Companies looking to extend their brand into new markets but don’t have the specialty knowledge, staff or skill sets required may benefit from brand partnerships. While speaking at The NATSO Show 2013, Hank Suerth, chief executive officer of Orion Food Systems, told attendees partnerships can also benefit companies looking to increase their distribution, improve supply chain efficiencies and standardize brand and marketing programs. Effective brand partnerships can also give companies access to new product categories and generate traffic.
Suerth said true partnerships hold the potential to create additional economic value for both sides. “It is very important from the standpoint of a partnership to have mutual benefits,” Suerth explained. “It has to create economic benefit for both parties. Usually if you don’t have a win-win situation, those kind of relationships blow up over time.”
For a partnership to be effective, Suerth said companies should only partner with organizations that they believe they can trust because “the things you have to share can sometimes be very proprietary.” He also recommends companies entering into a partnership nail down their contacts. “People move on, the words on paper do not,” he said.
When drafting a partnership contract, Suerth suggests companies include reasonable escape clauses in the contract in key areas, such as support performance, radius restrictions, product quality and time period. However, he recommends they do not agree to potentially punitive performance clauses.
Suerth shared some of his real-world, successful brand partnership experiences with attendees, including partnership ventures, including several that he formed when servicing as senior vice president, business alliances for the Starbucks Coffee Company. For example, Starbucks grew brand partnerships with Pepsi for ready-to-drink beverages, Kraft for grocery and club-channel packaged coffee and Dreyer’s Starbucks branded super premium ice cream. Through the partnership with Kraft, Starbucks was able to increase its channel penetration increased from 25 percent more than 95 percent, lowered the per pound distribution costs and surpassed financial objectives.
Based on his experience, Suerth said he learned that objectives need to be aligned with upside for all partners. Suerth told attendees a business is affected by the brands that it offers and that a strong brand has enormous leverage with retailers who either covet the brand or need to maintain selling it.
Ultimately, both parties should focus on their strengths. “Do what you do best. Let other partners do what they do best,” he said.