Which Distribution Method is Right for Your Food Product?
With UK food and drink exports in excess of £22.6bn in 2018 and the figures released for H1 of 2019 showing a growth of 5.1% at 11.3bn, all indications are that British food and drink products are in high demand around the globe.
Are you considering exporting your food products? There are many things to consider when planning your route to market, and sometimes it can seem challenging to know where to start. In this blog, we look at the critical steps for preparing your outbound supply chain when it comes to which distribution options to examine when exporting.
“ When it comes to planning your supply chain logistics for your food exports one of the critical elements is deciding your route to market and how you are going to sell your products to consumers abroad”
Thomas Kuehn, Managing Director, WTA UK
What approach do you take, do you use a wholesale, Food distributor or go directly to a retailer?
Wholesaler: A wholesaler sells many different products, and your product would be part of their portfolio of products. Food wholesalers can also be industrial-scale grocery stores that cater specifically to restaurants and groceries, selling in bulk at wholesale prices.
Food Distributor: Food distributors deliver directly to retail food businesses as well as food wholesalers who will sell these products to retailers. Distributors offer their customers the convenience of delivery, although they usually require minimum orders to qualify for delivery.
Many distributors also provide for the customer to come and collect from their warehouses.
The advantage of working with either a wholesaler or a distributor is that they already have existing sales channels with general retailers in place.
They would buy larger quantities from you and would organise the stockholding in your chosen export location. The disadvantage is that they are in control of your final customers and also make a profit margin. They could also ask for exclusivity, which might restrict your future commercial strategies.
Retailer: Approaching retailers directly can be a long process. If this is your strategy, we would advise you to set up direct sales in the country you are looking to export to. The clear advantage here is that you are in control of your sales. However, you will have to ensure that reliable logistics processes are in place so that you can fulfil retailers requirements. Most retailers have different logistics requirements.
An alternative to the three options above is the e-commerce route to market, and this can sometimes be a more cost-effective option for smaller food manufacturers and for food manufacturers who don't necessarily want to deal with complex custom procedures and labelling complexities. An e-Commerce route to market is undoubtedly increasing in popularity for the China market.