Unpacking Ingredient Sales
The Business of Food
by Jennifer Barney
Unpacking Ingredient Sales
3-min read
Value added ingredients that garner a premium over processor commodities is the next step in downstream innovation. Once you figure out what your closest and most ownable adjacency is, have done the market research and developed your business model, you’ll want to set yourself up for success to market those products. Vertically integrated producers are well positioned to take the lead in winning ingredient contracts and direct sales to manufacturers for the simple reason that as consumers demand to know the provenance of their food, manufacturers are taking preference for direct sources of supply. But getting to those manufacturers is not always a straight line, especially when you’re first starting out.
Ingredients 101
For the purposes of this post I am specifically talking about products that go into another product in a BOM (build of materials) at a manufacturer. I’m not talking about products that go to a bagger and then sold at retail. While both end up at retail there are distinctions that span from facility zoning, food safety, logistics, to new sales and marketing roles and channels. I will pause here and let you re-read that last sentence. This is where much misunderstanding stems when moving into more complex value-adds.
I’ve the food safety requirements needed in suppling to CPG and manufacturers, so let’s take off from the place where the capital project has been approved and you’re building out your revenue model.
Marketing ingredients
The dream is to win a long-term contract with a global CPG that takes all or most of your capacity. Making this your goal is like winning the lottery: could happen, but probably won’t, at least not until you’ve been in the game a long time. For that opportunity you’ll need to prove yourself as a solid supplier with smaller customers and build from there. You‘ll do this by:
Hiring someone with a broad and varied network in ingredient sales to the CPG channel
Building a landscape of prospects
Perfecting your consistency of product
Buyers at big corporates are not who you want to approach. Getting in with outsourced R&D firms like Mattson and JPG Resources where new items are being developed is where you want to be, says ingredient sales and marketing veteran Cris Cansino. These specialists work on projects for a variety of clients so you’ll need to be open to suppling any size deal, to get your foot in the door.
Co-packers who develop their own portfolio of products are also procurers. But a lot of co-packers are filled to capacity and not looking to market themselves to the trade, so they are harder to find. This is why you need an experienced salesperson who knows the players. For example, knowledge of who manufactures a certain nutritional bar that gets acquired by PepsiCo and has to move to a larger co-manufacturing facility is the perfect opportunity to bid out your ingredient. This is because the new co-packer has to validate all the raws coming in, requiring the nutritional company to assess all their existing suppliers. This is your chance to get your ingredient considered.
Ingredient distributors that source for particular clients are also a good place to start – especially because they are very visible at shows looking to gain new business.
Another reason to start with the small guys is to get the kinks out of your process. This is high touch business and very relational so you’ll have the opportunity to ask a lot of questions and learn how to best serve your clients.
Once you understand the landscape and how to market, you’ll have a realistic model from which to build your pro-forma and hold your team accountable to generating new business.
Product consistency
What will differentiate you from your competition in the value-added world is no longer price. Traceability and sustainability are now filters by which to compete. But before you can brag about how you are a steward of the earth, you’ll have to prove your consistency of product quality. Nothing trumps this. Your ability to ship a consistent product day in and day out is not easy and it’s where many fail. To be clear, I’m not talking about variances in crop attributes from year to year due to acts of god or water supply. I’m taking about what you can control on the product spec by how you handle the inputs, the way it’s manufactured, the freshness, storage and transport. This is paramount because it is going into a recipe (BOM) with other things so it has to perform the same way every time.
Successful ingredient sales are about getting really good at consistently delivering loads of product on a regular basis and building a stellar reputation in the industry.
All my best,
Jennifer
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I'd love to hear from you - get in touch at jennifer@3rdandbroadway.com