Experts offer advice on placing value-added products in stores
By Kelli Boylen
You have a great product and you think you are ready to market it on a larger scale. Now what? Getting products to expanded markets was the focus of a panel discussion at the Feast Festival and Tradeshow held in Rochester, Minn. in November. Panelists included Sally Witham from Classic Provisions, Rhys Williams from Co-op Partners Warehouse, Dana Rogers who is an independent sales representative and broker, and, Nick McCann of Iowa Food Hub. They offered many suggestions to help farmers put their products into buyers’ hands.
Rogers suggested selling your product first at a farmers’ market, and then contacting local grocery stores to carry your product so you get direct feedback from consumers. “Get your product out there in front of people and continue to refine it,” she explained. “Build sales this way first.”
Witham emphasized the need for concrete feedback from current customers; distributors want to know that your products are tried and true, she added.
She pointed out that foodmakers also need to be prepared to take on the huge responsibility of ensuring their product is safe. It can be a good idea to have your product lab tested before marketing on a large scale, she added. Some universities, such as the University of Kansas, offer these services.
Once your product is selling well locally, it’s easier to expand your market. Rogers suggested working with a broker to get your product into grocery stores. “Brokers can help develop a list of stores interested in carrying a product,” she explained. A broker is an independent sales person or company providing sales and support for a number of brands or products.
Armed with a list of interested stores, you have a better chance of landing a distributor, Rogers said. A distributor obtains products from foodmakers, stores them in their warehouses, and fills orders and makes deliveries to stores. Generally, a supermarket or natural foods store will place weekly orders with a distributor. “We get things from one place to another and can help to establish sales,” Williams with Co-op Partners Warehouse said.
“If you think your product is ready for a distributor, make sure it is unique,” Rogers said. “Go to the store and look at the shelf and ask yourself, ‘If I were a person deciding what to buy if there are 30 different types of that product on the shelf, why would someone pay more for my product?’ Why should your product take another item from the shelf? There are no empty holes on the shelf waiting for your product,” she added. Unique features to consider focusing on may include being local, being organic, supporting a not-for-profit group or supporting pollinators.
Some distributors and brokers can help people get their products ready to market. Witham said her company, Classic Provisions, can help get labels and barcodes correct from the start, which can save a lot of money in the long run.
Co-op Partners Warehouse can help label a product that is starting out, too, but Williams suggested foodmakers go to the store and really look at the labels on the products there to figure out what they need on their own products. The panel also recommended checking with your state Department of Ag to be sure your label conforms to all state labeling laws. Labels usually include bar codes, weights, expiration dates and any information that will help the product to sell, such as being organic, locally sourced or family owned. Products made with organic ingredients need to follow specific rules to use the USDA Organic Seal. For details, see mosesorganic.org/whyorganic/organic-label.
The panel pointed out the different benefits you’ll get working with either a small or large distributor, and explained that small distributors can be a huge asset to those wanting to start out. Often, producers will find they need to work with more than one distributor.
“You have got to have your act together going in,” Williams said about preparing to work with a distributor. “I recommend choosing whether you want a national, regional, or strictly local distributor.” He suggested asking managers of stores where you’d like to sell your product who they recommend as a distributor.
The panel also encouraged farmers and foodmakers to make sure they price their product so they make a profit from it.
“Figure in the (cost) margin for the distributor from the get-go,” Witham said. “Track your time, mileage, and everything else that goes into self-distributing and add it into the price of your product.” She recommends 20 to 25 percent be built into the price for distribution costs.
“There can be a lot of untold costs when going in with a big distributor, and you have to be big enough to be ready for that,” she explained. Sometimes the distributor may run promos and specials and the foodmaker is expected to absorb that cost. Some distributors will split the cost, but in many cases the foodmaker is responsible.
Witham noted that even after securing a distributor, marketing for a product needs to keep moving as there is always a new product wanting to squeeze onto store shelves. She encouraged the use of in-store demos and continued advertising.
Small-scale producers often start off being their own sales rep, but as their business expands, they may not have the time to do the marketing themselves and not be large enough to hire their own sales person. That is where a broker can come into the picture.
“Smaller scale producers wear so many hats—they can’t do everything,” Rogers said. “Brokers can handle sales for you.”
Brokers can represent many manufacturers at a time, making it more efficient for a store to meet with a broker than individual foodmakers. Brokers are typically paid by retainer or by a contract based on a percentage of sales, Witham explained.
“When new products are really ready for market and have all the pieces ready to go, and they are looking at a really good response, a broker can look at the potential of it and say ‘yes, you will make money and I will represent you, the retailer will make money, the store will make money and it’s all going to work,’” Rogers added.
“The manufacturers themselves are their best salesman and they know the stories behind the products,” Williams said. “But if they want to be successful they really have to hustle. It takes a lot to get it done.”
Another avenue to explore when you think you’re ready for larger scale distribution is to work with a consultant. Todd Hoekstra of Launch Consulting (not part of the Feast panel) explained the pur-pose of consultants is to assist foodmakers with the organization, compliance and preparation of their product through to the grocery retailer’s shelf. Hoekstra said consultants can help with things such as basic cost accounting, packaging selection and sourcing, graphic design guidance and re-sources, labeling and label printing, FDA nutritional compliance and licensing, UPC generation and contract production resources. They can also help with choosing distributor partners, presenting your product to a grocery manager or buyer and understanding promotional activity at retail.
He agreed that focusing on what makes a product unique is the best way to make it stand out. “Also, depending on the item, it’s better to go to market with at least two products,” such as two different flavors of sauce, he said. “One single packaged unit by itself can get lost on the shelf.”
Some distributors also offer cross-docking programs that allow farmers to sell directly to stores with the distributor handling transportation for a fee. This can be a helpful way for foodmakers to get their products on store shelves and become established before they contract with a distributor.
Kelli Boylen is a freelance writer with an agricultural background. She lives with her family on a homestead in Iowa.
From the January | February 2015 Issue