(27-10-2014, 06:00 PM)simpleman Wrote: [ -> ] (27-10-2014, 05:20 PM)chinafarmer Wrote: [ -> ]As stated in my first post, I am neither long nor short this loquat and my position is still the same as of now.
Chinafarmer
My questions are
(1) In 2011, Careffour and Walmart started selling Garden Fresh juice. If the juice is not selling well, will the two supermarket chains continue to carry the item for 4 years? (The shortseller has sighted the product in the supermarkets recnetly.)
(2) If Garden Fresh is not popular in China, why did Wellcome and 7-Eleven in Hong Kong agree to sell the juice?
Thank you if you can shed light.
From the press release regarding loquat entry into HK, i read that they secured a distributor(s?) to achieve penetration into Wellcome and 7 11.
You should check with the company if they pay slotting fees to the supermarket distributors and if so how much slotting fee they pay to them in order to have their product placed on their shelves. I do not know if the loquat has paid slotting fees. But if they have paid slotting fees to stay on the shelves then the assumption, that loquat drink sales must be good as supermarket chains have been selling them for years, must be met with skepticism.
In case you do not know about slotting fees, I suggest you try to understand the supermarket business model first.
http://en.m.wikipedia.org/wiki/Slotting_fee
Slotting fee
A slotting fee, slotting allowance,[1] pay-to-stay, or fixed trade spending[2] is a fee charged to produce companies or manufacturers by supermarket distributors (retailers) in order to have their product placed on their shelves.[3] The fee varies greatly depending on the product, manufacturer, and market conditions. For a new product, the initial slotting fee may be approximately $25,000 per item in a regional cluster of stores, but may be as high as $250,000 in high-demand markets.[4]
In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees.
According to an FTC study, the practice is "widespread" in the supermarket industry.[citation needed] Many grocers earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers. According to retailers, fees serve to efficiently allocate scarce retail shelf space, help balance the risk of new product failure between manufacturers and retailers, help manufacturers signal private information about potential success of new products, and serve to widen retail distribution for manufacturers by mitigating retail competition.[citation needed] Vendors charge that slotting fees are a move by the grocery industry to profit at their suppliers' expense.[citation needed]
Some companies argue that slotting fees are unethical as they create a barrier to entry for smaller businesses that do not have the cash flow to compete with large companies. The use of slotting fees can, in some instances, lead to abuse by retailers such as in the case where a bakery firm was asked for a six figure fee to carry its items for a specific period with no guarantee their products would be carried in future periods.[5]
The same practice is common on major bookstore chains in the US as well, as far back as the mid-nineties.[6]
In some countries, eg. in Poland slotting fees are illegal.
simpleman Wrote:Supermarkets carry thousands of items on their limited shelf space. They are therefore very selective and they would not carry any items just to recieve listing fees, promotional fees etc.
Items that are not selling well for sometime will be taken off the shelves.
As written in wikipedia, according to an FTC study, the practice of slotting fees is "widespread" in the supermarket industry. Many grocers earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers. In that respect, items not selling well may still remain on the shelves as long as the slotting fees are paid.
You really need to establish if the loquat had paid slotting fees to the supermarket distributors.