8 Facts about Food Brokers

Have you ever been excited to find out that one of your favourite small creators is selling a line of products in the grocery store? If you are a long-time fan, seeing them grow and reach new territories is exciting. However, getting those products into the grocery store probably wasn’t easy. Due to the process being rather complicated, they likely reached out to many for help.

Lack of experience and knowledge can hinder this process leading to unnecessary headaches and financial losses. Therefore, brands and creators call upon food brokers as a third party to help them sell their food products to grocery store distributors.

1. Food Brokers buy and sell things on behalf of other people

A food broker is an independent agent who facilitates transactions between food producers and buyers in the food industry. Brokers ensure that the transactions run smoothly and that each party has the necessary information. They do this by matching food producers with well-suited buyers and charging a fee for their service.

There is a famous saying, “It’s not what you know, it’s who you know,” and this couldn’t be more true for a broker. Brokers have diverse networks of people and will turn to them when figuring out the best pairing for their clients. The network also serves as a knowledge hub, giving them diverse information that helps brokers with food businesses. For example, if a client requires a particular ingredient for their product, the broker can additionally assist them in their search. They are that person in your friend group that seems to know everyone.

A food broker can be considered a part-time salesperson who supports the sale of a product. They negotiate prices and conditions for business transactions. Food brokers convince buyers to buy these products by demonstrating their potential success and projected growth. They also help with administrative tasks, such as invoicing companies after products have been purchased.

They may also assist clients in preparing long-term goals and marketing plans. Food brokers will help clients to determine the foundations of their products, how to position their product against other places as get clear on their objectives of where the food producer should take their product

Related: Understanding the value of brokers,distributors and consultants for food start-ups with Bernard Verkaaik, Founder/Operating Manager of the Greater Goods

2. Food Brokers have a rich knowledge of markets and regulations

A food broker is knowledgeable about food categories and markets. They can synthesize and adapt information from different sources for their clients. Food brokers know where to look for useful information such as trade publications, industry news and conversations they have in the industry. Having strong intellectual capital is what gives a food broker a competitive advantage.

An example of strong intellectual capital is when broker is familiar with who are the strong competitive player with a market segment. They know what makes these brands stand out and where a small business could fill in the gaps. Brokers also have access to knowledge to how well a product is performing in a category.

For instance, a food broker might recommend to their client that they first sell their mango cookies at a specialty Asian supermarket chain within a certain geographical region as this is more suited for their product style. Then when it proves popular they can expand out to the multinational level. Brokers are additionally knowledgeable about regulations such as those by the Safe Food for Canadians Act and Food and Drugs Act created by supermarket producers. That way if a client comes to the broker with a product that doesn’t hold up to these standards they can guide them along the way.

Overall, successful food brokers understand laws and regulations surrounding categories of food products their clients create.

3. Food Brokers have degrees in financial-related fields

There is no specific career path required to become a broker as a degree is not required for this profession. However, having a post-secondary education can help one stand out from the competition. It is common for food brokers to have a bachelor’s degree or college diploma in a financial-related field such as marketing, finance or business. Degrees in these fields will help brokers with their ability to negotiate with retailers on behalf of buyers. In contrast, what is unique about food brokers is that some may have post-secondary degrees in food science because it aids them in the understanding of food production processes.

4. Food Brokers negotiate contracts

Negotiating contracts is the cornerstone of every food broker’s job. Contract negotiations involve two or more parties discussing the terms of a contract to agree before signing and making it official. Additionally, contracts are everyday business transactions that detail what each party is legally responsible for. Examples of things that could be included in food industry contracts include:

• Provide X units by a specific date.
• A supermarket chain will sell X product on the third shelf for 10 weeks.
• The food producer will supply two different flavours with additional seasonal during the summer.

Working as a third party the food broker will always try to negotiate the best contracts in favour of all parties. The trick is to use strategic selling and negotiating skills that match all parties needs, strategies and opportunities. Contracts should always be realistic and minimize risk.

5. Food Brokers see the big picture

 A food broker’s job isn’t finished when a product is placed on a supermarket shelf. Many clients choose to continue their services with them well after that happens. Food brokers help producers grow their brand from a few supermarkets in a specific geographical region to across the country. Because they have helped other clients go through the process they know the steps required allowing them to see the big picture. Food brokers know it is important to plan, strategize and prepare for the next stages of scaling a business.

They help clients determine their sales goals and strategize for success. This includes educating clients on the importance of product placement in stores and having enough inventory to move products around.

On the flip side, they will also work on behalf of supermarkets. They will work with buyers to perform category reviews to determine if there are underperforming products that should be discounted. If a brand offers too many products, this can undermine the brand, and they may suggest cutting underperforming products.

6. Food Brokers help small businesses

For many new entrepreneurs in the food space, scaling their business may be difficult. Small business owners need to split their time between producing a product and selling it. Instead, brokers can work on selling the product and take care of the complexities of marketing. Their rich knowledge base can be used as an asset. Did you know that manufacturers pay retailers to appear on their own?

This can cost thousands of dollars, making it difficult for small businesses with smaller amounts of capital. Many new to the food industry likely don’t know how to navigate this. Food brokers are helpful for small businesses.

Additionally, they can act as a brand’s biggest cheerleader. If the product is on shaky grounds with supermarkets the broker can go to bat for the small business and negotiate what offers the store can run to boost sales and keep them on the shelf. Brokers are also beneficial to small business producers because some large retailers will not speak with smaller businesses but will with brokers. In many cases a broker may be the only way to make it into a store.

7. Food Brokers have rich networks

Brokers are only as good as their network. Having a strong network means that the brokers don’t need to perform cold calling because they can just pick up the phone and call someone they know. Individuals who become food brokers generally do not perform this as their first job after college. Instead, they have worked in the industry for many years and built connections. Using their close working relationship with stores they can get feedback about their clients including how well products are selling, the reaction of consumers to new and existing items, and current market trends, both locally and nationally.

8. Food Brokers are detail-oriented, communicate well and manage their time well

As with any occupation, there are certain sets of skills which will aid you better than others. For a food broker, these skills include:

• Time-management – All food brokers have multiple clients of varying sizes and to ensure they all get the attention they deserve the broker will need to manage their time effectively. Early on, brokers will evaluate each client’s potential and determine how much time is needed to achieve their goals. Brokers keep to exact timelines and schedules while also never wasting time on lengthy visits or calls.
• Communication—Building a strong network requires effective communication skills, such as active listening and effective speaking. Food brokers consistently speak with clients and outside parties through phone calls and emails. Brokers need to communicate well, or they won’t succeed in this business!
• Detail-oriented—An effective food broker is attentive to the unique needs of their individual clients. Remembering small details leads to stronger relationships and better services for clients. If details are not paid attention to, this can lead to a loss of a lot of money, especially when it comes to contracts.