A tier-one FMCG manufacturer broke a one-year contract cycle with a global retailer, securing the first three-year framework with fixed guarantees materially reduced and incentives tied to performance.
The relationship had defaulted into a yearly cycle shaped by retailer leverage and supplier fatigue. The retailer operated one-year terms with all suppliers as standard practice, using the annual reset to extract incremental margin. The client wanted to break the pattern: secure term, reduce fixed commitments, and tie investment to outcomes rather than entitlement. An unexpected opening emerged when the retailer delivered a weak year — flat at best in some markets and declining in others. That shifted the conversation from entitlement to accountability.
The structural constraint was the retailer's standard practice across all suppliers. Breaking it required compelling reason. The path to sign-off involved an APAC-led initiative but required regional commercial leadership, global account leadership, and executive-level commercial authority. External advisory was kept at arm's length from internal stakeholder management. And the retailer's default ask remained unchanged: last year plus more, regardless of their own performance.
The conversation was reframed around a simple question: why pay incremental margin for declining results. This shifted the negotiation from entitlement to accountability. A three-year framework with laddered, performance-linked incentives was proposed, so fixed commitments would shrink and investment would track outcomes rather than operate on autopilot. Six months of strategy and scenario development preceded the actual negotiation, with weekly and sometimes daily sessions through execution. Internal stakeholder alignment was managed by the client sponsor through the approval chain rather than direct advisory involvement.
The first three-year contract in the relationship replaced the annual cycle. Fixed guaranteed payments were materially reduced. A performance-linked incentive structure was accepted — something previously considered impossible in this relationship. The client delivered on timeline despite complex internal approvals.
Most engagements started exactly like this one.