In the food business when you are a small scale producer there are many. The financial ones are huge and you could write a book about that. So maybe I’ll do that one day .
I’ve decided to focus on distribution.
So, you have a product. It’s really, really, good. You start making this stuff, complying with all the health regs and packaging regs and you’re ready to go. You start by going to in person things like farmers markets and craft fairs and all that stuff. Maybe you get some attention by winning some international competitions. You’re in the newspapers. Maybe you’re even on the tv and radio. You have some local stores that are selling your products, but you want more. So, you go into some of the local chain stores and they give you some shelf space. Maybe you even get approached by a broker that can get you into 100 stores right now. You’re so excited that you almost poop your pants. It’s then that you need to make a big decision. You can get that volume. But you give up 25% of your wholesale price. I did it. For 5 or 6 years. At first, I was impressed by the marketing efforts. Local was huge and my stuff fit the bill. The big guys want to show support to us little guys. It looks good on them.
These are from a Loblaws store in North Vancouver. I wish I would have taken more pictures back then. I was really struck by a display in the entrance of the big Save-On store in Kamloops on a Fathers day weekend. It was basically a shrine of my products in the entrance of the store. That store was number 2 in volume in the entire chain. Lots of exposure. Maybe I took the picture but i don't have it now. Honeymoon stage I guess...haha.
Whole Foods West Vancouver was a really great account back then too. They built in a special display right in the middle of an aisle for my stuff that was dedicated only for that product. It was there for years.
All this time though the moms and pops that supported me from day one… well let’s just say they were not as impressed. My products were available everywhere. I lost accounts over this. I knew I had to do something, so I made some stuff only available to them. At the time I was still selling to the big guys but I’m trying to keep them happy. Turns out it was maybe the best business decision I ever made. I didn’t now it then though.
This is how it works. The chains steer you into selling to them through a broker. Why I’m not exactly sure but I think the reasons are less paperwork and less liability from an insurance standpoint. They only need to write one check instead of 50 and if someone eats a piece of glass or something there are more people to sue. However, I think it really comes down to money. The broker may have to pay for shelf space and listings. Grocery stores sell real estate on the shelf.
My situation is somewhat unique. I make every bottle by hand. Most local products being sold in chain stores are made by a co-packer and the producers are using this as a side hustle. And there is nothing wrong with that. They have a good recipe, and they have other things going on in their lives. More power to them. They are content with whatever they get. I know lots of producers in Canada and the US. I can count on one hand the ones that hand make everything. After a while I realized that giving up that 25% for me was stupid.That 25% was pure profit. I pulled out of all those deals. It felt like I was working for the broker. It was scary at first. But what happened after that was confirmation. The loyalists started to sell more. I have a more personable business. I work less for more in every way.
I suppose I am writing this now because my hometown store is no longer carrying my products. After 20 years. But this is what I know. They fought the good fight for me. Sales were very strong in that store for a town of 3000 people so that was not the issue. I'm sure they had been pressured to do something about this for a long time. They are a franchise store but they still have to comply with corporate guidelines. I wasn’t the only product discontinued. It’s just how things work. I thank the local management for doing what they could. No hard feelings. Once corporations get involved…well it really is all about the money.
So, if I could say anything to budding food producers, I would say this. Take care of the back yard. Bigger is not necessarily better.