Page 74 - Drambuie case study

"In the past, Drambuie always looked at shipment

sales. If our distributor contracted for a certain number

of cases and hadn't sold all that stock, Drambuie would

say, well, you contracted for these cases. You better

take them. But all you are doing is stock loading to

achieve targets. The distributor is still going to have

unsold stock, so he is going to order less further down

the line. All you are doing is throwing away next year's

profit.” Ian Graham: Director of Finance

The solution was to examine stock depletion as this was a

far more accurate measure of distributor activity. The by-

product was that Drambuie could now separate trading

profit from operating profit which in turn meant that all the

incentives were now linked to case sales of Drambuie

worldwide.