Unlocking Profitability: Essentials of Trade Spend and Deductions for Growing Food Businesses

According to Neilsen, 72% of CPG trade spending in 2019 had a negative return on investment. Do you know how your own promotions are doing?

Our webinar with TrewUp was an exciting opportunity for CPG brands to learn from Kyle Barnholt, an expert in trade spending and promotions management. Check out our recap of the session to equip yourself with the tools and insights needed to make smarter, profit-driven decisions for your business. These resources can help you optimize trade spend, reduce unnecessary deductions, and ultimately drive sustainable growth for your brand.

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Unlocking Profitability: Essentials of Trade Spend and Deductions for Growing Food Businesses

Navigating the competitive landscape of consumer packaged goods (CPG) requires more than just great products. For food brands looking to scale, understanding trade spend and deductions is essential. Done right, these financial tools can drive growth and improve profitability. Done wrong, they can eat away at your margins. This article explores how to turn trade spend and deductions into a competitive advantage.

Understanding trade spend and deductions begins with clarity. Deductions, which include promotional allowances, logistics costs, chargebacks, or unauthorized discounts, are often a mix of legitimate business expenses and hidden inefficiencies. Without clear oversight, these deductions can compress margins, obscure operational issues, and lead to missed growth opportunities. Categorizing and analyzing these offsets is the first step to controlling their impact and reclaiming profitability.

Connecting Sales Data to Deductions

When it comes to trade spend, spend data alone only tells half the story. To truly understand performance and profitability, aligning sales data with spend data is crucial. By merging these data sets, brands can:

Why Connect your sales data to deductions? Image source: TrewUP.

• Reveal spend as a percentage of sales, providing insights into effective and ineffective strategies.

• Shift resources to retailers that are driving growth or currently underspent.

• Uncover inefficiencies and hidden costs that may otherwise go unnoticed.

This comprehensive perspective enables businesses to redeploy resources more strategically and make data-driven decisions that directly impact the bottom line.

From Deductions to Trade Spend Insights

Deductions aren’t just expenses—they’re a lens through which trade spend can be evaluated. By scrutinizing deductions, businesses can identify excessive spending, measure the ROI of promotional activities, and fine-tune allocation strategies. This analytical approach transforms deductions from a passive cost into a proactive tool for enhancing trade spend efficiency.

Turning Insights into Profitability

Armed with insights from aligned sales and spend data, businesses can take actionable steps to maximize profitability:

• Optimize Promotions: Prioritize activities with the highest ROI and eliminate underperforming initiatives.

• Strengthen Negotiations: Use data to validate deductions and secure better terms with retail partners.

• Adapt Quickly: Monitor trade spend performance in real-time and adjust strategies based on proven results.

Key strategies for MAXIMIZING profitability through trade spend insights. Image source: TrewUP.

Common Challenges in Trade Spend Management

Managing trade spend and deductions comes with its own set of challenges. These include lack of visibility, reliance on manual processes, complex retailer compliance requirements, and the constant pressure to maintain profitability. Tackling these obstacles requires not only a shift in mindset but also access to the right tools and insights.

Simplifying Complexity with TrewUp

Common challenges with Trade Spend & Deductions. Image source: TrewUP.

For brands seeking clarity and control, TrewUp offers a solution that simplifies the complex world of trade spend and deductions management. With automated data retrieval, streamlined reporting, and detailed insights into trade spend by retailer and distributor, TrewUp empowers businesses to make smarter, data-driven decisions. By turning financial complexity into actionable strategies, TrewUp helps brands protect their margins and fuel sustainable growth.

Unlock Your Brand’s Potential

Trade spend and deductions, when managed effectively, become powerful tools for growth. By combining detailed insights with strategic actions, your business can turn these challenges into opportunities for profitability. With the right systems and approach, the path to sustained success is within reach.

Ready to take the next step? Sign up for a Free Trade Spend Health Check today and discover how TrewUp can transform your approach to trade spend and deductions management.

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Author:

Kyle Barnholt is the Co-Founder and CEO of TrewUp, a platform transforming trade spend management and deductions processing for CPG brands. Before founding TrewUp, Kyle spent over a decade at Hain Celestial in roles spanning retailer HQ sales, distributor management, and leading national sales teams. He later transitioned to a General Manager role with full P&L responsibility, overseeing trade spend, profitability, and budgetary delivery.

