From Kitchen to Consumer: Getting into the Natural Foods Game

grocery store aisle how to find product distributors

Once a staple of farmer’s markets, natural and organic foods are increasingly finding their way into the mainstream, from your local Whole Foods to big box stores like Target and Walmart.  And the popularity of these items continues to grow : Forbes recently reported that “global sales of healthy food products are estimated to reach $1 trillion by 2017.” If you have a great natural product, you may be wondering how to get your goods into the hands (and mouths) of consumers? Getting into the natural foods business isn’t impossible, but you’ll need a team of pros to help you navigate the process. Here’s a look at the players you’ll want helping you make it in this game:

First up: Co-packers and manufacturers

Cooking up a batch of hot sauce in your kitchen is fine if you’re just supplying friends and family, but when you start selling to a bigger crowd, you’ll want to call in some backup. Making your own product can be costly and capital-intensive. There are safety issues, regulations, and control costs to consider. An outside manufacturer or packer can be a great addition to your team for several reasons. Their extensive knowledge of the industry can save you time, from helping formulate your product to sourcing ingredients. You won’t need to spend money on expensive manufacturing equipment and supplies, or the rental space to house them, because these guys are already set up. Manufacturers know the safety issues and regulations that must be followed when creating (required) safety labels and packaging of your product. Though they will take a small bite out of your margin, they will also allow your business to grow faster than going it alone. While you may not need to partner with a co packer immediately, they will become a key player down the line when it comes time to scale production.

Next at bat: Brokers/sales agents

Once you figure out how to manufacture your product, it’s time to get it out there. That’s when you need to call your brokers and sales agents in off the bench. These guys are the face of your team. They’re the ones in the trenches, representing your brand to retailers and distributors. They know what you want to do, and they know how to work the field. Brokers get your brand to retailers at product review sessions, ultimately getting your goods in front of consumers in the stores. Many brokers specialize in selling certain types of goods and likely already have useful connections that will help you bring your product to market faster than going it alone. While their services often come with a monthly retainer and a commission that will take an additional portion of your profits, the value they bring to your team is immense.

Now at the plate: Distributors

Once a retailer knows they want your product in their store, they will likely go through a distributor to order, so you’ll need these guys in your lineup, too. Distributors warehouse and move your goods. Like your broker, they represent your brand (and others). Retailers prefer working with distributors over individual owners because of the ease of access and ordering to get your product on their shelves. Distributors are responsible for 90% of the products you see in stores. United Natural Foods Inc. (UNFI) and  KeHe are the biggest distributors of natural foods products, providing the majority of natural foods found in most stores. There are a few things you’ll want to consider when choosing your distributor, location being one of the most important. You’ll pay to ship your product from your distributor to your retailer so make sure that you’ve picked a one in a location that will get you the most bang for your buck, keeping in mind that you’ll likely be adding additional retail locations down the line.

Batting cleanup: The retailer

Once you have everything else in place, it’s time to up your game. Choosing a retailer is important. You have options; make sure you explore them. Places like Whole Foods and Sprouts may seem like obvious choices for your natural food product, but maybe your goods would be better suited to a specialty store. It really depends on what you’re selling. Commodity products (think bread, milk, and cheese) can do well in conventional grocery stores, while specialty items like chutneys, oils, and jams might be better off in a higher-end specialty store.

As the popularity of natural and organic foods continues to grow, you might even go after the bigger box stores, like Target and Costco. These large chains have been increasing the number of natural products on their shelves in recent years, even creating their own lines in some cases.
In the natural foods game, it’s important to play smart. Have a clear strategy! Knowing where you want your product to end up will help you get there quicker. You need to know the players and the rules if you’re going to  get your goods out to the public. Be aware that certain products sell better through different channels. Going into the game with a plan means you’ll put together a dream team that will build your brand with you. Are you ready to play?

If you’d like some additional information about how to get into the natural products game, check out a recent webinar series we conducted with Bill Capsalis, president of Naturally Boulder and 20 year veteran of the natural foods business. You can get the recordings here.

2 Comments on “From Kitchen to Consumer: Getting into the Natural Foods Game”

  1. There is only one reason to attempt to get your product on the shelves of big box retailers, that reason is that you are trying to sell your company. When you go to big box you can expect terms to be 2% net never. You will not be paid timely and the margin compression will put you out of business.

  2. Pingback: Four Distribution Tips for Natural Products Entrepreneurs | P2Binvestor

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