The combination of CWD and Sales per Point can show a buyer that increasing exposure of your item to customers would lead to greater revenue gains than maintaining that same level of exposure for something with a lower velocity.
In the CMA dashboards, the measure “Dollar Sales per Point” is calculated by dividing a Brand Family, Brand, or SKU's total dollar sales by its points of CWD.
Dollar Sales per Point represents velocity. But, it doesn't simply divide total dollar sales by the percentage of stores where a product is selling. Rather, it divides total dollar sales by Category Weighted Distribution, which represents the level of availability/exposure to beer category customers in the selected geography).
It can be argued that Dollar Sales per Point looks at a product’s velocity in a more meaningful way than if it was merely dividing dollar sales by the percentage of physical locations the product is selling in.
Let's look at an example: say you're looking at a single geography which generated a total of $10 million in 26 weeks. Circana has determined that your 6pk of cider is selling in three stores which collectively generated $2 million out of the total $10 million of the geography's beer category revenue, meaning that your 6pk of cider has 20% CWD for that 26-week period. And, if that 6pk generated $15,000 in sales in that market during the 26-week period, its “Dollar Sales per Point of CWD” would be $750 ($15,000 / 20 = $750)
At the heart of this concept, we could ask, “what happens if the availability (CWD) for that 6pk gets doubled”? If a retailer doubled its availability (CWD) in their stores over the next 26 weeks, it’s reasonable to assume that its dollar sales would also double over that 26 week span.
This exemplifies how CWD is a better way to predict monetized outcomes than with a physical distribution percentage. It would be a mistake to assume that increasing an item's physical distribution from 3 to 6 stores would double the 6pk’s dollar sales, because the additional 3 locations it expanded into may not sell nearly as much beer as the 3 locations that it's already in. With CWD, we specify that a higher percentage means increased availability to the customers in that market who are buying beer category items.
If a buyer decides to add your 6pk in several locations which they know are generating a bulk of their beer category dollars, the 6pk's CWD will rise, and dollar sales should rise proportionally. Thus, increasing the CWD form 20% to 40% for an item which displays a higher Dollar Sales Per Point of CWD will logically produce a greater spike in revenue than continuing to give 40% availability to an item with lower Dollar Sales per Point and slower velocity.
This is how we can show a buyer that something which is selling more efficiently/with greater velocity could replace something which has demonstrated more sluggish sales (despite higher availability) and dramatically increase revenue if given the chance.