Food and beverage distributors and wholesalers are essential components to the food
and beverage industry. Without them,
food suppliers would produce food and beverages, but have no way of getting
those goods to consumers. Food and beverage distributors use different channels
in order to move a product from the manufacturer to stores or even directly to
the end user. Wholesalers act as a middleman and will purchase goods, warehouse
them and then transport them to retail stores. Distributors are similar, but
instead of warehousing the products, they take them directly to retails stores
or consumers. Also, included in the food and beverage industry are private
label products, commonly referred to as the generic brand. These products are
typically cheaper and also use food and beverage distributors and wholesalers.
The
food and beverage industry is a large, fragmented industry divided into two
parts, production and distribution. Production doesn’t include the agricultural
industry, so it excludes any foods that were produced directly through farming.
It does however; include processing
of meats and cheeses, the creating of soft drinks and alcoholic beverages,
packaged foods, and other modified food and beverage products. The second part
of the food and beverage industry is distribution, as mentioned above. Distribution
of goods in the food and beverage industry involves utilizing different channels
in order to get those manufactured goods into the hands of consumers.
Food
Suppliers are growers and manufacturers who produce foods to be sold in grocery
stores, convenience stores, fresh markets, directly to consumers and more. All
food suppliers have to comply with strict regulations set forth by the Food and
Drug Administration (FDA) in order to keep people who consume those foods safe.
Producing and manufacturing the food is only one part of the process; food
suppliers still have to decide how to get their products into stores and
ultimately into consumers’ hands. The way that this is done is through food
distributors and wholesalers. If a food supplier chooses to use a wholesaler,
then that wholesaler would buy the products, warehouse them, and then
distribute the products to retail stores. If a food supplier decides to
eliminate the middleman and go straight to using a distributor, then the
distributor would pick up the products and deliver them directly to retail
stores.
In most stores across the nation, it’s extremely
common to find private label products, also know as the generic brand, right
next to products from a well-known brand. For example, a shopper might see Kraft
cheese and then a cheaper, private label brand of cheese right next to it. What
that shopper might not know though is that generic cheese most likely is
manufactured by Kraft. Some companies find that producing their own food is too
expensive, so instead, they might strike up a deal with a larger company, such
as Kraft. This deal would allow the smaller brand to purchase products from the
larger brand and then market it as a private label (generic) brand. This
agreement is only done if the larger brand feels confident that the private
label won’t cannibalize their sales or steal market share.
Food suppliers, private labels, and food and
beverage distributors and wholesalers are all part of the large food and
beverage industry. The top three companies in the food and beverage industry
for 2014 are PepsiCo, Tyson Foods Inc., and Nestle. A large part of their
success is having superior distribution strategies compared to other companies.
Without food and beverage distributors and wholesalers, those companies would
not be where they are today.
