November 5, 2011

What is ACV?

Years ago, my desk was one of three in the company with direct access to Nielsen Scan Data for a major packaged goods company. We used an index called ACV (All Commodity Volume) to examine and understand our products distribution in the marketplace. This number provided a benchmark to understand our success and performance in various chains. We sourced data from IRI/Nielsen as syndicated data.
All Commodity Volume Explained Tim Forrest
Our company’s product %ACV represented that portion of the overall market that our brand was scanning through the registers. ACV is weighted according to a chains overall sales and in relation to the overall market. If we marketed a sku in a retailer with the most traffic (Chain C.) it would reflect a greater %ACV than the same item in the smallest chain (Chain A). This helped us to be successful in the largest and most trafficked chains.

In the example above, ACV is equivalent to $600MM computed by adding the annual revenue of all four grocery store chain’s annual total revenue. Within the total market, Chain C represents 50% of the overall market with annual sales of $300 Million. If we only had one item in distribution in this Chain C then our ACV% would be 50%.

Focus on Your Market Area

You might think %ACV is for the big national and international food companies. You are wrong! The benefits they find working with ACV will work for your regional success. It is not fair to measure your distribution for your regional brands at the national level as it will cause them to look unfairly weak. Your success is in a particular market area and you can view %ACV in terms of your local or regional market, even city if your company is focused at that level.

For regional brands, compare %ACV at the regional level (NOT national level) where products are in distribution.

ACV is not an average of store locations, it is the percentage of exposure to consumer spending in the class of trade being reported for specific products and sku's during the time period covered by the report. ACV is far more meaningful than a straight percentage represented by store locations or chains. It quickly provides a comparative number for a variety of insights, understanding, and analysis of your success and sales. "Fishing where the fish are!”

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