Working with a broker

Aron

I was recently approached by a gourmet food broker. She had heard good words from a few of her accounts about our firm and our ginger cocktail mix. She contacted us and wants to rep our product in her accounts. As with most business decisions there are pros and cons. I`m looking to the Nation to weigh in on the pro`s and con`s and provide advice when working with a broker (should the pro`s win). Pro`s: It`s a pay-for-performance sales person. No salary and no overhead. Broker has network of accounts and can get us in accounts faster than before. Con`s: Eats into our margin. Have never dealt with a broker so not sure of terms - length of contract, exclusivity clauses, payment terms. Do not want to be thought of as a "gourmet food." One final thought. Our plan calls for an internal sales team to build an account list then go to a distributor, hand over the accounts and use their sales team to grow. Can you hand over brokered accounts?

FormsGuy

Aron,
I have experience developing both a national network of food brokers for  company I once owned and later a beverage distributor network for a national bottled water company when bottled water first became popular.
As far as food brokers you need to limit their contract to a specific trade( for example institutional food distributors) and their territory. They always ask for more they they can handle. Also they tend to take products on and hope they catch on without doing much work.
As far as beverage distributor networks watch out for the beer distributors. They are use to selling beer which requires very little upfront sales although there are a few that do a good job with non-alcolic beverages.
I could go on and on, and would be glad to help. I need to know more about your product and plans.
Good Luck
Doug
 

smitten

What`s not to like about being a `gourmet` food? 
With that said, you could discuss a short term contract.  Make sure you give them enough time to work the territory though.  Distributors/brokers always give market leverage - many distributors prefer to work through brokers regardless of your internal structure.  They usually have their preferred relationships though. Check out the background of the broker courting you.
 

Aron

Doug,We are a non-alcoholic cocktail mix. Our flavor profile is a unique one - ginger. We plan to make our play on a simple principle. Premium spirits are the hottest trend in the alcohol industry. Right now there are no premium cocktail mixes in the on-premise. Stirrings is our primary competitor and they exist in the off-premise market only. I`d love to hear more about your dealings with brokers/distributors. I have much experience in the beer realm but little with wine/spirits. Do you know if brokers deal with the on-premise? Or are they strictly focused on off-premise retail? My gut tells me get a good distributor and you don`t need a broker. What do you think?

infinique

I think there's no harm in working with a broker as long as there are no pre-conditions and targets that are set. Also make sure that there are no compensation clauses.

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