What is the Difference between a Food Broker and a Wholesaler?

What does a Food Broker Do?

A Food Broker (often also called a ‘Sales and Marketing Agency’, or SMA) is an outsourced sales agency that will help introduce your product to retail buyers at brick-and-mortar retailers or foodservice operators.  Foodservice operators includes places like Restaurants, Universities, Hospitals or other venues that serve food – read more about these types of operators in our e-Book ‘Let’s Do Lunch’.

Brokers also handle in-store promotions at the retailer level; they manage your promotional activities such as temporary promotional pricing, seasonal displays, like end-caps and in-aisle displays and in-store product sampling and demonstrations.

Brokers do not actually buy your product; they help you sell it.

What do Wholesale-Distributors Do?

Although there are some differences between companies that wholesale and distribute, for the purpose of this article are the same thing – (read more  here: ‘Explaining Wholesale Distributors’). Unlike Brokers, Wholesale-Distributors  buy your product, at volume.  They break bulk from you as a manufacturer, buying pallet-loads, and then breaking that into the smaller quantities that retailers can use; usually cases.   They are responsible for warehousing the product and transporting it to the right locations where it can be purchased by consumers.

Will Wholesalers Sell your Product to Retailers?

Yes, and No.  While their sales force will likely inform retailers that they carry your product, it is your responsibility as the manufacturer/brand to convince retailers to carry your merchandise.  You, or your Broker, if you choose that route (read about the pros and cons of working with a Broker, here: ‘Should You Hire a Food Broker?’) will need to do most of the work to sell to retailers.  To convince them that your product deserves shelf space in their stores.

Wholesalers need to move fairly large volumes of product and they will only be interested in carrying yours if consumers are buying it.  And that it sells fast enough (known in the trade as ‘velocity’) to be worth investing in.

Conclusion:

If you are going to launch your food & beverage product into sales outlets you will most likely need to work with Wholesale Distributors, so it is worth understanding this industry, who the key players are and how to reach them.  At MSource, we have many relationships with both large and small wholesalers of different types; book a discovery call to learn how we can help, here.

Thanks for reading!