Food Broker Overview

Food Brokers
The basis for good food sales and successful distribution of your food product.

The Food Broker can be a great tool in the market planning and
development of growth for your products and company. This article
provides a framework for considering, discussing, contracting, and
hiring of food brokers.

© Tim Forrest 2011. All rights reserved Tim Forrest.com

A Whole Foods supplier and friend sent me an email
regarding a call from a Food Broker,

“He wants to broker my product.
I need some advice before I do anything.
I respect your opinion.
Thanks, Dick.”


What Food Brokers Provide
Personal contacts and established relationships with buyers
Specific expertise in select retailers or segments of food service
Market and Regional expertise with the ability to address local needs
Market Coverage with cost efficiency since they represent multiple manufacturers
Administrative support on forms and documentation required by accounts

The food broker can be a great tool used in your market planning and
growth of your product and company.


How
The food broker does this generally with an expert sales force that is local
representation and costs as a % of sales; commission

At some point, you might consider hiring your own experienced sales representative
when commissions far exceed the cost of the brokerage firm. But, you need to
consider carefully this option since the broker can provide many valuable services that
may not be available to your hired salesperson. Brokers can provide significant value
for your company.


Do you have a written
Marketing Plan?
First, you should consider your Market Plan and where you want to go and have the
ability to move forward with your company. What is your potential production volumes
for the coming three years and where do plan to offer these cases of product? Do you
have enough product to service all of the brokers market coverage area? Where does
the broker plan to take your product and how will this impact your product
distribution.

What are his plans and ask to receive a Market Introduction plan? It can be very
simple. Just a simple list of accounts and what action he plans to take with each
account and by what date. You can draw this up prior to meeting and then ask him
during the meeting questions and jot down the answers for creation of the market
plan. As a follow-up to the conversation, you type the list up and send your email on
what was discussed.

Send me a note if you desire an overall template to layout your product
market planning.


Broker Services
Services that brokers often supply to their manufacturing principals:
Merchandising
Paperwork required to present and sell items for an account
Planning promotions and understanding costs
Computerized space management
Distribution warehousing and understanding
Buy-sell programs
Electronic Data Interchange (EDI) and other computer support systems


What is EDI
Electronic Data Interchange (EDI) allows retailers and customers to transmit orders to
one central location. It also provides speed for the customer and gives the sales office
a record of the order and the ability to track deliveries for the warehouses. This
method of tracking allows sales monitoring by account and by territory against
budgets and marketing plans. Wholesale and retail pricing can be monitored and
reports can be provided on unit movement.

Click the link below for a listing of EDI companies if required for you to handle directly:

http://docs.google.com/Doc?id=ddrhb5vw_14dnbgfk


Food Broker Specialization
Food Brokers often specialize in geographical regions and with segments of retail:
Supermarkets and Grocery Stores: Chain and Independent Specialty / Gourmet Stores
Health / Natural Foods Stores Club Stores Mass Merchandisers: Drug / Department
Stores Convenience Stores Food Service: Business and Institutional, Chain and
Independent Restaurants Vending Military - Commissary and Troop Feeding Export
Internet and Mail Order Niche Stores and Gift Baskets Event Marketing - Large
Crowds, Home and Garden Show, Etc... that are considered best consumers for your
product.

Generally, the food broker does not handle all of these areas and you would be wise
to ask questions and seek to work with the appropriate multiple brokers. I have a
Retail Store Census for reviewing opportunities for your product outside the traditional
sources.


Brokers Relationships with
Customers
What account list does he provide to you for market coverage?
Headquarters call or field store visits on a regular basis?
What is a regular basis?

Corporate Offices coverage

Product presentations are made to chains and wholesale groups to achieve computer
listings and schedule promotions. More and more key buying decisions and centralized
listings are being made at regional headquarters. Visits to the head office ensures
direct feedback and co-ordination between the head office and retail accounts.
Brokers can also assist when working with an accounts accounting department.


Retail coverage

Follow-up at the store level includes regularly scheduled calls which range from every
four to eight weeks for rural locations, to once a week for major retail and wholesale
accounts in cities.

Activities at the store include building special displays, making sure the product is on
the shelf, adjusting shelf space, handling complaints, pulling damaged product, rushing
through an unplanned order, helping to plan a special promotion for a local team,
monitoring promotions and monitoring competitive activity.
In order to resolve problem situations, extra store visits may be necessary.


