According to the latest food and agri-business report from IFAC, almost one in two sales for food businesses are delivered through direct sales.
And, no matter how good you think your product is, choosing the right route to market will be a key factor in determining how successful your food business is.
All business owners need to understand the current distribution landscape for their product.
This is according to the author of IFAC’s Food and AgriBusiness 2019 report, David Leydon, who spoke during the publication’s launch in Dublin’s city centre earlier this week.
David Leydon speaking during the launch of IFAC’s Food and AgriBusiness report 2019
He says that understanding the current “distribution landscape” for specific products is key.
“Business owners need to ask themselves: How are potential competitors selling their product?”
Leyden continued: “Other questions that need to be asked include: Do I have a novel product? What about industry experience or contacts in the branded retail sector that can help get store listings?”
Technology and consumers
Leydon went on to point out in the report that another factor to be considered is emerging technologies.
He also says that time-poor customers or changing value systems can impact on how consumers view and interact with certain routes to market.
Some food businesses will need to invest in upfront costs – e.g. websites and commerce capabilities.
Leydon added: “Other routes will require the ability to absorb longer payment terms so cash-flow management will be critical.
“It is also important to remember the fundamental needs of good value based on price and quality; availability of products in a timely manner so consumers don’t have to waste time; and good choice – all of these remain constant for consumers.”
Direct sales dominating
Meanwhile, the IFAC expert pointed to micro-businesses direct sales and how it is dominating the market at the present time (57%).
He does advise, however, that as all businesses grow – branded retail, private label retail and food service routes to market become much more important.
“Growing food businesses can benefit from this multi-channel strategy to de-risk their business from an over-reliance on one channel.
Also Read: ‘We need to try and find solutions together as opposed to tearing ourselves apart’“While direct sales are the most common route to market – the growing interest in private label is noteworthy.”