What Makes a Food Product Easy to Buy, Sell and Distribute?
Making a great food product is hard.
But making a great product that is easy for someone else to buy, stock, sell and distribute is a different challenge.
As a food business grows beyond direct-to-consumer sales, more people become part of the process. Retailers need to stock the product. Distributors may need to warehouse and deliver it. Suppliers need to keep ingredients and packaging available. And through all of this, the producer still needs to make money.
The best products aren’t just good products. They’re products that work throughout the food production chain.
1. Be Consistent
A customer might forgive a cookie that’s slightly larger this week.
A retailer or distributor sees inconsistency differently.
Product size, package weight, recipe, labeling, case quantity and quality should be predictable. If a case is supposed to contain 12 six-ounce packages, everyone downstream should be able to count on that.
Consistency starts with a good production recipe and a repeatable production process.
2. Leave Enough Margin for Everyone
A product can sell well and still be a bad business.
Suppose a product costs $2.00 to produce and sells directly to consumers for $6.00. That might look terrific.
But what happens when a retailer wants to sell it for $6.00?
The producer can’t expect to receive the entire $6.00 anymore. And if a distributor is between the producer and retailer, another business needs to make money too.
Suddenly that $2.00 production cost becomes very important.
Before expanding into new sales channels, understand:
What does it really cost to make the product?
What price does the producer need?
What margin does the distributor need?
What margin does the retailer need?
What price will the consumer actually pay?
There needs to be room for everyone.
3. Be Reliable
Getting into a store is exciting.
Staying there is more important.
If a retailer successfully introduces customers to your product and then can’t get it for three weeks, you’ve created a problem for the retailer.
Growth requires looking ahead.
Do we have enough ingredients?
Enough packaging?
Enough production capacity?
How long does it take our suppliers to deliver?
How much finished inventory should we maintain?
Reliability doesn’t mean having huge amounts of inventory sitting around. It means understanding your production and supply chain well enough to know what you can promise — and then delivering it.
4. Understand Your Shelf Life
Shelf life is obviously a food safety and quality issue.
But it’s also a business issue.
Imagine two otherwise similar products. One has a 10-day refrigerated shelf life. The other has a 90-day shelf life.
Think about how differently those products can be produced, stored, transported and sold.
Shelf life affects production quantities, inventory levels, delivery frequency, distribution distance, retailer risk and ultimately food waste.
That doesn’t mean longer is always better.
It means you should know your shelf life rather than guess at it — and understand what it means for your business and everyone handling your product.
5. Make Your Product Easy to Understand
As a food business grows, people will start asking questions.
What’s in it?
What are the allergens?
What’s the shelf life?
How should it be stored?
What’s the UPC?
How many are in a case?
What’s the case cost?
What’s the lead time?
What’s the minimum order?
Which lot did this product come from?
Those shouldn’t be difficult questions to answer.
Good information makes a small producer easier to do business with. And that’s valuable whether you’re talking to a retailer, distributor, supplier or customer.
The Bigger Picture
Food production isn’t really a series of separate activities.
Recipes affect costs.
Costs affect pricing.
Pricing affects margins.
Shelf life affects inventory.
Inventory affects production.
Production depends on suppliers.
Distribution connects producers with retailers.
And ultimately, all of it affects the customer.
The better these pieces work together, the easier the business becomes to grow.
Want to Go Deeper?
We’ve been building the Otherfoods Kitchen The Otherfoods Kitchen Food Production Guide Food Production Guide as a practical resource for food businesses.
It covers many of the subjects behind the issues we discuss in this newsletter, including recipe costing, inventory management, shelf life, nutrition labels, lot tracing, food safety and more.
You don’t have to master everything at once.
Pick the area creating the biggest problem in your business today and start there.
Better food businesses are usually built through a lot of small improvements made consistently.
— Otherfoods Kitchen