When to Use a Consolidator, Distributor or Go It Alone

There are three major options when it comes to actually getting your products into stores: an Australian based consolidator, an in-market distributor or forging your own relationships directly with the retailers and food service outlets. Which is best, and why?

Many Australian-based companies have a direct relationship with a retailer. Cristina Talacko, Marketing and Product Development Director at SalDoce Fine Foods says every time SalDoce have successfully entered a new market it was because they went to a food show. ‘We made contacts either through government agencies who brought the pre-qualified buyers to us or directly with the buyers when the big supermarkets visited our stand,’ she said. It turns out that that is a very good way to test a market.

For those who are trying to gain access to those retailers and buyers without the relationships already established, employing the services of a distributor may prove fruitful. ‘Distributors often do presentations on behalf of their customers, or may allow you to accompany them on a visit to that specific retailer or buyer to meet them yourself,’ says Howard Hurwitz, Head of Export ANZ Cerebos.

While the service differs, one of the benefits of using a consolidator or export house is you will generally not have to pay listing fees or promotional costs, just a commission or smaller rebate. The distributor model will involve extra charges for the extra services. ‘Your distributor model will invariably involve higher costs associated with new line fees, promotional costs and support costs,’ Hurwitz said.

So how do you know which model suits you?

If your export volume is low (i.e. less than a container-load), consolidators are a great way to start, says Talacko but also acknowledges that their involvement adds cost to the value chain. ‘At they end of the day this part of the supply chain adds another layer to your price and you do have to do your research really well as to how it will affect the price when it reaches the shelves in the market you want,’ she said. ‘Many times, we realised that people loved our products, but the price was prohibitive. And then we realised that we had too many layers, too many people adding a percentage on our retail price. Ideally if you can form relationships directly with retailers, that is best.’

So perhaps the market entry question should not just be ‘which’ mode but also ‘when’? Weigh it up with what you want export to mean for your business and how well-resourced you are for your export journey before launching into new markets.