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Distribution and Sales
Distribution is the means of getting your product
into the hands of consumers. Although distribution
methods and strategies vary depending on the
individual company, its product, business plan and
target market, there are six basic ways to get
products distributed. These include:
• direct sales to the consumer
• direct sales to retailers
• direct sales to food service
• contracting with a distributor
• contracting with a broker
• co-packing for private labels
• industry trade shows
A key factor in developing your distribution plan is
the availability of your product. Because small
producers often are not equipped for large scale
production, they often begin by introducing their
product into a small geographic area. Your five-year
plan could call for you to introduce your product
locally, then expand the market to include the whole
region and ultimately make the product available
nationally. When developing this plan, consider your
potential customers, the shelf stability of your
product and shipping costs. Also consider using
brokers and distributors or filling orders by mail as
alternate ways of penetrating distant markets. You
probably will not be able to call on retailers and
distributors nationwide. Of course, if your product is
a regional specialty, you will have limited markets
beyond your home territory and may not be able to
expand to national distribution.
The growth of your production capability should not
be rushed. Do not overextend yourself by selling to
too many outlets, too soon. Grow the business
gradually so that you can fulfil orders in a timely
fashion, without straining your systems. Do not
contract with distributors, brokers or retailers until
you are confident you can fill your orders on time,
both now and in the near future.
Many new companies sell product directly to the
retailer. Competition for shelf space is fierce and
until you can demonstrate that your product will sell,
distributors and brokers may be skeptical about
trying your product. You need to make the rounds,
pitching your product to retailers at gift shops,
specialty food stores and retail locations. That is
another reason to introduce your product in a small
area at first.
Direct Sales to the
Consumer
There are several avenues available to companies
wanting to sell their products directly to the
consumer. Selling direct is suited to specialized
products or a small number of customers. While it
eliminates the middleman, the processor takes on
most of the marketing and distribution functions.
Companies can sell direct by using:
• farmers’ markets
• special events
• craft shows
• mail order
• the internet
Direct Sales to Retailers
The available markets for food products are
expanding. There are many more options and outlets
than in the past. Primary markets include specialty
food stores, independent and chain grocery stores,
delicatessens, bed and breakfast establishments,
kitchen and cookware stores, retail shops, gift shops,
gift basket businesses and buyers’ clubs. The
demand for shelf space is fierce, therefore marketing
programs geared to retailers and consumers are
critical.