Frequently Asked Questions
What do I get when I join Food Brokers USA?
Your membership with Food Brokers USA give you access to 2 databases.
The Food Broker Database contains listings and full profiles of Food Brokers in all US marketing areas. Information includes the classes of trade they call on as well as categories and departments in which they specialize.
The Principals/Associates Database contains manufacturers seeking Food Broker Representation as well as those involved in the industry in other capacities.
You will also have access to valuable spreadsheets that will enable you to price your products properly based on frontloading ancillary marketing costs.
What is a Food Broker?
A Food Broker is an independent agent who acts on behalf of a manufacturer in selling and marketing the Manufacturer's Products.
Why would I use a Food Broker versus selling myself or hiring a salesman?
Food Brokers represent the most cost-efficient method of doing business. A salesman who is a direct employee is a fixed cost; a commission to a Food Broker is a variable cost tied directly to the volume being sold. It can be added as an exact figure to the cost of goods. Food Brokers also enjoy a close relationship with the accounts with which they do business. They understand the needs and goals of their accounts and build their programs around them. The familiarity of the Food Broker to the Trade adds more credibility to any line of products that the Food Broker is selling.
How much does a Food Broker charge for their services?
Typically, a commission of 5% is paid on Branded Products and 3% on Private Label (Store Brand) Products. General Merchandise and Health and Beauty Care products sometimes pay a larger commission. If a particular line of products has no present distribution, many manufacturers choose to pay a minimum monthly commission ranging between $1,000 and $2,500 for the first 6 months. This minimum is paid to compensate Brokers for time expended and out-of-pocket expenses in establishing a new product in the market while no regular commission is being collected. This is actually a wise investment because it obligates the broker to perform. With no revenue, any new product line becomes an afterthought and does not have the same consideration as revenue-producing lines.
How do I select a Food Broker?
The Food Broker you select should already be selling in the department your product is destined to be sold. Many Brokers tend to specialize in departments such as Frozen Food or Confection. To assign either of them a Deli Product would not be wise. Consideration should also be given to relative size of the manufacturer to the Food Broker. The Food Brokers capabilities should be in proportion to the level of revenue that a particular line of products pays. Interviewing a few potential Food Brokers will give a good feel for their differences. You might find that if your product has no present business, no Food Brokers will be interested in your line in the absence of a guaranteed minimum commission.
How long am I required to commit to a Food Broker?
It used to be that the industry operated on a 30-day contract; those days are over. Given the time and effort in launching and maintaining a line of products, most Food Brokers will insist on a one year minimum contract with automatic renewal based on satisfactory performance.
How quickly should I expect results?
Given the extraordinarily competitive environment, the time between assigning a Food Broker and actually getting an order is about 6 to 9 months. Getting appointments, presenting the products, product approval, and shelf resets have added greatly to the time line. Some buyers review categories only at specific times of the year; others have the added step of securing a distributor for the line of products before they can be presented to the trade.
How do I get started with a new product?
Many new manufacturers jump into the food business with a new idea or favorite recipe certain that they will capture the market. Unfortunately, many have little or no food marketing experience and are shocked to find the costs of going to market and the logistics involved. We highly recommend that you consult with a food broker to learn the realities of the business. Usually, for a consulting fee of $500.00 to $1,000.00, a food broker will walk you through the necessary steps including recommendations on labelling, case packs, targeted departments, pricing, positioning, and reasonable expectations. The "rags-to-riches" stories you might hear about successful new products are extremely rare versus the stories you do not hear about those doomed to failure due to a poor business plan.
Many have found our Retail Product Cost Scenario Sheet a revelation when calculating all of the ancillary costs of going to market. For instance, a product with an FOB Plant Cost of $1.00/unit becomes $3.39 at retail after marketing and distribution costs are front-loaded. This does not include advertising nor in-store demo costs that can also be front-loaded on the sheet that will drive the retail price over $4.00.
When I post my line on "Principals Seeking Brokers", what can I expect?
First of all, do not expect a flood of calls from brokers clammering to represent your line. Currently, there are over 1,700 Principals Seeking Brokers on the database ranging from startups to national brands. You must be very proactive in mining through the broker's database. Food Brokers get as many as 10 calls per week from potential principals.
You will find some who cannot represent your line because they represent a competitive product, or are simply too busy to handle new business. Others, as stated earlier, will not handle new product lines in the absence of a minimum commission. With patience and determination. you will find a broker to fill your niche. Most often, your potential broker will ask that you send samples and pricing before committing. Do not hesitate; this is the best method to spark interest in your product line.
Check List for New Manufacturers:
Supply plenty of samples for the broker to call on all of his accounts for presentations plus some for actual sampling
Be thorough with product information
Case Weight, Cube, Dimensions, Pallet Pattern, UPC Codes
Deivered and FOB Plant Pricing if applicable
Liability Insurance Certificate
Sell Sheets, Powerpoint Presentation
Electronic Product Images
Contact & Invoice Information
Be prepared to attend initial sales calls whenever possible; the broker provides access but you will be your product's best source of information