Kline Analyzed U.S. Crop Protection Programs Available to Distributors, Retailers, and Growers in 2018
PARSIPPANY, NJ – February 7, 2019 – By program effectiveness, Corteva, Bayer, and BASF are the top three companies with the most distributors, according to Kline’s recently published report, Effectiveness of the U.S. Crop Protection Company Channel Incentives. Bayer ranks first in more of the horseshoe (specialty) markets while Corteva is more in the Midwest. Monsanto was also in the top three, but only with some distributors. Companies surveyed for the study were ranked by distributors and retailers who provided us with a ranking by the effectiveness of companies’ incentive programs.
Research-based manufacturing companies use several types of rewards or incentives to maintain or grow product sales. These include the traditional early order/stocking, prepay discounts, delivery allowances, inventory protection, and others, such as brand loyalty, pair or match up on multiple products, competitive allowances, corporate/national, goal achievement, or financing.
Suppliers included in the report are generic companies ADAMA and Albaugh, mid-majors Arysta and UPI, and research-based BASF, Bayer, Corteva, FMC, Monsanto, Syngenta, and Valent. Together, these companies represent an estimated 85% to 90% or about $9.3 billion of the total crop protection business in the United States.
FMC has historically ranked high with distribution and may well improve in the future with an expanded portfolio. Syngenta was in the bottom of the group of basic suppliers.
The mid-majors and generics were evaluated separately and were generally viewed positively based on the simplicity of no or limited programs. Some generic companies ranked higher than basics.
The average supplier program incentives in 2018 for distributors, retailers, and growers is estimated at just under 30% for the research-based companies and 27% when adding mid-majors and generic volumes. Program incentives are based on the maximum potential, not actual payouts, and are calculated at EDI sales value. The biggest rebates appear to be in the Midwest corn markets.
Within incentives, EDI reporting is generally a requirement of the major suppliers and is included in program payments. All major suppliers participate in all these programs; however, generic suppliers, such as Adama, target a minimum of programs - distributor at net price or private label, mainly off-patent products.
The insights and suggestions on programs from distributors and retailers show that distributors like the option to private label, a portion of off-patent product business. It is being offered by most suppliers and is best when supplier reps are not penalized for what goes in their market area. Most surveyed also included top loyalty programs that have realistic share goals in the top three programs. However, it becomes problematic when brand shares are so high that distributors are caught with concerns about losing business with their customers who want generic or lower price options. Blackbox or hidden rebate programs were the most disliked by those surveyed.
The objective of the Effectiveness of the U.S. Crop Protection Company Channel Incentives report is to provide a summary of crop protection programs available, an analysis of potential incentive information by product, and feedback about how channel partners implement an outlook for future programs under the current economic environment.
Program rewards and incentives information can be viewed by fungicide, herbicide, insecticide, plant growth regulator, nematicide, and seed treatment products. Private-label products are excluded from this report. The distributor list or estimated net pricing is provided in the summary of incentives by product.
Kline is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the agrochemicals, chemicals, materials, energy, life sciences, and consumer products industries for 60 years.