Expansion into an omnichannel distribution strategy is happening faster and faster, especially when it comes to food and beverage brands within the broader CPG sector. More often than not, new brands are launching into retail channels only weeks after officially launching online.
We see this happening firsthand at Merchant Candy, with companies like Burlap & Barrel and 50 Hertz rapidly expanding their retail footprint to reach new customers that don’t purchase online.
After talking through retail expansion tactics that our customers rely on, we’ve aggregated three pieces of advice focused on emerging food and beverage brands.
To borrow from Kettle & Fire co-founder Justin Mares, DTC is an extremely useful channel for getting rapid feedback and test product, positioning, pricing, and branding. Once that feedback is integrated into your business, Justin recommends that founders hone in on distribution strategy: start small to prove your brand can win in local retail, then go national and scale up.
Once you’ve launched your online store and iterated on identifying customer pain points and key messaging that converts well, start to execute on retail and wholesale expansion close to home. Start by drafting a spreadsheet shortlist of local bodegas, independent grocers, boutique food stores, and restaurants that also sell separate product offerings.
Regarding the outreach process, either network to get a warm introduction to the store owner or send a direct cold email asking to find time for a call or ideally to meet in person, with product specs and sell sheets attached. In some cases, for example with local bodegas, you can show up during slower hours and bring samples, sell sheets, and packaging for an in-person demo.
It’s critical to spend real time with store owners, talking through what they’re looking for and what their needs are related to new product offering. In addition, it’s important to take into account what margins they’re looking to make while taking slotting fees into consideration.
In the case that your brand is operating in a crowded or saturated market segment, clearly outline and demonstrate your competitive advantages and key points of differentiation that make you stand out. The more quantitative data you have on online acquisition and growth the better.
Once you’ve established a growing foothold in independent retail stores and honed your pitch over time, start to leverage your network and focus on nurturing buyer relationships. This stage is critical in your omnichannel growth strategy, highlighting your brand’s ability to make the jump from small-scale outlets to mid-level retailers with larger consumer audiences.
This tier of mid-size retailers includes two tiers. The first consists of comparably smaller independent regional outlets like Erewhon in California (6 doors), Central Market in Texas, Wegmans in the Northeast (100 doors), and Fresh Market in the Southeast (161 doors).
The second tier consists of slightly larger retailers like Sprouts (364 doors), Fresh Market (159 doors), and Whole Foods (475 doors), which operates in a more decentralized region-specific style. As brands start to ramp up into the second tier and beyond, it’s critical that founders lean into broker networks, which we’ll dive into in the following section.
This phase of mass-market growth should be centered around getting access to pilot contracts with large-scale outlets like Walmart, Kroger, Albertsons, Target, Publix, Safeway, Sam’s Club, and Trader Joe’s. We chatted with SANS co-founder Nathan Gordon to dive into actionable tactics around engaging the right broker networks.
In the past, trade shows have been useful avenues to gain market exposure, however post-pandemic, low traffic has made these events less effective. Instead, to ramp national distribution, many brands have found success in deepening their partnerships with broker networks. Brokers essentially act as independent sales agents that work alongside brands to help negotiate sales with larger retailers on their behalf, often engaged in a retainer capacity paired with a negotiable percentage of topline sales revenue.
Broker networks like Green Spoon and The Stable rely on their long-standing relationships with mass-market retail, opening up channels for your brand directly to buyers. Some brokerages focus specifically on niche food and beverage categories (vegan, gluten-free, keto, paleo, etc) while others focus more on region-specific networks. The process of engaging a distinct broker is entirely dependent on your brand’s core value proposition and go-to-market sales strategy.
In these conversations, leverage your demonstrable wins in local and low-to-mid size retail to your advantage. If there are clear, quantitative measures of consumer adoption for your brand, mass-market brokers will be more likely to take you on as a client for national distribution. To hone in on what broker network might be right for your brand, actively seek feedback in digital food and beverage communities like Startup CPG and Indie CPG.