Nudie-Introduction:
Nudie, launched in 2003, has become number one juice brand in the grocery segment in Australian fruit juice drink market and one of the top 20 desired food and beverage brands in the Asian and Pacific Market. The company deals with exclusively fruit juices with no preservatives or concentrates. The popular coconut water was launched first by Nudie. It has recently launched 50% real fruit carbonated drink in the market (Monde Nissin, 2015). The company was acquired in 2015 by Monde Nissan Pyt Ltd. Monde Nissan has 4% estimated market share in the Fruit Juice Drink Industry.
The distribution channel can be physical or online. The term is used to describe the medium through which a product or group of various products is physically distributed from the point of manufacturing to the point of consumption or purchase (Dent, 2011, p. 45).
Distribution Channel Structure Alternatives:
There can be various alternatives for the distribution channels. The merger of the Nudie with Monde Nissin offers it the leverage of the economies of scale through wide distribution networks, and strong business relations with the wholesalers, retailers, and supermarkets. The selection of the distribution channel among the various alternatives depends on various factors. These factors include the product, the target market, the intermediaries, the company, the marketing environment, competition, customer preferences, and the compensation by channels (Kapoor & Kansal, 2003, p. 70).
Product: Fruit juice drink of Nudie is based on 100% fruit and no added preservatives and concentrates due to which it is required to not look for very long routes of distribution (Food and Drink Business, 2013).
Market: For the consumer market, like for Nudies, the retailer is essential, whereas, for the business market, which is also a part of the Nudies target market, retailers are eliminated. For the sale of food products, like for Nudies, wholesalers, and retailers both can be used.
Intermediaries: The intermediaries who provide advertising services can be given preference. Moreover, those who offer co-operation in marketing services are also preferred. The alternative intermediary generating large volume at lower unit cost is the one given top preference.
Customer Preferences: it is one of the most important factors. The whole point of distribution is to transfer the product to reach the customer. The reach of the customer is also dependent on their preference. The frequency of their purchase, their quantity of purchase, the location of their purchase, and the size of the bottle they prefer to purchase.
Compensation: This is another important factor for selection of channels. It involves the cost-benefit analysis. The distribution costs other than the compensation by distribution channels can be the warehousing costs, transportation costs, insurance, storage, handling personnel’s compensation, etc.
These all factors combined give the solution to a preferred alternative for the distribution channel.
Alternative Channel Structures:
The Channel Structure gives the procedure of transferring the product from the production point to the consumption or purchasing point. For this purpose, the target market of Nudie is important to understand.
Target Market:
- The market for a Nudie Fruit Juice Drink includes:
- Kids
- Teens
- Youth
- Working People
- Elderly People
- Housewives
Industrial Customers
- Travel Industry
- Railway Stations and Railways
- Local Transport Systems
- Movie Theaters, Malls, and Amusement Parks
- Hotels, Restaurants, Bars, Educational Institutes
The alternative channel structure is for the transferring of the product to the above points of purchase (Jones, 2013). Geographically, the company is now looking to expand in Australia, which is to expand and find distributors in Sydney (Edenexchange.com, 2015), and areas of Queensland, South Australia, Victoria which has more than 25% of the establishments (IBIS World, 2017).
Alternatives:
For any of the alternatives discussed below, the prime baseline is to consider the cost of distribution through that medium. If Nudie is reaching out to its customer through the highly intense network, but the cost is very high, and potential benefits are lower than it should not opt for it. However, if the benefits of opting for multiple intermediaries are higher than it is feasible to go for it.
Drug Stores:
Various drug stores also store fruit juices and drinks at their stores. Therefore, the company Nudie should also consider reaching out to various important drug stores in the region to target their potential customers in this region.
Gourmet Stores:
A gourmet store usually has dry groceries, fruit and soft drinks, and ready to eat gourmet food items. Nudie can consider this as one of its alternative distribution points. It can be targeted to reach the targeted market.
Club Stores:
Clubs are another niche market to which Nudie can look for distributing of its fruit juices. Club stores often have to store lots of ready to eat meals and a considerable supply of soft drinks and fruit juices for their club members. Thus, they represent an important niche and should be considered as an alternative partner for distribution to the target market (Medoza, 2010).
Vending, Food Chains, Institutions:
The vending machines throughout the region, various food chains, independent restaurants, and institutions like educational institutes, businesses, government institutes, and private office buildings can be considered in the distribution of the products of Nudie as it can reach out to an important and major part of the target market.
Supermarkets:
The supermarkets are the largest source of industry sales in fruit juice drinks industry. It has grown its share as share in revenue (52.8%) in the last five years. It stocks juice drinks, in different sizes, lines, and brands for its consumers (IBIS World, 2017).
Specialty Wholesalers:
This section accounts for another large chunk of fruit juice industry shares. These acquire products from manufacturers and sell it to the retailers, including in cinemas, stadiums, convenience stores, retail outlets, and in stations. Nudies has initiated its service through this medium.
Grocery Wholesalers:
Their share has fallen, but it can still be a medium for Nudie. Smaller supermarkets usually demand products from grocery wholesalers.
Retailers:
These make up a small portion of the Australian fruit juice industry but still substantial. The vending machines, street stalls, and stands, and small retailers account for these.
Online Medium:
Nudie can use electronic commerce to link with its customers directly, and send the producers directly via online purchase. It can become an important tool for not only reaching out to the customers directly, but also to build an online portal for its trusted distributors and wholesaler so that they can order their supplies online.
