FMCG distribution in Peru

In Peru, with over 250,000 mom and pop stores to cover, Coca Cola partners their bottling partner, the Lindley Group. Recently, a local discount competitor was cutting price dramatically and this put Coca Colas costs under close scrutiny. The Lindley Group outsourced its entire distribution function to 70 wholesalers with their lower cost base and a detailed understanding of micro market conditions. This move required close supervision, significant investment in IT applications and continuous training and support. For example, Lindley defined the sales routes, coached sales management techniques and assisted in the use of technology.

 

The Lindley Group has grown sales in the Peruvian mom and pop channel by an average of 10% per year since 2005 and has reduced distribution costs by more than 60%. Sales and distribution are no longer fixed costs for the company as payment is linked to results. [i]  It was the second time that Lindley had transformed the business model. The first time was when Coca Cola had arrived in the market and failed to beat Lindley at the distribution game into the informal market. Finally, in 1999, Coca Cola had to buy 50% of the Lindley Group for a reputed $300 million largely due to its understanding of the local market and especially how to access informal opportunities. The symbol of this success throughout has been their Inca Cola, a bright yellow concoction based on hierba luisa, lemon verbena. [ii]


[i] Forethought Section, Harvard Business Review, South Asia. (April 2008)

[ii] Inca Cola: The curious Peruvian Cola or the story of the little cola that could. (September 2006)

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
This entry was posted in Country in focus and tagged , . Bookmark the permalink.

3 Responses to FMCG distribution in Peru

  1. Sounds just a little high the number of Bodegas (Mum & Pup Stores). According to recent surveys, we have no more than 65,000 in Lima, and 35,000 in the rest of the country.

  2. robjbell says:

    Many thanks for this clarification. If there is anything that can be added to this perspective or, links to a Blog please advise and it will be included. Is there a Business School interested in linking with us? See the Blog Roll LSCM network. We are keen to add to the network.

  3. Indian FMCG major Dabur (www.dabur.com ) with interest in Oral care , Personal care is looking for distributor in Peru

    Would be of great help if you could introduce or give contact of FMCG distributors in Peru

    Regards

Leave a Reply

Your email address will not be published. Required fields are marked *

5e9kVx

Please type the text above: