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Food Sales and Marketing Industry

The Food Sales and Marketing industry, also know as the Food Brokerage industry, began primarily from the need of food manufacturers to service grocery stores. Food Brokers wrote orders in stores, rotated product for freshness, tagged shelves for product reorders, collected damaged product, and ensured correct retail pricing.

Food Sales and Marketing companies contract with manufacturers, on a commissioned basis, to essentially be their sales force. Presentations are made to direct buying chains and wholesalers to order product. FS&M companies receive orders from these customers and forward these orders to the manufacturers for fulfillment. In the process they ensure correct pricing and track delivery. Once delivered, the retail departments make store sales calls to effectively pull the product from the warehouses into the stores, and the process begins again. Key support services from the administrative department include processing billbacks, clearing deductions, and processing customer contracts. Marketing departments create fact based selling presentations and category management departments create retail shelf location fact based selling presentations.

The Food Sales & Marketing industry is experiencing the same challenges faced in most industries today, consolidation, reductions in force, revenue shrink, and constant change However, in spite of these challenges, the industry remains strong, and the services provided are cost effective to the manufacturers that employ this industry as a viable alternative to a direct sales force.

Consolidations continue to be a complicated issue, having a three dimensional perspective. Consolidations from manufacturers represented, from customers sold to, and from Sales & Marketing Companies themselves, exemplify the necessity to adapt. Cities that once supported around ten to fifteen separate Sales & Marketing Companies, merged into Market representation, then into Regional representation, and now National representation. Arguably, there are currently only four companies National in scope. These "Mega Sales & Marketing Companies" are aligning with Mega Manufacturers. This consolidation has caused the resurgence of Regional companies to service small and mid-size manufacturers that do not receive the attention they need, and pay for, to grow their business within the framework of the Mega National companies.

Profitability within the industry and revenue shrink, driving the reductions in force. The industry is notorious for accepting contracts where the cost of services rendered exceeds the revenue paid. Complicating this issue, many manufacturers continue to reduce commission rates as they consolidate markets. Primarily, this is a challenge within the Mega National companies. The newly created Regional companies, with few exceptions, are selective with who they represent, being cognizant of service vs. revenue and credit risk.

Changes are constant from both manufacturers and customers. A limited number of manufacturers now seek hybrid services, with some directly employing Business Development and Customer Managers while employing the Broker's Retail, Administrative, and Order-Entry services. Others may not require Retail or Marketing services. Obviously, menus of services and associated costs need to be created to satisfy this demand. Customers national in scope are moving more decision making from regional offices to corporate offices. Brokers need to respond by establishing corporate contact. Especially vulnerable are regional manufacturers that have little awareness at the corporate level.  

The future remains bright for those companies that continue to adapt and maintain constant awareness of profitability and cash flow. Success will depend on intimate local market knowledge, manufacturer awareness (defined as complete understanding of their vision, mission, philosophy, specific goals, and brand knowledge), effective administration, and a creative, optimistic go-to-market approach.









Regional Access Inc. 4655 Linglestown Road Harrisburg, PA 17112.

Phone: 717-657-5702 Fax: 717-657-7939