Alternative Channel Structures:
It is an assumption-based structure, which can use the various alternatives available for Nudie to reach its target market. The alternative distribution structures can be varied depending on the location and market targeted and the price that the manufacturer is willing to pay. With increasing number of intermediaries and distribution intensity, the price to the manufacturer would increase as well. The levels of intermediaries are however important for reaching out to the customer if not any other alternative is available. Moreover, the more the number of distributors the less is the risk for distributor monopoly. Any company should never depend on few distributors for their distributions as it would decrease their bargaining power and gives infinite power to the distributors. The various channels of distributors for Nudie can be:
1-Nudie to Online Medium to Customer:
Nudie can build its online medium stronger and sell its products directly to its customers after online order. However, for this medium, the online medium and online marketing have to be very strong. Moreover, this can further involve the addition of a distributor or can rely on direct sending of product to the customer from Nudie. For direct medium, Nudie has to have a strong courier service or can outsource to a courier service to send it to customers. The price of distribution of this medium is a more one-time investment as compared to other, as it only requires the building of good e-commerce website and courier service charges.
2-Nudie to Online Medium to Wholesalers/Retailers to Customers:
As mentioned above, Nudie can add a wholesaler or courier service to send the ordered product to the customers. However, there is also a possibility of using the online medium for the wholesalers and retailer. They can also order their supplies online and also keep track of their previous orders. It has been used by Coca-Cola Amatil for their distributors and wholesalers (IBIS World, 2017).
3-Nudie to Wholesaler to Customer:
It is one of the simplest distribution channel structures in which a wholesaler is employed to reach out to customers. The commission of wholesaler is usually 5% (Hall, 2000).
4-Nudie to Wholesaler to Supermarkets to Customer:
Another alternative is to use the wholesalers to reach out to the supermarkets which have access to the targeted customer regions. The two levels of intermediaries are used to reach out to the potential customers who have the buying pattern of shopping for Family packs of fruit juices at Supermarkets.
5-Nudie to Wholesaler to Wholesaler to Customer:
Another layer of the intermediary can add more to the cost for the Manufacturer; however, it is not always the case. There are many wholesalers who buy their wholesale supplies from the larger wholesalers rather than from the manufacturer directly to cater to the need of their buyers.
6-Nudie to Wholesaler to Retailer to Customer:
It is another traditional distribution structure through which wholesalers are provided with the Nudie supplies. Many small retailers shop at these wholesalers and offer it at their retail stores.
7-Nudie to Wholesaler Distributor to Retailer Customer:
In this alternative, the distribution intensity is higher with multiple layers of intermediaries. However, many wholesalers sell their supplies to the distributors, and these distributors get it to smaller retailers. Often the manufacturer also tries to reach small areas through this medium.
8-Nudie to Wholesaler Distributor to Customer:
These same distributors mentioned above can also sell directly to the customers through their employed salespersons making the distribution network more intense.
9-Nudie to Trading Company to Distributor to Wholesaler Customer:
Nudie can opt for giving its products selling the contract to a trading company also, who works as an intermediary between various buyers and sellers. These trading companies offer products to distributors, wholesalers, and retailers. The channel can include all the intermediaries or skip some reaching out to the customers directly.
10-Nudie to Trading Company to Trading Company to Wholesaler Customer:
Like mentioned above, there can be various routes for the product flow. A trading company can also sell to another trading company as per the demand for the product. And it can further flow to the wholesaler, and then to the customers.
11-Nudie to Grocery Wholesalers to Small Retailers to Customers:
Nudie should look for grocery wholesaler; however, their share has substantially declined in the previous years. Still, it can offer an alternative for the areas where there is not any other major wholesaler or distributor is present.
12-Nudie to Specialty Wholesalers to Small Retailers to Customers:
Specialty Wholesalers get higher commission usually at about 15% (Hall, 2000). These can be thus selected after a very detailed study of the market; they are offering to and its potential sales for the manufacturer. These can be used to get to small retailers, or stations, airports, businesses, intuitions, or directly to the customers.
References:
Dent, J., 2011. Distribution Channels: Understanding and Managing Channels to Market. 2nd ed. London: Kogan Page Publishers.
Edenexchange.com, 2015. 2 Nudie Juice Distribution Business – Sydney. [Online] Available at: http://www.beta.edenexchange.com/business-for-sale/4997/2-NUDIE-JUICE-DISTRIBUTION-BUSINESS-SYDNEY [Accessed 3 January 2018].
Food and Drink Business, 2013. A decade of Nudie. [Online] Available at: http://www.foodanddrinkbusiness.com.au/news/a-decade-of-nudie [Accessed 3 January 2018].
Hall, S.F., 2000. From Kitchen to Market: Selling Your Gourmet Food Specialty. Dearborn Trade Publishing.
IBIS World, 2017. Fruit Juice Drink Manufacturing in Australia: Market Research Report. [Online] Available at: https://www.ibisworld.com.au/industry-trends/market-research-reports/manufacturing/beverage-tobacco-product/fruit-juice-drink-manufacturing.html [Accessed 3 January 2018].
Jones, K., 2013. A decade of Nudie: Juice business Nudie has just turned 10. In a market saturated by big name brands, how has it survived? [Online] Available at: http://www.smh.com.au/small-business/startup/a-decade-of-nudie-20130610-2nzfc.html [Accessed 3 January 2018].
Kapoor, S.K. & Kansal, P., 2003. Basics Of Distribution Management: A Logistics Approach. PHI Learning Pvt Ltd.
Medoza, S.A., 2010. Selling Through Distributors.
Monde Nissin, 2015. Monde Nissin and Nudie Teams Up in Australia. [Online] Available at: https://www.mondenissin.com/news/title/monde-nissin-corporation-and-nudie-teams-up-in-australia [Accessed 3 January 2018].
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