Once someone develops a fantastic idea for a food product and begins to manufacturer it, they have to figure out the best way to sell it. Although many food manufacturers often get their start working personally with different retailers and trying to convince them to sell the product, they quickly realize that a food distributor or a food broker might provide an incredible opportunity for growth.
Both food brokers and distributors can help manufacturers get their products on the shelves of retailers, but they go about it in different ways. Understanding these differences can help businesses make the best choice to build their organization.
What is a food distributor?
A food distributor works with product manufacturers to get their products to retail stores. They will generally buy the product in bulk and then sell their supply to the store themselves.
These organizations work to build relationships with retail establishments so that they have the network and connections that allow them to sell the products significantly easier than an independent food manufacturer. However, with distributors that manage numerous brands, smaller companies have to make sure that their business’s needs do not get overlooked.
Working with a food distributor does allow the food manufacturer to hand off many of their tasks, including delivering food to the retailer, taking requests and orders from the retailer, managing product returns, and overall managing the relationship with the retailer.
What is a food broker?
A food broker can also help manufacturers market and sell their products through retailers. A food broker will use their extensive network and relationships with various retailers to build selling opportunities for a food manufacturer. The broker will encourage retailers to sell the product and then typically charge a commission based on the products that get sold.
How to understand the differences between a food distributor and a food broker
The differences between a food distributor and a food broker can be difficult to see at first. Both help food manufacturers get their product out to retailers and help them manage many of the tasks associated with the relationship between retailers and the manufacturers.
However, the food distributor personally buys the product. They will purchase a certain amount of a given product at wholesale prices and then sell it themselves to retailers to make their profit. Since they purchase the product themselves directly, they handle more of the responsibilities involved with managing orders and inventory from the retailer.
The broker, however, does not buy products from you. Instead, they function in a sales role. They promote your product. This makes them more invested in the long term plan for your product. A plan that indicates more opportunities for growth also positions them to build their profit margins from your product.
For food manufacturing brands that want to work with professionals to encourage retail sales opportunities for their products, both food distributors and food brokers offer potential solutions. Understanding the differences between these two types of companies and how they work with retailers can help every food manufacturer make the decision that will work best for their organization.