The October number

The flags from yesterday are still up on the kiosks, and the sales team is looking at a good October number. The month is a week old and the order book already reads like a strong one: volume up on last year, distributors reordering early, the big pack going out faster than it did all summer.

I managed brands in Egypt through a currency that moved, and I learned to distrust that particular number before I learned anything else.

It is a currency position. In a currency that moves, the trade buys ahead of the price list rather than ahead of the customer. Every distributor and every wholesaler in Ataba knows a new price list is coming, because in Egypt one always is, so they fill the warehouse at the old price, sell through at the new one, and keep the difference. Nothing has left the shelf faster than it did in September. The number moved because the exchange rate did.

The report cannot tell the two apart. Sell-in is what the company invoiced, and it is the line in the monthly pack because it is the line the company can see. What the trade believes about the pound is folded into it and never shown separately, so a good month and a nervous distributor produce the same figure.

The danger is less that it flatters October than what gets built on it. The fourth-quarter consumer plan is being written this week on that number: a November promotion sized to demand that is sitting on pallets in a warehouse on the Ismailia road, a December launch pushed into a channel that already holds three months of stock.

The sell-in is a currency forecast wearing a sales report, and the consumer campaign planned on it arrives at a shelf that was decided in October, by a distributor reading the exchange rate.