You’ve been on the food market circuit for a while and perhaps even have a couple of local retailers stocking your products, but how do you grow your stockists and reach new retailers potentially hundreds of miles away? The time might be right for you to start talking to food and drink wholesale distributors.
Working with food and drink wholesale distributors can be an effective way to reach a wide network of retailers and can significantly aid your business growth. However, there are several things to bear in mind before you start.
Identifying the right wholesale distributors
Depending on whether your product is chilled, frozen or ambient may determine which wholesale distributors you can work with. Some will only deal with certain food types (i.e. wine or cheese) and some will cover nationwide whilst others cover a defined geographical area. Some food and drink wholesale distributors carry upwards of 1000+ SKUs (stock keeping units) and some will be smaller, more specialist distributors focusing, for example, on selling artisan products to delis and farm shops.
Finding the right fit for your brand and, equally as importantly, you as an individual is absolutely key. It can be tempting to accept the first contract offered but listen to your instincts, if it doesn’t feel right it probably isn’t. Some wholesale distributors may insist on a period of exclusivity so getting the fit right is crucial. Do your research, find out which wholesale distributors could carry your product and then think carefully about how they could help you achieve your 1-3 year sales goals.
Are you the brand?
Sometimes a food or drink brand is synonymous with an individual (Levi Roots anyone?) who might be the founder, recipe creator or even the entire food or drink business. When selling your products through a distributor you will rarely be face-to-face with the retailer. Often, distributors have a network of sales agents nationwide who will present your brand, alongside potentially hundreds of others, to retailers.
If a key part of your brand is you, your personality, your heritage, your knowledge, you need to think carefully about how a third party can convey all of this on your behalf. Review your product packaging, any sales material you have, your website (if you have one) and all of your social media accounts to ensure your personality, ethos and vision is effectively communicated. Some wholesale distributors will welcome accompanied sales pitches to retailers, particularly for key accounts, so if this something you can support it’s worth discussing.
It’s all about the money
If you have been selling to a few local retailers directly you will be used to quoting them a trade (or buy in price) to which they will add on their margin to create the consumer (sell out) price. Working with a wholesale distributor adds a new element to the equation and the wholesale distributor margin needs to be accounted for. You need to have a really good handle on your cost price so you can calculate all the necessary margins:
COST / MANUFACTURING PRICE
WHOLESALER DISTRIBUTOR BUY IN PRICE
RETAILER BUY IN PRICE
SELL OUT PRICE / RRP
It is at the point of working with wholesale distributors that food and drink producers often upscale their production. As their margins are squeezed the output needs to increase to support the necessary growth in turnover.
Before approaching a wholesale distributor it is worth spending some time putting a simple sales presentation together covering:
- Your brand – it’s ethos, vision, purpose and aspirations
- USPs – any unique ingredients, flavour combinations or production methods
- Products and usage – clearly list all available products and consider including serving or recipe suggestions
- Pricing – depending on a wholesale distributor’s order quantity your pricing may vary but make sure you have some starting point calculations to discuss
You may want to consider producing point of sale (POS) material (i.e. shelf barkers, recipe cards) to help your products sell in store which your wholesale distributor can send out to retailers with their deliveries.
You should also note some wholesale distributors will charge a listing fee to start selling your products. They may also expect you to fund retailer promotions or ask you to place adverts in their catalogues so discuss this early on.
Wholesale distributors are likely to want to know most, or all, of the following:
- Minimum order quantity (MOQ)
- Lead time
- Product availability and seasonal fluctuations
- Other distributors you work with
- Any existing retail listings
- Future new product development (NPD)
- Accreditation and ingredient and product traceability
Beginning to work with wholesale distributors is a big step for any growing food or drink business. However, the potential nationwide sales could really catapult your brand, business and sales to the next level.
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