Is your sales forecasting leaving money on the table?

Sales forecasting problems in beverage alcohol don’t always look like forecasting problems.

Imagine shipments are up 7%. On the surface, that’s good news. But a few months later, distributor inventory is high, the warehouse is filling up, and the next shipment forecast needs to come down.

What happened?

The shipment forecast may have been telling a different story than the depletion forecast.

That disconnect is worth paying attention to because, in BevAlc, shipments and depletions tell us two different things. Shipments measure what leaves the winery, distillery, or brewery and goes to the distributor. Depletions measure what distributors actually sell through to retailers and accounts.

Shipments may represent revenue today, but depletions provide an important signal of what the market is actually pulling.

When forecasts drift apart

At many beverage alcohol companies, depletion and shipment forecasts are built separately. Sales develops a depletion forecast based on what teams are seeing in their territories, while supply planning develops a shipment forecast to support production and inventory decisions.

When those forecasts aren’t systematically connected, they can gradually drift apart.

That can create downstream problems:

• Production may plan against shipment expectations that don’t reflect changing market demand.

• Inventory can build on SKUs that have slowed while faster-moving products become constrained.

• Finance may add buffers because confidence in the forecast is low.

• Sales teams can spend significant time updating forecasts without seeing how their input affects the broader plan.

The cost doesn’t necessarily appear on the P&L as a line called “forecasting error.” Instead, it can surface through excess inventory, emergency freight, margin pressure, missed targets, or missed opportunities.

The spreadsheet problem isn’t really about spreadsheets

Spreadsheets can be perfectly useful planning tools. The challenge begins when a collaborative forecasting process depends on emailing, merging, reconciling, and maintaining multiple versions of them.

If different teams are working from different versions of the forecast, determining which number is current becomes part of the job.

More importantly, by the time everything is consolidated, the underlying demand signal may have already changed.

A better forecasting process should make it easier for current market information to flow into the decisions that depend on it.

Three warning signs to watch

A quick check of your current forecasting process can reveal whether shipments and market demand are becoming disconnected:

1. Shipments are growing, but depletions aren’t keeping pace.
   That may indicate inventory is accumulating downstream rather than being pulled through by the market.

2. Shipment and depletion forecasts live in separate files or processes.
   If there’s no systematic connection between them, discrepancies can persist until they become inventory or revenue problems.

3. Sales, finance, and operations are planning against different numbers.
   Different functions will naturally look at demand from different perspectives. But the business ultimately needs a reconciled plan everyone can execute against.

From forecast to executable plan

The goal isn’t simply to produce a more accurate spreadsheet.

It’s to create a forecasting process where depletion expectations inform shipment requirements, inventory positions are considered, and sales, finance, and operations can work from a connected view of the plan.

When that happens, a forecast becomes more than a number to review at the end of the month. It becomes something the business can actually use to make production, inventory, financial, and sales decisions.

Want to go deeper?

This is just a starting point. In the full article, we take a closer look at how disconnected shipment and depletion forecasts can affect inventory, revenue, and planning decisions, along with practical ways beverage alcohol companies can build a more connected forecasting process.

Continue reading on the Claret website:
https://claret.app/blog/is-your-sales-forecasting-leaving-money-on-the-table

If you’d also like to estimate what improvements to your planning and forecasting processes could mean financially for your business, try our free ROI calculator:
https://claret.app/roi-calculator