New Year’s means a lot of things to a lot of people, but in the CPG world, it’s life or death! January is by far the most challenging and perplexing month of the year. It is unlike any other month, making it a surprise for most new CPG brand builders. It was for us!
When we started Barefoot wines, we had big plans for January, but it took us several years to really appreciate the plans that January had for us! Once we understood and gained respect for the CPG challenges of the new year’s first month, we developed strategies and tactics that made all the difference in our brand building efforts. Here’s what you can expect:
1. No Appointments.
Buyers who put you off until “after the first of the year,” continue to put you off. June is also “after the first of the year,” and there’s no real urgency on their part to accommodate your needs. In fact, most will forget any loose ends remaining from the previous year as they begin to tackle their own predetermined and packed agendas. All the while, you are up against a constant din of requests to meet with your buyers from your competitors. We finally wised up and asked for February, and even March appointments, with much better luck.
2. No Room.
Retail buyers want to clear out their warehouses of unsold holiday inventories in January. Even if your products sold through, their money is tied up in CPGs that they overbought. Now they are under a great deal of pressure to sell out that over stock. They don’t even want to think about the new inventory of existing product lines, let alone new ones. So, they focus instead on displaying and discounting their unsold products. After we got better established, we actually used this as a selling point for November and December sales, “Don’t worry, if it doesn’t sell by New Year’s,” we’d say, “you can get rid of it over the MLK Day weekend in mid-January!”
3. “The Cut.”
Just like in sports, when you are trying out, you have to make the cut in order to stay on the team. In the CPG world, cuts happen in January and February. That’s when buyers know how your CPG brand performed in their stores during the preceding year. Buyers are reticent to make any purchasing decisions until they decide who is going to be discontinued, and who the top performers were from the previous year. Most CPG brand builders are shaking in their boots until the news comes down. We actually took advantage of this annual “pruning” by having contingency proposals with the big buyers back in November to expand our line when they discontinued others.
4. The Set.
Once the buyers know what CPG products “made the cut,” they can develop their set diagrams, or “planners,” based on the previous year’s sales performance. Typically, this gives the best shelf positions to the hottest movers. New CPG brands face double jeopardy as they can wind up on the bottom shelf where few shoppers look, while the established brands get eye level. This is why we negotiated for, policed, and kept well-stocked floor displays. We sold much more off the floor than we ever sold off the shelf.
5. The Sales.
Considering that January is a long month with 31 days and two major holidays, sales are relatively slow. Consumers have overbought in December and are pulling back on their budget strings. The next big sales events aren’t until Super Bowl and over the Valentine’s Day – President’s Day holiday. The weather is generally cold in the northern hemisphere and shoppers tend to stay home. Sure, folks are returning gifts and scooping up deals but, again, that’s excess inventory which shuts out new inventory purchases. With diminished sales, your competition is full throttle, trying to get the jump on the new year’s sales quotas. This is when we would “strike where the enemy is not!” January is a great time to put your energy into places that are outside of the mainstream. We had tremendous success in little-known burgs and backwater towns that never got any attention from the Big Boys.
So, buckle up, put on your hard hat, and get ready for January! It’s no longer about whether you got in last year. It’s whether you stay in next year. Happy New Year to all our Brand Building friends out there! We hope our experience helps you make the cut!