Working with your team at the
Broker
You have to get into a position of managing and working the relationship with your
broker. He will be informing you on competitive issues and marketing opportunities
within the respective accounts. Attempt to organize all of these opportunities in front
of the actual presentation to the retailer. You should understand the implications of
selling into any major account prior to the initial approach and sales meeting. Along
with the necessary forms and procedures, this is one of the valuable insights a broker
can provide. This requires discussion and analysis of the marketing programs and
costs associated with the retailer.


Promotions Available? Slotting?
Mandatory Price Reductions? Mandatory Fees?
Signage Costs? Shrinkage?
Display Costs? Reclamations?
Advertising Costs? Distribution Fees?
Mandatory Advertising/Marketing Other Fees?
Participation?

Evaluate several brokers. The strengths of a broker may include excellent headquarters
office contacts, retail market coverage, trade contacts, quality employees, market
knowledge, professionalism, aggressiveness and good communication skills.
Strengths are also related to "comfort level" which is a subjective judgement on your
part. Make sure the broker's market positioning is in line with your own planning
needs.

Carefully consider the information you gather. Then, make your final decision and
appoint your food broker.


Questions to ask
Who are the owners of the broker's firm and are there any immediate
management plans, ownership changes expected or impending mergers?

Who are the major principals?

By asking for a business and product portfolio, you will find out what products
they are carrying now, and if you will become one of six main lines or one of
sixty-six. You want to avoid a conflict of interest with existing products lines
when possible.

Who are the five or largest retailers and/or foodservice accounts he works
with?


Are there any items in the present product line that would be an advantage to
our line or provide an experience base?

Are there people in your broker organization familiar with my product
category? If so, what is their experience?

Who will handle your account and what is that person's background?

What accounts does that person have now?

What particular successes has he/she had in the last six months? This person
is often called an AE or Account Executive in larger firms.

What has been your best selling and merchandising performance in the last 12
months?


Collateral Materials for the
Broker
To get the results you expect, give the broker the tools needed to accomplish the job.
The broker will require training and sales support materials. For example, a show and
tell book will include product information, price lists and order forms. You have to
provide the brokers with the bells and whistles for sales presentations. The broker can
supply the forms for new item set-up.

Also, fact sheets can show photographs of the products and highlight the
specifications. Personal product sales training and a farm visit should also be
considered. You will need to provide the broker with a quota for sales or a similar
sales goal. Make sure you both agree on all targets.


Identify the criteria that will be used to measure performance. An annual review
should contain no surprises. If performance is not satisfactory, you may give the
broker notice for termination of services. It's likely that the broker will also have a
similar clause in the contract for your termination as a client if the product does not
perform according to plans.

Be realistic about your expectations. If your product will contribute 3 per cent of the
broker's income, you can't expect the broker to put 100 per cent of his time into
selling your product. Remember, the broker represents multiple principals. To get the
results that you want, provide ample lead time. Allow the broker to plan ahead for
market visits, new product launches, promotions, and meetings.


Download
Click below for Broker Dialogue Worksheet:

http://docs.google.com/Doc?id=ddrhb5vw_19dzjfwb

Click below to see my University of Nebraska Food Presentation

Food Broker Market Planning - University of Nebraska Food Presentation

View more presentations from TimothyForrest.


The Broker Will Consider Your
Product
The food broker will make a determination as to represent you or not after a quick
review of your product and discussion with you. He will consider the potential volume
and possible commissions. Also, he will consider how your product fits into his mix of
companies and what future value you will have to his company. Also, he will consider
his buyers needs and opinions of your companys product. He will also look at your
marketing program and the financial resources you will apply to the introduction and
growth of your products.

There is a tremendous amount of work and information for you to follow-up when
deciding on using and choosing a broker. Good luck and let me know any needs going
forward. I hope this helps with your process and this continues where our on-going
conversation on success with your products.


Monthly Updates and Ideas for
You
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incredible results from your Broker Network. This free approximately monthly
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with your national and international food broker growth.

Request a Consultation with Tim Forrest

What actions are you taking to grow your business?

Send a note or comments to Tim, also follow me on Twitter and see my retail
photo notebook. I want to hear about your success!


Food Broker Overview

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