Kiosks: how to take advantage of the channel

A universe with 100,000 opportunities seems like fertile ground for doing business. In Argentina, the number of traditional kiosks is around that number and small and medium-sized companies in the field of sweets and cookies, among others, make room in the most limited gondolas in the world of retail. Dielo (Fantoche), Tía Maruca, Productos Lipo, Paulista (Biznikke), La Nirva (Grandote), Lheritier (Pico Dulce), Compañía Americana de Alimentos (Nevares), Alfajores Guaymallen, Argensun (Pipas), El Carmen (Citric); Interlink Company (Vauquita) and more than 200 other small and medium-sized family businesses have kiosks, drugstores and self-service stores as their main sales channel, which according to market sources, reaches 90% of turnover among the smallest. a huge concentration in the market. Just three firms generate more than 70% of sales in this sector, assures Pedro Nicola Candia, Managing Partner of Potigian Golosinas, a distributor that channels products worth more than $1,000 million annually, among the kiosks of the City of Buenos Aires. Aires and more than 1,600 service stations throughout the country. I manage a portfolio of premium products because that is what my clients and their consumers demand, says the executive, who has only 5% of his suppliers as SMEs. Sweet temptation Divo Campanini, from Divito Golosinas, another distributor that covers the area of ​​the Federal Capital, makes a similar reading. And, even, it goes further: There is some fear that a monopoly will be generated in the kiosk market by large firms, such as Arcor or Mondelez, as is already happening in some places in the interior. In any case, I cannot guarantee that this concern is shared by the kiosks. For Nicola Candia, there are three main reasons that explain the scarce presence of small and medium-sized companies among the large distributors in the sector: quality standards, volume and merchandise turnover. The first point refers to expiration dates. The products of SMEs tend to be more artisanal, so the expiration dates are very short for the requirements of large chains and, especially, of service stations, which request at least 60 days from when the product is delivered until the expiration date, explains the businessman. Secondly, there is an issue of quantity, Nicola Candia points out and gives an example. If I want to buy a special product, such as a regional alfajor or food for celiacs, and the demand explodes, they cannot supply it. Hand in hand with the second point, we arrive at the third question, which is raised by one of the owners of Potigian. Advertising and rotation are essential to reach certain mouths and sustain. Meanwhile, there are products that are born to be only in the suburbs, for packaging, product and price, sentence.Cookies that rhymeTía Maruca is an SME that stands up to the giants of the industry and channels 75% of its sales in kiosks and self-services. Pablo Requiere, General Director of the firm created by Alejandro Ripani, says that, from the beginning, the company was clear that it had to win an empty space in the kiosks and, for that, it developed a strategy from the exhibitors. We seek that from the gondola an artisanal product is perceived and repeat the mystique that the galetiteras tins of other times had, he assures. And the mystique paid off since today, with around 120 employees, it has 4% of the cookie market, which, translated into pesos, means a turnover of more than $300 million every 12 months. The goal has always been to reach the kiosks, because it is a product of impulsive consumption and that is the first channel that the consumer chooses, says the manager of the company that works with some 300 distributors, serving between 250 and 300 outlets each. For his part, Campanini highlights the power of firms such as Mondelez, which can accompany the offer of their products with merchandising, such as the Beldent chewing gum wheel, and thus generate a privileged place in the gondola of the kiosk. On the other hand, there are very few SMEs that usually have the capacity to make this type of investment. For Tía Maruca, the initial investment was minimal because, in the first years, production was entirely freelance, so she avoided a large outlay in machinery and concentrated its efforts on exhibitors, brand creation and consigning products to grocers and kiosks. Acceptance was very good. In 2000, the brand had already covered 70% of the country. The peak years were 2005 and 2006, explains the CEO, just when the firm set foot in supermarkets. The displays are part of its secret, they have between 12 and 20 varieties of cookies, depending on the size and with a unified price for all products, something new when it was put into practice. To ensure the presentation of the products in the displays, we decided to look for exclusive distributors throughout the country and not sell through the wholesale channel, Ripani points out. In 2002, Tía Maruca opened its first plant, in Luján. Five years later, it added a second plant in Chascomús. However, even today 50% of what the brand sells is produced by different strategic partners, both in the GBA and in the interior of the country. They are in demand for special products such as wafers and the Maruquita line, adds Requires. Three floors Perhaps the word Dielo, simply, does not refer, in the mind of the consumer, to many experiences. But, knowing that behind that company hides the manufacturer of the traditional Fantoche, creator of the triple alfajor, the story takes another height. Claudio Messina, Marketing Manager of the company, which also produces sweet bread, puddings, candies and cookies, explains that it channels 30% of its sales through kiosks and the rest through self-service stores and supermarket chains, generally small, through through distributors. With alfajores, puddings and sweet bread, we reach the large supermarkets but, in