Predicting Market Influences
Changing the Tax Method in the Alcohol Industry
Background
The introduction of the tax reform in the alcohol market has shaken the cards in the local market.
The purpose of the change was to assimilate a uniform tax according to the concentration of alcohol, as distinct from the previous method of taxation, which was complicated, unclear and mainly intended to protect manufacturers in the local market.
The reform will create a new retail reality. Suddenly it will be worthwhile for a local liquor store to stand up and sell quality international produce at sane prices, and it was expected to have a significant market change, which has so far relied mainly on duty free products.
The mission
Forecasting structure and market size after implementation of the reform.
Understanding the variables that help retail sale of alcohol.
Execution
Forecasting projects are risky and complex projects because the range of error in predicting the future is enormous and the number of variables to consider is enormous.
We chose to attack the problem from two directions - from the field and from the world.
For about a month teams of the company from Jaffa about 80 retail outlets of alcohol and conducted a research forecast among buyers, near the shelf.
About 250 different variables that make up the alcoholic shopping experience have been analyzed and analyzed into 5 relevant indexes that explain "retail gravity" - the attractiveness of an alcohol store / shelf for buyers or simply what causes buyers to reach a particular alcohol store by type.
In addition, we ran an online questionnaire of about 1000 alcohol customers to validate the results of the field.
At the same time, we conducted extensive international research to understand how retailers sell alcohol in leading markets, and we have also identified three other countries in which similar tax changes have been made.
We have drained the international data along with the information we received from the local labor model into a prediction formula built from a 3-dimension donation - demand growth, retail improvement and the distribution of some duty free sales to local retailers.
The Results
The results we received amazed us and the customer.
The combined forecasting model succeeded in isolating and predicting, apart from practical variables for increasing sales, the alcohol store density variable in 5-7 years, which is one of the most accurate predictions of market volume and sales.
The forecast product reached Pai: a 3.14-fold increase in the density of stores to a defined area after the reform. Since retail growth occurs many times in a circular way, this product has profound significance.
In order to illustrate the accuracy of the model - if in the city of Ramat Hasharon in the center of the city there were 2 alcohol shops in the pre-reform. Today it has 6, which is an increase of X3.
In addition, the customer received a BEST PRACTICE knowledge and information system in alcohol retail around the world, as well as a simulator system for the game and market forecasting and profitability as reflected in the reform and forecasting products.
