- This topic is empty.
November 6, 2019 at 4:12 am #999861
I run my own home juice beverage business, and am trying to plan for future growth and scaling the business.
A bit of background, I launched my business 6 months ago, and door knocked/cold called my way into 20 stores- a mixture of cafes, gourmet grocery stores, and green grocers/fruit and veg stores across Melbourne. The most recent addition to the stockist list was an IGA which I’m still so over the moon about, and am now waiting for customer feedback and what the reorder rates will be like.
I’m at the stage where my current stockists are on regular fortnightly schedules for large orders, and I’m finding all my time is spent producing and self delivering, and there’s no more time to do further door knockings to land more stockists.
A few things currently on my mind- finding a commercial kitchen and deciding when the right time is to do that, or engaging a co-packer/bottling company to help me produce the drinks (in which case I won’t need to find a commercial kitchen if production is being outsourced), and finding a local distributor.
First question: I reached out to a distributor via email and they replied asking me to shoot through my pricing: distribution, wholesale and retail. This will be my first interaction with a distributor, so am cautious with my words and not blowing this opportunity. Of course, I will research them as part of my own due diligence, and seeing if they are a good fit for my brand and product, but I wanted to know if there is any advice on what to reveal with my pricing, and if it would be wise to lay all my cards on the table.
I know what the RRP is from my stockist, but I’m unsure if I should reveal my current wholesale price, as this would then set the starting price for negotiations. Should I then just tell them the RRP and set my distribution price, and let them establish their own wholesale price? Also, I take it the distributor could always go to any of my stockists and ask them what the wholesale price is, although I would like to think that my stockist would say that it’s none of their business.
I did a google search on what’s considered a ‘reasonable margin’ for ‘fast moving consumer goods’- distributor margin 15%-20%, and retailer margin 10%-40%. Any insight on this or advice on what is generally divulged to a distributor would be most appreciated!
Second question: If I am upfront with a distributor about my current production capacity and said I was in the process of getting a co-packer/bottling company, is it likely that they will work with me (suggest their network of manufacturers?) or will it just put them off thinking I am no where near distribution ready and I should get all my ducks in a row first?
Third question: If I engage a co-packer/ bottling company first before approaching a distributor, I’m unsure I’ll be able to meet their minimum requirements as I don’t know the distribution quantities. Also, does anyone know how bottling companies work with juices? At the moment, I am cold pressing raw ingredients from home and it has come to mind whether I will need to change the formula to be bottling/mass production friendly?
May also be relevant to mention that I have a unique product and is first to market, so I’d like to take advantage of this position and dominate the market before others who have much more business experience with the relevant networks join the playing field. I would post my website on here, but ironically, it is down at the moment- ironic as I am trying to grow the business, yet I am unable to engage a reliable hosting company to get my website up and running!
Sorry for the long post. Any advice on the above would be so helpful!
Cheers!November 6, 2019 at 4:42 am #1221637Jason RamageParticipant
- Total posts: 3,160
Have only skimmed across the majority of this post (no offence intended) although just wanted to address the supply issue you will have….
Once you engage a distributor, or even commence chatting, one of the key things aside from price is always your ability to produce the goods they will be selling.. If it takes off, and you can not replenish or supply enough stock to fulfil orders, this is not good for the distributor as it is their brand and work ethic that will be affected. As such, they tend to side with businesses that are ready to go.
Are you able to commence a chat with a production house to have ‘on call’ should a distributor want to come on? furthermore, without having a chat to this outsourced component of your business that sounds like it may be a necessity, how will you be setting your pricing without knowing what they will charge you?
It is important to have your prices all encompassing. Imagine you get the distributor on board and then you start queries with the production house and then also notice that you are off (in a bad way) by 10% on what you thought the costs would be? Not a nice thing to have to go back to the distributor and say ”oh, and by the way the price is increasing to xxxx as i forgot to allow for xxx”
Just food for thought, its a very interesting and very tough space… Local cafes may like it for its uniqueness or ’boutique’ style, which will be lost when going main stream and groceries may not like it as its not a branded item or advertised to encourage consumer uptake in the heavily dominated FMCG field. Not saying cant be done, just issues you must work through before you set a price with someone that can make or break you.
Let us know how you go, i will revisit the post to read it properly later – just wanted to add this before i forgot
JasonJason Ramage | Lucas Arthur Pty Ltd | E: firstname.lastname@example.org P: 61 3 8324 0344 M: 61 412 244 888November 6, 2019 at 10:02 am #1221638Paul – FS ConciergeModerator
- Total posts: 3,127
We have had similar posts to yours Aileen and we do have a “Search Forums” function so I am sure you would find some interesting info if you hit the search button.
Good luck.November 7, 2019 at 1:18 am #1221639Paul – FS Concierge, post: 267730, member: 78928 wrote:We have had similar posts to yours Aileen and we do have a “Search Forums” function so I am sure you would find some interesting info if you hit the search button.
