Food Broker Overview

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The food broker can be a great tool used in your market planning and growth of your product and company with the opportunity for substantial financial returns. This requires you 'selling' the food broker on the merits of your product prior to making the sale to customers. The broker develops local relationships while you manage sales opportunities in multiple national markets.

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Food Broker Overview

  1. 1. Food BrokersThe 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
  2. 2. A Whole Foods supplier and friend sent me an emailregarding 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.” © Tim Forrest 2011. All rights reserved Tim Forrest.com
  3. 3. What Food Brokers ProvidePersonal contacts and established relationships with buyersSpecific expertise in select retailers or segments of food serviceMarket and Regional expertise with the ability to address local needsMarket Coverage with cost efficiency since they represent multiple manufacturersAdministrative support on forms and documentation required by accountsThe food broker can be a great tool used in your market planning andgrowth of your product and company. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  4. 4. HowThe food broker does this generally with an expert sales force that is localrepresentation and costs as a % of sales; commissionAt some point, you might consider hiring your own experienced sales representativewhen commissions far exceed the cost of the brokerage firm. But, you need toconsider carefully this option since the broker can provide many valuable services thatmay not be available to your hired salesperson. Brokers can provide significant valuefor your company. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  5. 5. Do you have a writtenMarketing Plan?First, you should consider your Market Plan and where you want to go and have theability to move forward with your company. What is your potential production volumesfor the coming three years and where do plan to offer these cases of product? Do youhave enough product to service all of the brokers market coverage area? Where doesthe broker plan to take your product and how will this impact your productdistribution.What are his plans and ask to receive a Market Introduction plan? It can be verysimple. Just a simple list of accounts and what action he plans to take with eachaccount and by what date. You can draw this up prior to meeting and then ask himduring the meeting questions and jot down the answers for creation of the marketplan. As a follow-up to the conversation, you type the list up and send your email onwhat was discussed.Send me a note if you desire an overall template to layout your productmarket planning. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  6. 6. Broker ServicesServices that brokers often supply to their manufacturing principals:MerchandisingPaperwork required to present and sell items for an accountPlanning promotions and understanding costsComputerized space managementDistribution warehousing and understandingBuy-sell programsElectronic Data Interchange (EDI) and other computer support systems © Tim Forrest 2011. All rights reserved Tim Forrest.com
  7. 7. What is EDIElectronic Data Interchange (EDI) allows retailers and customers to transmit orders toone central location. It also provides speed for the customer and gives the sales officea record of the order and the ability to track deliveries for the warehouses. Thismethod of tracking allows sales monitoring by account and by territory againstbudgets and marketing plans. Wholesale and retail pricing can be monitored andreports 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 © Tim Forrest 2011. All rights reserved Tim Forrest.com
  8. 8. Food Broker SpecializationFood Brokers often specialize in geographical regions and with segments of retail:Supermarkets and Grocery Stores: Chain and Independent Specialty / Gourmet StoresHealth / Natural Foods Stores Club Stores Mass Merchandisers: Drug / DepartmentStores Convenience Stores Food Service: Business and Institutional, Chain andIndependent Restaurants Vending Military - Commissary and Troop Feeding ExportInternet and Mail Order Niche Stores and Gift Baskets Event Marketing - LargeCrowds, Home and Garden Show, Etc... that are considered best consumers for yourproduct.Generally, the food broker does not handle all of these areas and you would be wiseto ask questions and seek to work with the appropriate multiple brokers. I have aRetail Store Census for reviewing opportunities for your product outside the traditionalsources. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  9. 9. Brokers Relationships withCustomersWhat 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 coverageProduct presentations are made to chains and wholesale groups to achieve computerlistings and schedule promotions. More and more key buying decisions and centralizedlistings are being made at regional headquarters. Visits to the head office ensuresdirect feedback and co-ordination between the head office and retail accounts.Brokers can also assist when working with an accounts accounting department. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  10. 10. Retail coverageFollow-up at the store level includes regularly scheduled calls which range from everyfour to eight weeks for rural locations, to once a week for major retail and wholesaleaccounts in cities.Activities at the store include building special displays, making sure the product is onthe shelf, adjusting shelf space, handling complaints, pulling damaged product, rushingthrough 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. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  11. 11. Working with your team at theBrokerYou have to get into a position of managing and working the relationship with yourbroker. He will be informing you on competitive issues and marketing opportunitieswithin the respective accounts. Attempt to organize all of these opportunities in frontof the actual presentation to the retailer. You should understand the implications ofselling into any major account prior to the initial approach and sales meeting. Alongwith the necessary forms and procedures, this is one of the valuable insights a brokercan provide. This requires discussion and analysis of the marketing programs andcosts associated with the retailer. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  12. 12. 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 headquartersoffice contacts, retail market coverage, trade contacts, quality employees, marketknowledge, professionalism, aggressiveness and good communication skills.Strengths are also related to "comfort level" which is a subjective judgement on yourpart. Make sure the brokers market positioning is in line with your own planningneeds.Carefully consider the information you gather. Then, make your final decision andappoint your food broker. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  13. 13. Questions to askWho are the owners of the brokers firm and are there any immediatemanagement 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 productsthey are carrying now, and if you will become one of six main lines or one ofsixty-six. You want to avoid a conflict of interest with existing products lineswhen possible.Who are the five or largest retailers and/or foodservice accounts he workswith? © Tim Forrest 2011. All rights reserved Tim Forrest.com
  14. 14. Are there any items in the present product line that would be an advantage toour line or provide an experience base?Are there people in your broker organization familiar with my productcategory? If so, what is their experience?Who will handle your account and what is that persons background?What accounts does that person have now?What particular successes has he/she had in the last six months? This personis often called an AE or Account Executive in larger firms.What has been your best selling and merchandising performance in the last 12months? © Tim Forrest 2011. All rights reserved Tim Forrest.com
  15. 15. Collateral Materials for theBrokerTo 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 andtell book will include product information, price lists and order forms. You have toprovide the brokers with the bells and whistles for sales presentations. The broker cansupply the forms for new item set-up.Also, fact sheets can show photographs of the products and highlight thespecifications. Personal product sales training and a farm visit should also beconsidered. You will need to provide the broker with a quota for sales or a similarsales goal. Make sure you both agree on all targets. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  16. 16. Identify the criteria that will be used to measure performance. An annual reviewshould contain no surprises. If performance is not satisfactory, you may give thebroker notice for termination of services. Its likely that the broker will also have asimilar clause in the contract for your termination as a client if the product does notperform according to plans.Be realistic about your expectations. If your product will contribute 3 per cent of thebrokers income, you cant expect the broker to put 100 per cent of his time intoselling your product. Remember, the broker represents multiple principals. To get theresults that you want, provide ample lead time. Allow the broker to plan ahead formarket visits, new product launches, promotions, and meetings. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  17. 17. DownloadClick below for Broker Dialogue Worksheet:http://docs.google.com/Doc?id=ddrhb5vw_19dzjfwbClick below to see my University of Nebraska Food PresentationFood Broker Market Planning - University of Nebraska Food PresentationView more presentations from TimothyForrest. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  18. 18. The Broker Will Consider YourProductThe food broker will make a determination as to represent you or not after a quickreview of your product and discussion with you. He will consider the potential volumeand possible commissions. Also, he will consider how your product fits into his mix ofcompanies and what future value you will have to his company. Also, he will considerhis buyers needs and opinions of your companys product. He will also look at yourmarketing program and the financial resources you will apply to the introduction andgrowth of your products.There is a tremendous amount of work and information for you to follow-up whendeciding on using and choosing a broker. Good luck and let me know any needs goingforward. I hope this helps with your process and this continues where our on-goingconversation on success with your products. © Tim Forrest 2011. All rights reserved Tim Forrest.com
  19. 19. Monthly Updates and Ideas forYouPlease sign-up for the on-going updates, methods, and tecniques for receivingincredible results from your Broker Network. This free approximately monthlynewsletter will offer templates, success generating methods, and documents to assistwith your national and international food broker growth. Request a Consultation with Tim ForrestWhat actions are you taking to grow your business?Send a note or comments to Tim, also follow me on Twitter and see my retailphoto notebook. I want to hear about your success! © Tim Forrest 2011. All rights reserved Tim Forrest.com

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