Through these experiences, Kyle saw firsthand the challenges of managing trade spend and deductions across both large organizations and emerging brands. This inspired him to create TrewUp, equipping brands with the tools to simplify complex processes, optimize trade spend, and drive growth.

Check out our Recent Webinar: Alternative Finance Options for Funding Growth of a Food Business

What revenue milestones do I need to meet to unlock new sources of funding?

What type of financing fits my company's current stage and needs?

How do I leverage value from existing assets like my inventory to invest in my company?

After almost a decade of supporting food-related businesses, especially those that are scaling up from a small venture, Branchfood hears questions like this often. We know that having enough capital to invest in company growth is critical to scaling a successful business.

To answer these and similar questions, we invited five speakers from across the business financing ecosystem to share their insights. The panel represented diverse and unique models, ranging from crowdfunding, to credit cards with favorable terms, to loans repaid with future revenue. Each speaker shared details about their program requirements and terms, food business insights, and tips for diving into a new financing relationship. We also heard a short presentation on how best to match funding options with each stage of food business growth, from Branch Venture Group’s partner Marcia Hooper.

The speakers:

Jay is the Head of Sales at Flex, a Fintech company offering an all-in-one platform solution for businesses across various industries. Flex's mission is to empower CEOs and CFOs to run the finance operations of their business on one platform, saving operators countless hours every single month. Additionally, Flex offers a credit card with long-term payback options for growing businesses. 

Jacqueline Halber is the Philadelphia Manager at Honeycomb Credit, a community investment platform that empowers small businesses to grow by offering accessible and community-driven financing options. They have helped numerous food businesses scale through innovative funding that connects small businesses with local investors.

Susan Murray is the Executive Director of South Eastern Economic Development (SEED) Corporation, a mission-driven economic development organization serving Rhode Island and Southeastern Massachusetts. SEED’s mission is to promote economic growth and provide training, education, and equitable access to affordble capital to entrepreneurs seeking to start or grow a small business. SEED works independently or in conjunction with local financial institutions to provide below-market term loans and focuses on underserved individuals and markets.

Marcia Hooper currently serves as a Partner of Branch Venture Group, an angel investing network focused on food startups, food technology, business services for food-related companies, ag-tech, and sustainability. BVG’s multitude of portfolio companies is driving progress across the entire food system through strategic investments. 

Tor Trivers, CIO and Co-Founder of Pershing Ventures, focuses on providing flexible financing to underserved, private companies, making his expertise in private debt a key part of the customer's success story. Pershing Ventures offers non-dilutive growth capital which is based on revenue history and forecasted revenue growth and is repaid over time based on the amount of revenue generated in each period.

If you are interested in learning more about any of these options for your business, don’t hesitate to reach out to us. We have a decade of experience helping entrepreneurs like you build their businesses. Get in touch with us at info@branchfood.com for more information. 

Through the collaboration and support from Rhode Island Commerce Corporation, Branchfood has developed key resources for women and minority-founded food businesses scaling in Rhode Island including:

• Spanish translation of the Finance Webinar presentation deck

• Connections for Growth is our program to match entrepreneurs with trusted industry experts who can advise on their most pressing business needs and facilitate key partnerships to accelerate growth. Simply fill out the brief survey and we will connect you with the resources your business needs. 

• Get Ready to Grow, our food business growth toolkit has resources on expanding distribution, raising capital, and increasing production. 

• Assistance with the application to the Rhode Island DEDI certification program for women and minority-owned enterprises. Certified entities gain important visibility among national retailers and corporations seeking to meet their diversity procurement goals. 

• The new capital access grant program from Rhode Island Commerce Corporation, with grants up to $20,000 available to invest in growth for qualifying Rhode Island-based businesses. Reach out to karen@branchfood.com for more information. 

• One criterion for applying is completing 15 hours of technical assistance support from intermediary organizations such as Branchfood. This webinar and all technical assistance we provide will count towards those hours.

Keep up to date with Branchfood’s work and events by signing up for our newsletter, following us on LinkedIn, and attending our monthly Community Table. See more resources for Rhode Island entrepreneurs.

Read Lauren's Interview from the 6th Annual Industrializing Cultivated Meat & Seafood Summit

Following the highs of 2021 and 2022, the past 2 years have presented funding challenges for cultivated meat and seafood. Why are you still confident of its potential in the future of food?

