% ACV Distribution

http://www.cpgdatainsights.com/distribution/2nd-most-important-part1/

You probably consider dollars the most important measure and it IS the bottom line.  But the number one driver of dollar sales is distribution.  After all, shoppers cannot buy something that’s not in the store!

Used properly, % ACV Distribution will give you the answer to crucial business questions like:

• Are there any retailers that are not carrying our #1 item?
• Are we meeting the distribution goals we set for our new product?  Which retailers are selling at least one of the new items?
• My broker is saying sales are down because we are losing distribution.  How can I tell if this is true?  What is really happening in the stores?

So what exactly does % ACV Distribution mean and how is it calculated?

% ACV Distribution is often just abbreviated “% ACV,” especially when talking about it verbally.  It can generally be thought of as “% of stores selling,” but with stores weighted based on their size.  In other words,  you get more credit for being in larger stores than in smaller ones.  The size of a store is based on annual sales of everything the store sells, called All Commodity Volume.  When Nielsen and IRI calculate ACV, they don’t count things like pharmacy, lottery, and gasoline since not all stores have those features.

% ACV Distribution is calculated as the dollar value of stores in which a product has scanned in a geography divided by the dollar value of all the stores in that geography.  Let’s repeat that:  A product must scan in a store for it to count as being in distribution there. If it is on the shelf but does not sell or it is supposed to be there but is out of stock, it doesn’t count as being in distribution. In this picture, this retailer is out of stock on several items.  Even though there are shelf tags for these items, in Nielsen and IRI, these products are not counted as “in distribution” because they won’t scan at the register.

Here is an example of how % ACV is calculated.  Let’s say Anytown USA is made up of 3 retailers, as follows:

	# of stores	ACV $	% of stores	% ACV $
Fun Foods	60	$200MM	30%	50%
Happy Grocery	40	$40MM	20%	10%
Smart Stores	100	$160MM	50%	40%
Total Anytown USA	200	$400MM	100%	100%

If Brand A has scanned in Fun Foods and Smart Stores, then it is in 80% of the stores (30+50), but has 90% ACV Distribution (50+40).

So just remember, % ACV is like % of stores selling but you get more credit for big stores than small ones.