Food Broker - Distributor Information Sheet
Is a broker or distributor right for your business?
If you are a food product manufacturer, establishing a partnership
with a broker or distributor can be key to your success. Brokers
and distributors link manufacturers to retailers. They can help
you sell your product - for a fee. The cost of making a broker or
distributor part of your team can be compared to the costs of maintaining
your own sales staff and consumer outlets, including salaries, travel
expenses, office operations and running a fleet of trucks.
Hiring a broker or distributor is not always necessary, especially
for larger companies with an established consumer base. However,
their services and contacts can give new or existing products an
extra push and can be a key component of your strategic marketing
What is a broker?
A broker (or agent) sells your product without taking ownership
of it. Brokers provide varying levels of sales and marketing services.
These services may include preparing a marketing plan, selling to
retail or foodservice outlets and head offices, promoting your product
to consumers, managing product categories, and invoicing.
- A pre-order broker or distributor may only deliver the product
and typically allows retailers to display and promote the product
as they choose.
- A full-service broker may deliver, display, stock and promote
your product. They may also manage the inventory of your product
and provide services to keep it looking fresh and appealing on
store shelves (dusted and labels facing front and so on).
Brokers can operate on salary, but usually operate on commission,
often representing a "stable" of small and medium-sized
businesses. Depending on the services provided, the average brokerage
commission in Canada can range from 5 to 20 per cent of sales.
What is a distributor?
A distributor (also known as a wholesaler) buys your product at
a discount from the retail price and resells it to other firms (such
as restaurants, specialty food retailers and gift stores) or to
their own internal chain stores.
George Weston Ltd. wholesales to its own Loblaw Companies Ltd.,
Ontario's largest food retailer. Wal-Mart is famous for its internal
distribution. Sysco is one of North America's largest foodservice
Distributors move large volumes of product, often with nation-wide
economies of scale, and they can be reluctant to carry slow-selling
or regional items. For these larger firms, small orders and partial
cases can slow down their automated order assembly times, adding
Companies using a distributor have three customers to satisfy -
the consumer who buys the individual item, the store and the distributor.
If you choose to hire a distribution partner, you must still persuade
retailers to stock your item and consumers to buy it.
Finding the right partner
It's essential to find a partner that fits with your business objectives,
as bigger is not always better, especially for smaller food firms.
Selecting this partner requires careful consideration and homework.
Here's how to get started:
- define your target market segment
- develop a strategic marketing plan
- develop a promotional and distribution plan that establishes
the services you must have and how much you are willing to spend
- shop around for a broker and/or a distributor that best meet
Talking to other people in the industry can yield valuable information
and insight for your search. Some tips:
- Contact manufacturers (and their trade associations) who are
already doing business with your target retailers. Ask their perspective
on what the retailers need from a broker or distributor. They
may be able to walk you through samples of typical paperwork,
such as electronic purchase orders.
- Join trade associations for the retailers you want to reach
- you can join as an associate member. Through these groups you
gain access to networks of suppliers. Ask other suppliers about
their views on specific brokerage or distribution firms - some
may also be keen on sharing such services with you.
- Ask your target retailers which distributor they use. Explain
that you want to make it easy for them to buy your product, if
they are interested in it.
- Attend shows selling to the retailers you want to reach and
walk the trade show floor to see which brokers and distributors
are active and making sales.
- Review reports on this topic from governments, non-government
organizations and industry trade associations and focus your efforts
by integrating relevant resources into your market research and
planning. See the list of resources below.
As you narrow your choices, consider taking the same steps to find
a broker or distributor that you would to find a reliable employee
or contractor. For example:
- Ask brokers to provide you with a list of their clients, and
which distributors, wholesalers and retail outlets they regularly
work with. Ask distributors which retailers they sell to and ensure
they fit your target market.
- Ask them to describe the volume they sell through each channel.
- Interview several brokers or distributors.
- Check for reliability, get quotes and don't assume anything!
distributors and self-distributing chains
Agricultural Information Network has prepared a report which
describes the broker structure in Canada including a listing of
brokers with offices in Ontario and/or Quebec.
and Foodservice Association
Careers in Grocery
list of primarily U.S. and some Canadian companies
of Restaurant and Fast Food Chains in Canada ($)
Canadian Grocer magazine
- "Who's Who in Grocery Retail" ($)
Note: $ sign indicates a fee-based resource