“Bud Light should continue to suffer the consequences of its actions, and so should Brooks.”
Points of distribution are costly for a manufacturer to maintain, particularly when sales are falling. Suppliers in many product categories pay “slotting” allowances to essentially “rent” facings on the store shelf. As unit sales decline stores will reduce the facings for the declining product or demand significantly higher slotting allowances to maintain the number of facings. The number of facings in a store is a proxy for the strength of the brand.
No doubt major retail chains are being courted aggressively by Bud Light competitors with lucrative offers to obtain some of Bud Light’s facings. The same retail chains are demanding higher promotional funds and slotting allowances from AB to maintain the space. Each week Bud Light sales drop 25% the battle for its shelf space intensifies. If the boycott continues, and gains new supporters, the economic squeeze will become unbearable. Competition in free markets is a wonderful thing.
Excellent explanation. Thank you.