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Sunday, 21 June 2015 22:00

Stocking Shelves: Food vendors share best practices for getting products picked up by retailers

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For startup food vendors, gaining access to shelf space at major retailers such as Meijer Inc. and SpartanNash Co. can often mean the difference between remaining a cottage business or scaling up their operations to the next phase of growth.

That was the case for Grand Rapids-based The Gluten Free Bar (GFB). After winning a contract with Meijer, the company transitioned from its initial Chicago location, where it used a third party to manufacture its product, to its own production facility in West Michigan.

In seeking to grow its retail presence, GFB focused on a strategy of being persistent in scheduling meetings with buyers and focusing on its product pitch, said President and co-founder Marshall Rader.

“A lot of it is cold calling and searching on the Internet,” Rader said. “From there, you stick to it and keep calling and emailing. … You have to make yourself known.”

The buyers’ desks at Meijer receive “several hundred” phone calls per week from companies looking to get their products onto store shelves, said Pete Heinz, director of dry grocery at the Walker-based retailer.

“We have a policy of returning all calls within 24 hours,” Heinz said. “We treat everyone equally, so whether you’re Kellogg’s or General Mills or the local brewer down in Kalamazoo, we are are sincerely committed as an organization to giving everyone a fair chance.”

During the initial pitch meeting, Meijer works with a food producer to learn which markets the company’s product would fit best in based on emerging consumer trends, the vendor’s distribution network at other metrics, Heinz said.

Rader recommends that companies do their homework to be able to explain how their product fits in with the market and how it would stand out among competitors. Even as a startup, a business should have at least a basic sales forecast to “show (retailers) that you have your act together,” Rader said.

However, in the end, it comes down to being able to sell your product to the buyer during the initial meeting, Rader said.

“Have a point to your conversation and know that they only have a limited amount of time with a few products to see,” Rader said. “You have to make your product stand out and you only have 20 minutes to do it.”

Rader founded GFB in 2010 after being diagnosed with Celiac Disease. Since then, the company has grown to between $3 million and $6 million in annual sales and has a distribution network of 5,000 stores in the U.S. and Canada, including Meijer, SpartanNash and Whole Foods Market.

Taking advantage of a broker is another way for smaller food vendors to get their products in the hands of buyers at large retailers, sources said. Approximately half of Meijer’s new food products are sourced from brokers, while the rest are the result of direct connections from companies, Heinz said.

GFB built about 70 percent of its business before recently turning to a brokerage service to spur additional growth. If a company does choose to work with brokers, Rader recommends they have an established network and salient business plan in place before contacting possible partners. Executives should also talk to a number of brokers to see which one best fits with the needs of the company, Rader said.

“There’s definitely a huge value in finding the right broker,” Rader said.

USING PROGRAMS

Entrepreneur-focused food programs and resources such as those offered through the Michigan State University Product Center are another place to start for companies looking to get their products on the shelves of major retailers.

Though her business had been established since 1988, Julie Applegate, founder and president of Mrs. Dogs Products LLC in Grand Rapids, worked through MSU’s programs to help her regain her focus on the business after her husband tragically passed away.

“I just got where I wasn’t that interested in the business. I was depressed and realized that I needed to pay rent and health insurance,” Applegate said. “I went to the MSU people to get some passion back and see what I could do. I got involved in the program and did the food shows and I think that was really the main thing that helped.”

Mrs. Dogs recently had its Dangerously Hot Pepper Sauce picked up by Meijer stores. The company manufactures mustard sauces and other products and is distributed throughout West Michigan, Detroit and Traverse City. SpartanNash also stocks Mrs. Dogs’ products.

Working with an established program such as the MSU Product Center can also help attract the attention of retailers. When it looks for new products, Meijer prefers to source goods from companies that have gone through some type of food-specific training, Heinz said.

“We actually love to work through MSU … especially for local products … because that curriculum actually helps those entrepreneurs prepare everything to be ready to work with retailers,” Heinz said.

ATTENDING EXPOS

For Holland-based Good Life Granola LLC, moving from selling its all-natural artisan granola products at farmers markets and specialty food stores to getting shelf space at larger retailers resulted from a serendipitous meeting with a Meijer vice president at a beer, wine and food show four years ago.

The company decided “on a whim” to exhibit at the show, “just to try it out,” said Vice President Mike Freestone. The meeting with the Meijer executive led to a follow-up conversation with the retailer and distributors.

“We started out with six stores, and it was great,” Freestone said. “That was the foot in the door we had to drive some sales, get our name out there, and that led to the next step of getting in the Michigan section (at Meijer). Then we were chosen to be in the mainline (cereal) section in all their stores.”

Good Life’s story of meeting a store executive is fairly typical for Meijer, Heinz said. Approximately 30 percent of new products are discovered and recruited directly by Meijer — primarily from trade shows, he said.

Attending food shows such as MSU’s “Making it in Michigan” specialty food expo along with the Natural Products Expo — which is held on both the East and West Coasts — are some of the best opportunities for companies to get their products in front of retailers, Heinz said.

“We love finding (new vendors). That’s what we use these food shows for. … That’s where we find a lot of these new guys,” Heinz said. “We’re often searching for those unique startup companies. That’s where a lot of the innovation starts.”

Good Life’s products are now in Meijer stores in six states across the Midwest, and the company is in discussions with other retailers to expand its reach even more, Freestone said.

Sales for Good Life are “in the six figures” as the company’s seen annual growth in the 15-percent to 20-percent range, but Freestone said he expects that trajectory to accelerate this year.

“I think (growth) is a great thing and a great opportunity,” Freestone said. “We’re the type who just put our heads down and go for it. The most important thing is to get the product manufactured and get it out to customers and then grow it from there.”

MiBiz Managing Editor Joe Boomgaard contributed to this story.

 

Sidebar: TIPS FOR STARTING A FOOD BUSINESS

As a small business, Holland-based Good Life Granola LLC is constantly in a state of learning and trying to overcome challenges, said Vice President Mike Freestone, who started the company six years ago with his wife, Dee.

Here are his recommendations for other entrepreneurs who are looking to start a food-based business with the idea of eventually selling their products through regional retailers and grocery stores.

  • First and foremost: Start with quality ingredients, he said.
  • Leverage the resources available from entrepreneurial support organizations. Good Life Granola worked extensively with The Starting Block kitchen incubator in Hart. “There’s a lot of things you can avail yourselves of. There’s always counselors to help you,” Freestone said.
  • Plan for the growth. Freestone recommends companies build in enough margin on the front end to recoup their costs, but they need to factor in other costs that come from growth. “You have to have your margins built in for you, your retail sales, your wholesale sales, your broker and your distributor,” he said. “For long-term growth, you can never have enough margin.”
  • Find ways to attract shoppers’ attention in the stores, even though small producers are competing against multinational food companies. “We do a fair amount of price drops in the store to entice people to buy,” Freestone said. “We’ll give some greater discounts. Sure, we’re giving up some money, but it’s a way to get them to start buying, so it’s worth it.”
  • Engage customers on social media and look for ways to increase exposure. “We still do the farmers markets as well in the Holland area because it’s fantastic exposure, (but) I’d rather have them go to Meijer and buy it from them all the time and just take samples at our table,” Freestone said.
  • It often pays to work with a broker, as well as connect with grocery stores and buyers at trade shows. “We have a broker now who’s always in active talks with grocery stores,” Freestone said. “If you can find the right one — and it has to be the right one — they’re worth it because they know everybody and they have all the contacts.”

— Reported by Joe Boomgaard, MiBiz

Read 6955 times Last modified on Sunday, 28 June 2015 18:00

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