What is Trade Spend? How Australian Liquor Suppliers Calculate and Manage It

Q: What is a good trade spend percentage?

There is no single good percentage, as it varies widely depending on product category, margins and growth stage. In the consumer goods industry, trade spend typically accounts for 15% to 25% of gross revenue.

Learn how to calculate and manage trade spend in the Australian liquor industry. Discover the difference between working and non-working spend, and how to ditch spreadsheets.

Largest line item on a typical supplier P&L, behind cost of goods sold

15–25%

Typical trade spend as a share of gross revenue in consumer goods

1 day

Lost per banner group, every cycle, purely to spreadsheet assembly

Spend categories you must separate: working and non-working

The result of spreadsheet-based trade spend management is a constant cycle of end-of-month panic. Sales teams argue with finance over deductions, commercial managers struggle to calculate the true return on investment of a catalogue feature, and valuable time disappears reconciling scan data against withdrawal data.

To protect your margins and grow market share, you need to understand exactly what trade spend is, how to calculate it accurately, and why generic fast-moving consumer goods (FMCG) software often fails in the Australian liquor market.

Understanding trade spend in retail

At its core, trade spend is the financial investment a manufacturer or supplier makes to promote their products through retail channels. It is the money spent to incentivise retailers to stock your product, and to incentivise consumers to buy it.

In the liquor industry, this covers everything from funding a “two for $100” multi-buy deal at a local bottle shop, to paying for premium catalogue placement, to covering the cost of an end-cap display.

However, not all trade spend is created equal. To manage your budget effectively, you must categorise your spend into two distinct buckets: working and non-working spend.

Working vs non-working trade spend

Understanding the difference between these two categories is the first step toward optimising your promotional budget.

Working spend

Investments the shopper can see

Working trade spend refers to investments that directly influence consumer behaviour and are visible to the shopper. This is the money that actively drives volume and trial.

Temporary price reductions (TPRs) and discounts
Multi-buy or mix-and-match offers
Retailer catalogue and media advertising support
Preferential shelf placement or end-cap displays

Non-working spend

The cost of doing business

Non-working trade spend covers the operational costs of doing business with a retailer. These expenditures do not directly encourage a shopper to pick up your product, but they are often necessary to maintain the retail relationship.

Spoilage allowances and breakages
Administrative fees and data sharing costs
Slotting fees or "pay-to-stay" arrangements
Short shipment penalties

Working versus non-working trade spend at a glance
Spend category	Primary purpose	Visibility	Examples
Working spend	Drive consumer purchase and increase volume	High — visible to shopper	Discounts, catalogue features, in-store displays
Non-working spend	Maintain retail relationships and operational compliance	Low — behind the scenes	Spoilage allowances, admin fees, slotting fees

Scroll the table sideways to see all columns →

The unique challenge of the Australian liquor industry

If you search for advice on trade spend management, you will find countless articles written for massive, global consumer packaged goods (CPG) brands managing promotions across generic supermarkets. That advice rarely translates to the realities of the Australian beverage market.

The Australian liquor landscape is uniquely complex. Suppliers must navigate a highly concentrated duopoly alongside a fragmented network of independent banner groups. Managing promotions across Endeavour Group and Coles Liquor requires a vastly different approach than running a campaign through Australian Liquor Marketers (ALM) or Independent Liquor Group (ILG).

Furthermore, the data itself is complicated. Suppliers are constantly forced to reconcile scan data — what actually sold through the till — against withdrawal data, which is what left the wholesaler’s warehouse.

When you add complex supplier allowances, state-based pricing variations, and varying store compliance rates into the mix, generic trade promotion management (TPM) software simply cannot cope. Nor can it handle the reporting expectations of buying groups, whose members each want their own view of the same numbers.

The unique challenge of the Australian liquor industry

The foundational metric for evaluating your promotional investment is your trade rate. This calculation helps you benchmark your spending against your overall revenue, ensuring your promotional budget scales appropriately as sales fluctuate.

The standard formula

Trade Rate = Total Trade Spend Gross Sales

Quarterly trade spend: $150,000
Gross sales, same period: $1,000,000
Trade rate: 15%

For example, if your brand spends $150,000 on promotions, allowances, and displays in a quarter, and generates $1,000,000 in gross sales during that same period, your trade rate is 15%.

While the formula is simple, gathering accurate data to plug into it is notoriously difficult. If your sales team is tracking promotions in one spreadsheet, finance is tracking deductions in another, and marketing is holding the advertising budget in a third, calculating an accurate trade rate becomes a frustrating, manual exercise.

The hidden cost of spreadsheets

When trade spend is managed in spreadsheets, errors compound quickly.

Errors that compound

A missed formula or an outdated cell reference can distort your understanding of a promotion's profitability, leading to poor decisions in the next cycle.

Time you can't recover

Manual data entry drains your team's most valuable resource. By the time data is collated, cleaned, and analysed, the next promotional cycle has already begun.

A closed learning window

Once the next cycle starts, the window for learning and optimisation has closed. You repeat last quarter's mistakes because the answers arrive too late to act on.

Most liquor suppliers and buying groups are losing a full day per banner group, every single cycle, just to spreadsheet assembly.

The team at OnTap Data

That is time that should be spent negotiating better terms, analysing competitor activity, or building relationships with retail buyers.

How Promoflo transforms trade spend management

To break the cycle of manual reporting, you need a system purpose-built for the nuances of the Australian liquor market. This is where Promoflo changes the game.

Promoflo is a retail promotion management platform designed specifically for Australian liquor suppliers and buying groups. It replaces fragile spreadsheets with a secure, cloud-based single source of truth. When you manage your trade spend through Promoflo, you unlock immediate commercial advantages.

Real-time visibility

Any change to a promotional plan flows instantly through every report. View live volume data, target attainment, and year-on-year performance benchmarks in 30 seconds — rather than waiting days for a spreadsheet to be updated.

Automated compliance and ROI tracking

Promoflo tracks promotion performance across every cycle, automatically calculating store compliance and highlighting opportunities to lift participation. Measure promotional ROI with confidence, knowing the data is accurate and up to date.

Total team alignment

Because Promoflo acts as a single source of truth, your marketing, sales, and finance teams are always looking at the same numbers. This eliminates internal disputes over deductions and keeps everyone aligned on the cost and performance of every campaign.

Stop collecting data and start commanding it

Trade spend is too large of an investment to leave to guesswork and manual data entry. By understanding your working versus non-working spend, calculating your trade rate accurately, and moving away from outdated spreadsheets, you can turn your promotional budget into a true driver of profitable growth.

Stop rebuilding the same promotional spreadsheets every cycle. It is time to turn your beverage sales data into commercial intelligence you can actually use.

Frequently asked questions

The questions Australian liquor suppliers ask us most often about managing promotional investment.

What is the difference between trade spend and marketing spend?

Trade spend is directed at the retail channel to incentivise product stocking and consumer purchases at the point of sale — for example discounts and catalogue fees. Marketing spend is directed at the consumer to build broad brand awareness outside the store, such as television commercials and social media advertising.

How do you measure trade spend ROI?

To measure trade spend ROI, calculate the incremental gross profit generated by the promotion — actual sales minus baseline sales, multiplied by your margin — and divide it by the total cost of the promotion.

What is a good trade spend percentage?

There is no single “good” percentage, as it varies wildly depending on your product category, margins, and growth stage. However, in the consumer goods industry, trade spend typically accounts for 15% to 25% of gross revenue.