised the marketing team at the local brewery to accept that models based on historical data will fail to capture the uncertainty of the future. It isn’t wise to bank on a +23% increase in ₦ retail value, but it is fine to accept that this data-driven exercise has uncovered a huge potential opportunity that will be of interest to senior management.

CLIENT ACTIONS
A Crisp, Smooth, and Refreshing Finish
The local brewer’s marketing team gained senior management support for a tighter PPA that was closely related to the preliminary Middlegame recommendation.
The finance and commercial teams equally backed the opportunity to raise the average price per litre of the portfolio with the revised product offering. Retailers in South-East Nigeria were prepared for the initial roll out in stores across Abia, Anambra, Ebonyi, Enugu, and Imo State. Buy-in was negotiated based on the reduced complexity and uplift in category incrementality.
Results in the stores were not quite as high as Middlegame modeled, but inflation adjusted retail sales value ₦ Naria grew +8% and profitability rose +14% for the local brewer. All other immediate-consumption stores in South-East Nigeria were scheduled to complete the roll-out. Meanwhile, plans to tweak the PPA for the other five Nigerian geopolitical zones are on tap.