A distributor’s perspective on distribution
We have been talking about the challenges of distribution for the last few weeks. The timing was great because I had the opportunity to have a conversation with Chris Parker, Sr VP Operations and IT at Tree of Life Canada last week in Winnipeg at the FCC Food and Beverage Summit. This was a great event hosted by FCC with over 275 people registered. Chris and I took the final 45 minutes on the agenda to discuss distribution and share some great insights with those in attendance.
First a bit about Tree of Life Canada-They are a leading distributor in the Canadian food and beverage industry. They are curators of unique brands bringing elevated food & beverage experiences to Canadians. Their mission is to be the "number-one growth partner" for brands in the food and
beverage sector. They aim to achieve this by offering a comprehensive suite of services designed to support the growth of food and beverage brands in the Canadian market.
The comprehensive suite of services includes:
- Distribution and logistics: The efficient movement of products from suppliers to retailers & foodservice sectors across Canada.
- Retail sales: A dedicated sales force that works to get brands onto store shelves and helps manage their presence in retail outlets and foodservice operators across Canada
- Brand development: Guidance and support to brands on purchasing, sales, logistics, and financing strategies, enabling them to grow effectively.
- Food service distribution: The only distributor in Canada offering a dedicated foodservice channel, allowing brands to reach restaurants, hospitality businesses, educational institutions, and more.
- Market insights: Data-driven insights and analysis to inform go-to-market strategies, helping brands make informed decisions.
Our conversation
We had a great discussion about the realities of distribution in the Canadian marketplace. It is not easy to service this market and with more pressure on cost of goods than ever, there is also more focus on the cost of distribution.
What a brand needs in place to approach a distributor
We know the distributor has the infrastructure in place to service the market. We discussed the capabilities the brand needs to have within their own business to approach a distributor.
It is important to have some proof of concept. The distributor wants to see that the product is on the shelf and performing. The distributor has the ability to grow the presence, but for small to medium sized brands, they need to illustrate the product does sell in the market.
Products need to be priced right. It is one thing to have an economic model that works with local distribution and a reputation in your own market. It is another thing to have a product that will sell at a price that includes distribution, sales and marketing costs to grow where consumers and customers do not know the product. Do your research to understand these costs so when you approach the distributor you can prove the product will sell with these costs included.
The commitment to create demand in every market. A great product is a given, there are so many great products out there. Brands need the commitment and the ability to do the sales and marketing and interact with the distributor’s team. You also need to be prepared to participate in trade shows to support the growth.
When you are working with a distributor, what you need to do
The best relationships are collaborative. A distributor like Tree of Life will meet with brands every quarter to discuss results, plans and trade spend. Some people think the distributor will do all of this work. They will execute and suggest but the brand still needs to drive the overall sales and marketing.
Focus on demand planning. The ability to forecast and produce the right amount of product is very important. We often focus on capacity which is crucial to be able to ‘ramp up’ as demand grows. The winners understand their sales and work with distributors to grow at the right pace. Producing too much product leads to challenges with inventory costs and possible BB date issues. You really need to have good ability within your business to forecast sales accurately and produce the right amount of product to support these sales.
Great execution within your own business. You have a partner to get the product to market and on the shelf. Consistency in product quality, finding efficiencies to allow you to keep cost right or even invest more in trade spend will pay dividends.
For emerging brands who want to grow what they should consider
Many brands start regional, even within 100km radius of your production. If you do want to grow, understand what is required in terms of pricing and other attributes to be across Canada. You might be regional for a period of time but plan for bigger. Find partners that fit your business as you grow.
Factors for brands to consider in growth
Work with partners based on your business needs
From regional to national footprint. As soon as you get bigger, simplify/consolidate your business distributor needs with someone who can help you scale
Explore different strategies on how to grow, know who you’re partnering with – understand their capabilities
There are different options for distribution as you grow, look at options especially when you want to go direct.
Trends in the industry to be aware of from Tree of Life trip to Europe
Pleasure – asserting itself as a key value, 75% of consumers expect to find pleasure in their food
Cost Pressure – cost of living crisis is affecting the food industry, 44% of have changed their spending habits due to the cost of living crisis
Community – togetherness is a fundamental ingredient to enjoying pleasure in food & coming together as a community, 40% of consumers enjoy cooking for themselves and for others
Caring – taking care of yourself involves eating well, 72% of consumers favour less processed foods, 65% are prepared to pay more for healthier products and caring for the planet is a rising consumer concern, 59% of consumers prefer fair-trade products
Deep Tech Future – online shopping and continual service improvement, e-commerce has has grown with a 15% share of the global CPG market
Really appreciate the insights from Chris during our conversation. He shared so much valuable information for brands and working with a distributor. It was a great event hosted by FCC and I appreciate the opportunity to be there.
Peter
SKUFood Recipes for Success Podcast
The response to our SKUFood Recipe for Success podcast has been great. We want to thank everyone who has been with us as a guest. So many interesting conversations about our industry.
With thirty-three years on the retail side, Eric has honed his skills in distribution center operations, health and safety, process improvement, and more. His diverse expertise spans from quality assurance to procurement, bringing a wealth of knowledge to the table.
But Eric's journey doesn't stop there. For seven years, he's lent his talents to the supplier side, excelling in sales and marketing roles. His contributions extend beyond individual companies, as he's actively involved in industry organizations like the CPMA and CFIA advisory board, where he's made a lasting impact.
Currently the Director of Sales and Business Development at Algoma Orchards, Canada's largest independent apple grower, Eric continues to shape the future of the produce industry.
Join us as Eric shares his insights, lessons learned, and the secrets to cultivating success in this ever-evolving field. Whether you're a seasoned professional or just starting out, this episode is sure to leave you with a recipe for success.
Building brand awareness and sales never stops
For those of you who have been receiving our SKUFood newsletter for a while know we keep an eye on the Oreo brand. We have lost count of the number of SKUS and opportunities Mondelez have introduced.
Last week at Costco we found the following items:
I do have travel coming up to Vancouver, Toronto and Lethbridge so if you want to connect or have an even in any of these locations give me a call or send me an email.
Excited to be participating in this series for N.S. businesses looking to export. Practical information from a variety of perspectives to support the export of N.S. food and beverage products.
Looking forward to the second Agri Food Innovation Expo. Last year there was a lot of great information shared with producers and processors in Red Deer. This year in Lethbridge the even promises to be even bigger.