cookies, it is difficult to access that channel. For this reason, we are aiming at self-services and local markets, says the executive, who points out that several of the supermarkets favor negotiation with large firms. In the alfajores category, which represents 60% of the group's income, the figures are reversed and Fantoche places 30% of its products in large supermarkets, while the rest, through distributors, is divided equally between supermarkets (35%) and kiosks (35%). Direct customers, wholesale distributors and national and international chains. In this way, the management of the commercialization of its production is divided, which grew by 15% in volume last year, assures the businessman. Regarding logistics costs, Dielo seeks balance by making an average, since, according to estimated data by the company, direct sales to kiosks are more expensive than wholesale distribution, although it cannot specify the percentage. province of Santa Fe) keeps 40% of the sales. It is strong in Rosario, says the executive who projects a 12% jump in production this year. When highlighting the differences between operating with SMEs and the large ones in the industry, Campanini highlights the pleasant treatment and the sentimental proximity with the owners of local SMEs. When you place an order, it can be resolved with the owner and by phone. Instead, for example, with a multinational firm, you have to fill out an online form, at a certain time, to order the prestobarbas, he compares. 30% of the merchandise that Divito Golosinas channels belongs to medium-sized firms, such as the now popular Guaymallen. We want SMEs to advance, but they tend to have a single-product offer that results in a low rotation in the kiosks and that makes it difficult to operate with them, explains Campanini. Hot, warm and cold We all want to be close to the hot zones, says Messina, by Dielo. Hot and cold are the zones defined by the kiosk based on the rotation of the products. The secret is to be in the areas with the highest turnover because they are the ones that usually have the most visibility, he says. However, many times, large companies buy these spaces, especially in kiosk chains such as Open25. The Dielo executive explains that the competition in soft alfajores, the company's core business, occurs between local SMEs. To compete, the idea is to generate brand presence and the traditional kiosk is the best ally because it does not deviate from the seller. Therefore, we try to maintain a close relationship with the merchant to be close to the consumer. Chinese supermarkets and national supermarkets have another logic. They only buy what is sold, explains the executive of the traditional Fantoche, who is part of a staff of 250 people. For the owner of Potigian, who expects to grow 4% in volume this year (provided that the companies comply with the shipments of production), the reasons for this behavior in a cold economic context occur because there is an increasingly globalized consumption at the country level, that is, products that were not previously sold beyond General Paz, are now incorporated into the diet of the rest of the Argentines. If SMEs want to gain ground, they have to dare to play first class and learn from the big ones. In other words, to compete betting on a product in which they concentrate their product development energy, from ingredients to packaging and advertising, proposes Nicola Candia. If it is about launching new products, kiosks are also a priority. Dielo, which produces more than 600,000 alfajores a day and shipped 1 million in the 1990s, participates in the cookie market. Twenty years ago, the most popular sales format was the so-called fresh pack, with loose cookie tins, he recalls. Today, that category is on a plateau and we are growing with individual packages of dry crackers, mainly in self-service and Chinese supermarkets. Dielo is about to launch Vitagran, a line of healthy crackers, in which he invested $2 million in product development. . There, the kiosks will not be the best option and, therefore, the cannons will point to self-service stores. The product, aimed at men and women between 25 and 35 years old, will be presented in packs of 250 grams. In terms of inflation, the worst began to happen at the end of 2013 with key inputs such as flour, fat and dulce de leche, with increases that ranged between 20 and 50%. To avoid transferring these increases to our products, we make combos of different products, brands and presentations with benefits, it ends. The choice of the representativeA commercial representative and/or distributor is an external commercial network that allows capturing new markets and segments with very low risk, it begins Alicia Verna from AV Consultores Pymes. The key is to think of them as strategic partners and not just as clients, that is, develop the business relationship, hold frequent meetings, define joint actions, commit both to the development of the channel and the area, adds the specialist, who presents three ingredients principles to successfully develop a dealer network: selection, gradual induction process and investing in the network. The first is to gather as much information as possible about the experience, the type of customers and the products you already have in your portfolio. Then, plan a training process on the company, its products and the commercial methodology to be used. Simultaneously, invest in training, catalogs and advertising, among other things. When choosing this modality, Verna highlights the following pros: speed of expansion, breadth of personnel cost and greater coverage of areas. However, also on these points to follow: the control is more complex, the agents' independence and the heterogeneous style. Requiree, by Tía Maruca, projects a 10% increase in sales volume this year supported by distribution, with new channels and the launch of new products, such as a line of cereals, among other secrets.