“I am 100% confident that consumers will be eating, and enjoying, cultivated meat, and other cultivated foods, in the future.”

Push and pull forces are undeniable in the cultivated meat space and are necissitating change in how protein is manufactured. Though recent challenges in funding cultivated meat advancements are very real for pioneering companies, it doesn’t mean this method of protein production isn’t viable, scalable, or better, for a whole host of reasons.

The growing appetite for food that ensures environmental sustainability and agricultural land conversion, supports animal welfare, and reduces antibiotic use, are key priorities for governments, industry titans, and consumers alike. Food, agriculture, and climate change are inextricably linked, and not only is the sector one of the largest contributors to greenhouse gas emissions, but conversely, climate change will have a detrimental impact on food production in many regions of the world. Today, we have the technology and tools to produce food differently, more sustainably, more efficiently, and in ways that consumers are open to. Research has shown that consumers are willing to try novel proteins, and decades of behavioral science show that there is promising potential if the introduction of such proteins is done with care and consideration.

I am 100% confident that consumers will be eating, and enjoying, cultivated meat, and other cultivated foods, in the future. It is going to take time though, and perhaps longer than environmentalists or investors would like, for this new industry to reach a meaningful scale, but how exciting is it to watch a whole new sector in the food industry develop in our lifetime?

The Branchfood community can use code BRFICMS10 for 10% off ticket prices.

Do you feel there is a disconnect between food techs and investors? If so, how can this be overcome?

The global food industry is complex. There are aspects of it that are outdated and others that are incredibly efficient. Some processes make sense, while others are ripe for disruption. The whole system is intricately connected to ensure that food grown around the world makes it to consumers, who in many cases, live thousands of miles away from where that food was harvested or produced. Changing any one part of a $10 trillion industry built to serve the 8.1 billion people living on our planet today takes more than an idea and a minimum viable product. This complexity, scale, lack of certainty, special interests, and the pressure of time have resulted in a more complex path to success than the traditional venture capital investment community is used to, or comfortable with. We’ve found that developing a strong conviction in making an investment in foodtech requires as much knowledge of industry trends, technical advancements, and consumer psychology, as it does confidence in the capabilities of the founding team. Successful companies don’t just happen, they are built, and we’ve found that to ensure meaningful progress on the path to success for entrepreneurs and investors alike, both must be laser-focused on developing a strong value proposition, maintaining consistent communication, and being forthcoming with expectations.

From your perspective, what is the most commercially viable go-to-market strategy for cultivated meat and seafood products?

Longstanding behavioral science shows that people are skeptical, and even fearful, of new foods. Approaching the introduction of cultivated meat to the masses will take a multi-pronged strategy to ensure all stakeholders in the food supply chain are on board. From leveraging science and technology to ensure taste, texture, and mouthfeel are at parity with consumer expectations, to commuting the benefits of this method of protein production, and working with skilled marketers to address any consumer concerns will all be necessary.

A phased approach targeting high-end restaurants and specialty food markets initially can create a premium brand image and generate buzz. As production scales and costs decrease, brands might expand into retail and broader foodservice channels and partner with established food brands. The more companies that achieve market penetration, the greater the groundswell effect will be for the entire industry. At the end of the day, people need to just try it! Finding ways consumers can try it, even for free, will be critical to overcoming the barrier of purchasing for fear they won’t like it and their money will be wasted.

“Success of the cultivated meat and seafood industries will take a community, and I’m looking forward to meeting and collaborating with that community at the Summit.”

What is the benefit of investing in early-stage start-ups?

Investing in disruptive products, technologies, and services poised to transform the global food industry offers the potential for impact and significant returns to investors, particularly ones that invest at the company’s earliest phases of development. Early-stage startups often have the potential for rapid growth. If the company succeeds, early investors can see substantial returns on their investment, often much higher than more established companies. Investing in early-stage startups can also be a way to support innovation and new ideas.

This can be personally rewarding and align with the investor’s values or interests and we often see this among investors in our community. Despite the benefits, it's important to note the risks involved. Startups have a high failure rate, and it's possible to lose the entire investment. Therefore, it's crucial to conduct thorough due diligence and consider these investments as part of a diversified portfolio to ensure impact and a strong return on investment is reached.

What are you hoping to get out of the 6th Industrializing Cultivated Meat & Seafood Summit this August?

