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Is there a future for nutrition distributors?

The future of local distributors can be bright because large brands are facing fierce competition from smaller suppliers.

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The future of local distributors is in finding new suppliers of exciting products.

First, let’s define what a nutrition distributor is and does. It is an independent company that has come into (almost always) exclusive agreement with a manufacturer of a nutritional product to market/sell/distribute such product in its local (often national) market.

Most well-established brands of nutritional products (the majority of them being additives, although vitamin and trace mineral premixes still play in this category) have already established their own offices in interested markets. That is, they employ people who are dedicated to promoting their own business alone. Distributors almost invariably have a rather expanded portfolio representing various brands. The reasoning of having your own dedicated local team is obvious, but the expense is rather prohibitive for smaller players.

In the past, most nutritional products were sold largely through distributors, and with the advent of additives such arrangement became the norm. But, today, there is a question mark placed over the future of such businesses as they see their large suppliers often competing in the same market with them. It is not uncommon for a brand to have a local distributor for small customers, while the brand’s own sales team handle large customers. But this causes a conflict of margins with a bitter aftertaste on the part of long-term and rather loyal local distributors.

The future of local distributors can be bright because large brands are facing fierce competition from smaller suppliers, often start-ups, that look for an outlet for their products. And such products can be as good as any other in the market – save for extensive marketing. And, here is where local distributors who best know their local market can excel by marketing new products, often at reduced cost and price, in one-to-one customer marketing/sales efforts.

Such has been the nature of a recent call I had by a new start-up supplier of a range of yeast products. Its products perform as well as any, but it does not know how to introduce them into the market and secure local distributorships. Surprisingly, one of its products has only a single competitor, and it is not located even in the same continent, so basically it can have a virtual monopoly if it manages to bring such product in the market.

So, to close this blog, I will repeat that the future of local distributors is in finding new suppliers of exciting products based on technologies that work, and then invest themselves into heavy local marketing. Gone are the times when local distributors depended on marketing done by the large firms as such players have long decided to make the final push to the end customer.

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