‘Working Trade’ vs ‘Non-Working Trade’

Non-Working Trade

Essentially, by non-working trade, we refer to dollars that do not get to the consumer, do not drive targeted distribution, and do not drive repeat purchase.

Examples of Non-Working Trade

    • OI’s & the Resultant Forward Buying
    • Non-Targeted Slotting/Free Goods
    • Administrative Fees
    • Short Coded Buy Downs
    • Unauthorized Deductions That Need to be Repaid

Working Trade

Working Trade is targeted spending with retailers to drive growth, your brand franchise/equity, and represent dollars reflected at the consumer level.

How Can You Measure This?

While short-term results may be difficult to measure, retailer level case growth is a barometer. Longer-term consumption growth, reduced spending per case, and reduced slotting are key metrics. Also, spending can be evaluated and measured by ROI, ‘cost per incremental case’, and customer profitability longer term.

So When Do You Begin to Evaluate This?

It is important to note that these are not ‘big company’ approaches – companies under $10M address some or all of these areas when discussing working trade vs. non-working trade.

On-Demand Webinar - Working Trade vs Non-Working TradeNatural-Specialty Trade Spending Webinar (On-Demand)

Would you like to learn more about ‘Working Trade’ vs. ‘Non-Working Trade’? We have developed an educational webinar for CPG manufacturers in the natural-specialty segment, and invite you to join us at your convenience for this on-demand webinar. Feel free to reach out on LinkedIn to learn more about Adesso.

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What is Trade Spending or Trade Promotions?

 Trade Spending, or Trade Promotions, are expenditures paid directly by a manufacturer to the retailer or distributor within the Consumer Packaged Goods (CPG) industry.  However, the purpose of trade spending is to encourage promotion via discount, secure additional distribution and shelf space. Also, drive additional volume, form a percent discount from list price, an amount per unit, and it can be a fixed or lump-sum payment for merchandising provided by the retailer. In other words, trade spending or trade promotions is everything a brand spends in order to have their product put on a shelf.

Examples of Trade Promotions include:

  • Off Invoice Allowances
  • Slotting Allowances (‘Free Fills’)
  • Retailer Promotions (Scan-Downs, Ad Fees, Display Allowances, etc.)
  • Administrative Charges, Late Fees & Other Distributors Deduct
  • Manufacturer Charge-Backs (MCBs)
  • Short Coded, Pickups & Discontinued Product
  • Distributor Food Shows & Promotions
  • Performance Allowances
  • Case Purchase Allowances
  • Rebates