8 Facts about Food Brokers
Have you ever had the excitement of finding out that one of your favourite small creators is selling a line of products in the grocery store?
If you are a longtime fan, it’s exciting to see them grow and reach new territories. However, the process of getting those products into the grocery store probably wasn’t easy. Due to the process being complicated they likely reached out to many for help because the process is complicated.
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.
Table of Contents
1. Food Brokers buy and sell things on behalf of other people
A food broker is an independent agent that helps to facilitate transactions between food producers and buyers in the food industry. They ensure that the transactions run smoothly and that each party has the necessary information and buyers in the food industry. They ensure that the transactions run smoothly and that each party has the necessary information. Brokers do so by matching food producers with well-suited buyers and taking on a fee for their service.
There is a famous saying that “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 access to a diversity of 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 who seems to know everyone.
A food broker can be considered a part-time salesperson to support the sale of a product. They negotiate prices and conditions for business transactions. Food brokers convince buyers to shelf these products by demonstrating the potential success of the product and its projected growth. As well, they help with administrative tasks such as invoicing companies after products have been purchased.
Additionally, 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 well getting clear on their objectives of where they food producer should take their product.
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 gives a food broker a competitive advantage.
For example, having strong intellectual capital could mean that a broker is familiar with who is the strongest competitive player in a given 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 about how well a product is performing in a category.
For example, a food broker might recommend to their client that they first sell their mango cookies at a specialty Chinese supermarket chain within a certain geographical region, as this is more suited to their style of product. 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 those 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 have a strong understanding of the laws and regulations surrounding the 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 postsecondary education can help one stand out among 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 understanding 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 come to an agreement before signing and making it official. Additionally, contracts are normal business transactions that provide details about what each party is legally responsible for.
Examples of things that could be included in food industry contracts include the following:
- providing X number of units by a certain date
- A supermarket chain will sell X product on the third shelf for a total of 10 weeks.
- The food producer will supply two different flavors, with additional seasonal flavours added during the course of 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 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 figure out 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 under-performing 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, they may find it difficult to scale their business. Small business owners need to split their time between the production of 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 advertise on their own? This can cost thousands of dollars, which can make it difficult for small businesses with a smaller amount of capital. For many new to the food industry, they 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 ground 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 get 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 do much cold calling because they can just pick up the phone and call someone they know. Individuals who become food brokers generally do no perform this as their role after college. Instead, they have work in the industry for many year and built up connections. Using their close working relationship with stores, they can get feedback about their clients, including how well products are selling, the reactions of consumers to new and existing items, and current market trends, both locally and nationally.
8. Food Brokers are detail oriented, communicate well and are detail oriented
As with any occupation, there are certain sets of skills that 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 the potential of each client they work with 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 up a strong network requires effective communication skills, such as active listening and effective speaking. Food brokers consistently communicate 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 not only leads to stronger relationships but also provides 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.