Yes I had spent some time searching distribution and beverage distribution and did not find what I was looking for before posting a separate thread, which I know in hindsight should have also been in the ‘logistics’ category. oops. sorry.November 7, 2019 at 2:04 am #1221640Paul – FS ConciergeModerator
- Total posts: 3,127
Not at all [USER=101766]@Aileen Lam[/USER] .
If you search price or pricing or similar, you might get some background around what others have done to calculate price.November 7, 2019 at 2:27 am #1221641Paul – FS Concierge, post: 267736, member: 78928 wrote:Not at all [USER=101766]@Aileen Lam[/USER] .
If you search price or pricing or similar, you might get some background around what others have done to calculate price.
ahh cheerswill dig further.November 22, 2019 at 12:34 am #1221642businesstradeParticipant
Aileen Lam, post: 267726, member: 101766 wrote:I know what the RRP is from my stockist, but I’m unsure if I should reveal my current wholesale price, as this would then set the starting price for negotiations. Should I then just tell them the RRP and set my distribution price, and let them establish their own wholesale price? Also, I take it the distributor could always go to any of my stockists and ask them what the wholesale price is, although I would like to think that my stockist would say that it’s none of their business.
- Total posts: 210
I would avoid giving them too much information as that would weaken your position in terms of negotiating.
Disclaimer – I’m no expert on beverages, manufacturing or distribution and this is just my personal opinion.
Approach a few smaller manufacturers and find out if they will do smaller batches for you seeing as you’re relatively small scale. Ask them what it would cost to make X amount of bottles based on your specifications.
That would be my starting point. If the numbers are viable then re-evaluate your options.December 5, 2019 at 10:07 am #1221643MH08Member
- Total posts: 284
I recently sold my beverage and foodservice distribution off in Sydney back in 2017, with a turn over $15M and over 2000 lines in 2,500sqm warehouse.
I can tell you a fair bit about it, but I’ll tell you pointers now, I’ve seen many juicers like yourself and I’m close friends with pretty much every large distributor in each state, large enough to be sole state licence distributor of San Pellegrino for example because San Pell, the distributor has to buy $3 million per quarter, and I’m probably the only reason the Raw Sugar pump for baristas even exist in Melbourne including Coles today due to my contacts, I used to even transport their product for them. CostCo was acquiring San Pellegrino 500ML PET bottles from warehouse in Sydney supplied by a distributor in Melbourne nationwide.
Here’s some advice – push forward and be relentless – distribution is an old game with sharks that pretend their nemo fish all day when their not, the more professional you come across (counter-intuitively), the more will you’ll get knocked back for not coming off as experienced their’s actually a lingo in the game that’s how we know your experienced.
- Experienced Distributor will cross match pricing against current juice markets by simply phoning a friend once you’ve left the room if your price can’t give them 30% gross you won’t get a call back.
- If its highly perishable your level of success is close to 5% due to logistical nightmare it is, think Emma and Toms.
- Boutique Cafe’s tend to buy them I had a few cafes buying a fresh juice for $4.50 per unit and they were selling it for $7.00 let me tell you it lasted a month because people want to see the fruit being crushed infront of their eyes, no matter how much convincing its fresh in a jar they still won’t care.
- If you think for a second you’ll outsmart a distributor, we (they) all know each other, I used to bring in Lipton Tea from Adelaide cheaper then buying it from Nestle within Sydney.
- A distributor is never your friend at this current retail level they are all cutting each others throats at the moment, they do want something new but they want it for free.
- If the product is highly perishable they’ll want a rebate to have the product
- If the product can’t move at least 5 pallets per week for them, they will want the stock on consignment with 1 pallet mixed first.
- Retailers need to make at least 2.75 times the purchase price to survive today.
- Distributors anywhere between 30 to 50% margin depending how hard they bargain you down.
The list goes on but pretty much they’re the main points.
Best way, prepare a catalogue, hit the shops they’ll tell you who the distributors are contact them directly that their own shop wants your juice, it’s faster because they’ll think your taking a customer from them and probably range your juice. Essentially you’re acting as a ghost rep, if you’re in an area that’s highly concentrated by one distributor, ringing them and saying 10 of their shops want your juice, it will entice them.
Be careful with large grocers, I’ve seen so many companies go bust trying to reach Coles and Woolworths they have very strong contracts and essentially you become a slave to them. IGA’s are independent their not that bad.. Sorta, I have friends that have a few like Romeo’s for one.
Do the research and the hard work. Make the juice and store it in a make shift chiller at home and hit the streets, no one will order from a website because BidFood and others have companies like Ordermentum for a shop to do all it’s ordering through one app to their supplier. They will not visit your site to have you as another supplier and order like that because it’s too difficult.
I built my business purely from Sales, I had a website like 3 years later and I was turning over $7.5M by then.
- You must be logged in to reply to this topic.