The three main elements of specialty food distribution are product, price, and service, according to Chris Doering of European Imports. Doering and Beth Haley of DPI Specialty Foods spoke during an SFA Maker Prep webinar last week about how specialty food makers can engage and build their relationship with distributors.
“When I think about vendors partnering with my business, the first thing I think about is whether they have the right product size to engage all of our customers and clientele,” Doering said. Using Mike’s Hot Honey as an example, he explains how each of the company’s sizes (12-ounce bottles, 24-ounce bottles, 1 gallon bottles, and .75-ounce packets) corresponds to consumer, foodservice, and retail foodservice needs.
Since distributors look for products with a story, according to Doering, companies should answer the questions: Who makes the product? Where is it made? What makes it unique? Why was it created? Specifically, if a company is selling to foodservice, it should be able to outline the product’s portion size, it’s various applications, and how those can save the establishment time and money.
On the service side, expect to sell the product yourself, said Doering.
“Distribution does not automatically equal sales,” he said.
Use social media and trade shows to help get product awareness and support sales whenever possible, Doering suggested. In addition, develop point of sale materials that include the brand story, product pictures, portion costs, and what makes your product different.
Haley shared the two sides to distributor onboarding: vendor set up and item set up. To get set up as a vendor, there first needs to be a vendor agreement, which includes a statement of policies and expectations. Other forms to be submitted include the W-9 taxpayer ID form, certificate of liability, food safety documentation, and any other certifications (diversity, kosher, organic, etc.)
Setting up a product with a distributor requires a new item form, along with a price list, product and packaging specs, shipping points, and all of the product details including pack size, attributes, temperature requirements, shelf life information, and allergens.
To ensure success with a distributor partner, Haley recommended that makers understand the difference between costs for the distributor, retailer, and consumer. Distributor costs include freight administrative costs, retailer fees, promotions, and marketing fees. Costs for the retailer include the distributor margin to cover the cost to serve, and the consumer retail price includes the retailer’s margin as well.
“Be sure to have room in your margin to support both the distributor and retailer requirements while still maintaining a competitive retail price,” said Haley.
Other ways to succeed include offering compelling or timely promotions, participating in distributor and retailer ads or marketing events, and spending the time to educate the distributor, retailer, and the customer on your product and why it’s special.
“Work with us, not around us,” said Haley. “That way we can offer ourselves as a total solution to retailers.”
Click here to view the full recording.
Related: Funding Your Business: Working With Investors; How to Navigate Distributor Relationships.