As was announced via press releases from first Nalgene and then Peregrine Outfitters, Nalgene has chosen to sever its 18-year distribution agreement with Peregrine, effective March 5, 2008.
The decision by Nalgene comes on the heels of Peregrine agreeing to become the exclusive distributor of CamelBak bottles and hydration accessories (not packs) to the outdoor market.
Bob Olsen, president of Peregrine, told SNEWS® that he was very upfront with Nalgene during the entire negotiation process with CamelBak. While he realized Nalgene was not very happy with the prospect, at no point was there an indication, until recently, that the company would pull its business from Peregrine.
"We're certainly not happy, for either us or for our retail customers, that Nalgene decided to go in this direction because we chose to add a competing brand, but we certainly understand that this is a business decision and respect that decision," said Olsen.
"They (Nalgene) have been an important partner of ours for 18 years, and we will work with them to ensure our retail customers have access to all the Nalgene inventory they need in both our Williston, Vermont and Ogden, Utah, facilities until March 2008," added Olsen.
SNEWS® was told by both Olsen and CamelBak that at no time did CamelBak ask for or frankly want an exclusive distribution arrangement which would result in Peregrine having to choose between CamelBak or any number of other bottle companies, including Nalgene, Sigg, Nathan, etc.
While the decision by Nalgene does appear to be all about CamelBak, Eric Hansen, marketing manager for Nalgene, told us that this decision was by no means an easy one for Nalgene, nor was it made simply because of Peregrine choosing to add CamelBak to its business.
"Peregrine's decision to add competitive product was only part of the reasoning behind our ending the distribution agreement," said Hansen. "We are not looking to stand in anyone's way to better their business. However, it is a very competitive market right now, and we felt the decision we eventually made, after much debate, was the correct one for us to be able to sustain and grow our business."
Nalgene, which sells directly only to a select number of larger accounts, will not be looking to change its model of distribution anytime soon either, we were told. The company will be focusing on fully supporting its current distribution partners, which includes Adventure 16, Liberty Mountain and Equinox.
Retailers, who began emailing us following the April 9 announcements sent to dealers from Peregrine announcing the shift, wondered the logic in a move to distribute a product that any retailer, at least one who is an authorized dealer of CamelBak, can simply purchase directly from CamelBak.
Olsen has heard that one before, many times, and told us that many of the products his company carries can be purchased directly from the manufacturer, often for few pennies or even dollars less. It is the fact that a buyer can now place one order, and receive one shipment, among many other reasons, that makes using a distributor such as Peregrine a profitable alternative for a retailer.
As for CamelBak, Mac Tillman, vice president of marketing and product development for the company, told SNEWS® that while it was true any authorized dealer could purchase directly from the company, his reps were finding retailers were frequently out of bottles, simply because it had slipped their mind or because they were waiting to place a bottle order when they placed a bigger hydration pack order, to save time and shipping.
"We are moving from simply a pack-oriented business, which is a high-value item, to a pack and bottle business, and the smaller items require more muscle memory for retailers to keep front of mind," said Tillman. "We reached the decision to go to a distributor as most retailers find this method of refilling stock on the smaller items far more efficient."
SNEWS® View: Frankly, it is our view that Nalgene is taking a huge leap of faith with this move, trusting that retailers love and, more importantly, need the Nalgene products sufficiently that retailers will transition business currently with Peregrine to either Adventure 16, Liberty or Equinox. Peregrine, for its part, is trusting and expecting that the demand for CamelBak bottles, along with its other hydration accessories, will be sufficient to keep retailers engaged with them and not jump ship to a distribution competitor.
The ones who will likely be the most affected, at least once Nalgene is no longer an order option from Peregrine, will be the retailers, many of whom told us that even if they keep part of their business housed with Peregrine, they need to keep Nalgene on their shelves, forcing them to look to set up new SKUs and manage another set of sales data, which just isn't a lot of fun. Even less so if, as a result of moving business from one distributor to another, it simply makes more sense to convert hundreds or even thousands of SKUs so orders still come from one place, not two.
Now, on another note, for those retailers who are (ooopsie) neglecting or forgetting to reorder their CamelBak bottles from CamelBak and ending up with empty shelves, you're leaving money on the table -- BIG time!!!! And there is no excuse for that, especially when every dollar and every percent you can eek out from selling high turn items count significantly to the bottom line. Tighten up your business gang…it is NOT that hard. If you need some tools, you might start with reading our SNEWS® Retail Merchandising Training 101 article on calculating and understanding turns by clicking here. And when you are done with that, we have a 10-part series in the Training Center full of buying and merchandise planning advice and tools. Enjoy and use them to good health and profit.