Success of the cultivated meat and seafood industries will take a community, and I’m looking forward to meeting and collaborating with that community at the Summit. This sector is evolving quickly and the event offers a great opportunity to hear about the latest technological developments, regulatory updates, and commercialization strategies companies are thinking about for the future. Also, as a Boston-industry enthusiast, I’m looking forward to speaking about, and hearing from, my local collaborators on their great work leading the future of cultivated protein.

See Lauren’s session details and the speaker list by downloading the full event guide. The Branchfood community can use code BRFICMS10 for 10% off regiatration.

Download the Toolkit for Rhode Island Entrepreneurs

Our Webinar, Sustainably Nourishing Tomorrow, Showcased Leading Sustainability Initiatives in the Food Industry

Who is successfully implementing sustainable practices in food? Challenges are inevitable, but how are companies overcoming them? These questions, and more, were answered in our recent webinar, Sustainably Nourishing Tomorrow: A Collaborative Approach for Global Impact. In collaboration with Greater Zurich Area, the Swiss business concierge for companies looking to grow internationally in the Greater Zurich region, Branchfood brought together industry experts for conversations about the future of packaging, sustainability metrics, and creating sustainable consumer products. Annette Herz, strategic advisor at Branchfood and moderator for the webinar, spoke with Stefanie Guyer about why Greater Zurich offers an ideal environment for innovation-focused companies that prioritize collaboration between research institutions and the private sector.

Syntegon’s paper-based barrier packaging and SIG’s carton bottle

Gavin Steiner, Chief Technology Officer at SIG Group, a leading packaging solutions provider, and Stephan Schuele, Head of Product Management at Syntegon, a pioneering processing and packaging technology company, discussed how using monomaterials, meaning only one type of material in packaging, can enhance sustainability. During disposal, packages made of a single material are much more likely to get recycled because of their higher value to recyclers. Consider the aluminum foil you probably have in your kitchen at home; it’s an important tool that can act as a barrier to light, oxygen and moisture. Fifteen years ago, most beverage cartons used aluminum foil as a lining. Though the amount of aluminum was small, in fact, the lining was 7x thinner than a piece of hair, says Gavin. SIG Group pioneered its removal to reduce cartons’ carbon footprints by 23%+. That’s not even accounting for the increased recycling rate of the cartons. 

Yamo’s cartons and pouches

Gavin and Stephan also discussed the future of the packaging industry agreeing that there’s no silver bullet, and that change will take time. Stephan discussed the current trend of “paperizing” all packaging. In his experience, paper packaging wrinkles easily, disrupting the product seal and can compromise the safety of the contents. Gavin was quick to agree that while consumers focus on the end of life of packaging, companies think more about maintaining the resiliency of the product in the food supply chain. Reducing food waste is the biggest benefit that sustainable packaging can offer, and one that can reduce carbon footprints. 

Two of Planted’s planted.chicken flavors

Tobias Gunzenhauser, founder and CEO of yamo noted that monomaterials were also used in their packaging. The company produces shelf stable baby food using high pressure pasteurization, so they needed a material that wasn’t breakable. Yamo uses monomaterial plastic, and though the higher recyclability rate is an advantage, a lighter product offers a reduced carbon footprint which is 70% lower than their competitors using glass jars. Planted, which makes plant-based meat from natural ingredients like soy protein, and bean and rice flour, sees sustainability as core to their product and brand. Planted Co-founder, Pascal Bieri, said that the best thing they can do is help flexitarians consume more plants. 

Planted, like yamo and SIG Group, are headquartered in Switzerland, a country well known for its environmental leadership and natural resource conservation. In 2023, the country voted to become carbon neutral by 2050 and the largest city, Zurich, ranks #8 in the Global Destination Sustainability Movement Index. The Swiss business ecosystem offers a resource-rich environment for sustainability-oriented companies to put down roots and boasts the most sustainable startups per capita of any country in the world. Further, the region is home to global leaders in the food industry and leads as a global talent hub.

Interested in learning more about the region’s network of innovators and how to join the ecosystem yourself? Reach out to Greater Zurich Area. They offer free consultation and support for companies interested in expansion. 

If you, or your company, are seeking deeper involvement in the dynamic and global Branchfood community, get involved! Signup for our newsletter, follow us on LinkedIn, and attend our monthly Community Table. For more information on our bespoke advisory services, or to speak directly with a member of our team, please reach out to info@branchfood.com.