When Is the Right Time to Start the Beverage Contract Process?
My clients and my prospective clients often ask me, “how far in advance of the expiration date should I start thinking about the contract?”
The right answer is “now”.
If Your Contract Will Soon Expire
For a contract that will expire soon, a two-year window is the least amount of time for beginning the process. If you wait until a year prior to expiration, you may not have time to easily and properly set the groundwork for a successful outcome.
Soft drink contract negotiations are much like a choreographed dance performance, in which each side has a predictable script. If you know the script and you are prepared to turn the script upside down in the right way, your chances of success are much greater. Knowing the script gives you a chance to prepare in advance the proper set, the right actions, the right meetings, and the right set of responses to meet your goals.
While two years in advance is the least amount of time for an ideal state, three years is ideal. With a three-year window, everyone involved in the process can begin to prepare at leisure.
If You Are in the Middle of Your Contract
Contract expiry is not the only time you should think about your soft drink agreement. There are several reasons why periodic contract check-ups are important.
1) Soft drink demand and consumer tastes are changing more rapidly now than they ever have been in the last 50 years.
2) Benchmark your deal periodically to get a feel for how competitive your funding is. If it is way off, your competition has an advantage you will want to take away.
3) Where is funding going? Is it for things that are still relevant?
4) Did you sign a volume commitment that is elongating the contract? If so, you may be able to fix that problem.
5) Are you getting the appropriate level of equipment and service? Have your needs changed? Are you using all of the service your contract calls for? Make sure you aren’t leaving money sitting unlocked in these two areas.
Your Beverage Contract is Not a Jail Cell
Beverage contracts should be living, breathing documents. You always have options to make sure your relationship with your supplier is optimal. You and your beverage partner should always be ready to make adjustments that make sense for both of you.
Ben Kitay is the Chief Operating Officer and Chief Negotiator for BevTrust Associates and CEO of the Beverage Contract Negotiation Institute, LLC.