3 Ways Food and Beverage Distributors Can Take Control of Pricing

Food and beverage distribution for dairy
 
 
Distribution is at the core of getting products out for purchase and the cornerstone of building a successful food and beverage company. Within a global economy, distribution is part of the downstream process, including transportation, packaging, and delivery of goods.

Food and beverage distributors can choose a number of different paths to move goods–some short and some longer, some direct and some indirect. Their role often includes marketing and selling, transport, and storage.
 
Being responsible for so many different aspects of food distribution can make it a challenging task, especially when it comes to determining a pricing optimization strategy. Considering the ever-changing, fast-paced global market and customer demands, it can be hard to keep up with all the data and information.
 
To begin, it’s helpful to look at the various food and beverage distribution channels.  Different distribution sectors will necessitate different types of price optimization tools and solutions, so it’s helpful to know which channel a company falls into. 
 
 

Common Channels of Food and Beverage Distribution


The role of a distributor is to help operators make products available to consumers by bridging the gap between manufacturers and retailers. They help to make the process more efficient and profitable for everyone. There are four primary channels that food and beverage distributors operate in: broadline, specialty, redistribution, and cash and carry.
 
Depending on which channel a distributor is working in determines what kind of data they need and what kind of modern commerce tools will serve them best.
 
 

Broadline


Broadline distributors are those that serve a variety of operators with a variety of food and food-related products. Rather than focus on a niche market, they work with many different manufacturers and food operators to find deliver products that meet consumer needs.
 
A broadline food and beverage distribution may be responsible for thousands of items, necessitating large teams of people to help manage numerous accounts. It’s quite an undertaking and one that can be greatly assisted by pricing optimization.
 
 

Specialty Distributors


Specialty distributors, like broadline, may deliver a variety of food and beverage products to operators, but they serve niche markets.
 
These niche markets may include seasonal or limited items, specialized equipment, or non-traditional grocery accounts that are not served by broadline food and beverage distributors.
 
 

Redistributors


Redistribution is a lesser-known and somewhat complicated channel of food and beverage distribution that involves a “middleman” between the manufacturer and a typical distributor.
They serve small food distributors that may not have the space to house large amounts of goods. Redistributors purchase truckload quantities of food and beverage products from a variety of manufacturers. Then, they store those products until customers need them, thus saving distributors time, space, and money. They do not serve the food operators directly.
 
Supply chains can certainly get confusing when throwing in a redistributor to the mix, which is a great opportunity to use AI tools that can save time and help create efficient strategies.
 

 

Cash-and-carry food distribution

 

Cash & Carry


In contrast to the other three types of food and beverage distribution, cash and carry distributors do not transport products directly to food operators. These distributors physically go to warehouses to purchase wholesale products.
 
Some common cash and carry customers are restaurants and caterers. Essentially, the distributor is the customer themselves, making purchases on a smaller scale to suit their specific needs.
 
 

Take Control of Distribution Pricing


Now that we have a better understanding of the types of food and beverage distributors, we want to see how AI technology can assist them with optimizing their pricing and supply chain management.
 
Taking advantage of digital commerce is quickly becoming an industry standard. Distributors that haven’t yet capitalized on machine learning and AI may fall behind, so it’s important to know the benefits of investing in these useful commerce tools.
 
 

Leverage Machine Learning to Analyze Data Trends


With so many products on the market coming from a variety of manufacturers and headed to numerous food operators, it can be challenging for distribution sales teams to develop up-to-date, effective pricing strategies. 
 
Leveraging machine learning technology takes the time and hassle out of analyzing spreadsheets and information. Instead, the price optimization software uses statistical algorithms and data to create clear pricing recommendations for sales and marketing teams.
 
Taking the immense amount of data generated from sales cycles, market trends, and industry standards, matching learning technology can help to sort out the information in an actionable way. Essentially, distributors have more access to what’s important so they can work more efficiently.
 
With accurate information at their fingertips, food and beverage distributors can:
• Identify revenue leaks and gain insights into how to recover and identify revenue potential with precise pricing software
• Gain clarity about the data so they have confidence in recommendations
• Organize customers and contracts with a Master Price List
• Quickly adapt and improve growth
 
Consider the company Bidfood as an example. With numerous products and transactions happening simultaneously, it became a challenge to truly know which products were profitable, what wasn’t, and how to price accordingly. Using price optimization software, Bidfood was able to get pricing guidance and product analysis to identify gaps in what they sold and properly educate sales teams on how to respond.
 
As a result, they eliminated unprofitable transactions, raised the number of line items sold per month by 400 for each salesperson, and improved their margins. All thanks to dynamic pricing science!
 
 

Streamline the Customer’s Buying Process with AI


Customers demand personalization especially as the tech-savvy millennial generation continues to grow into the workforce. The need for technology-driven solutions, timely responses, and quickly delivered quotes are driving the market and companies are wise to respond.
 
In addition to a speedy process, customers want a streamlined, easy-to-navigate buying process. They don’t have time to figure everything out on their own–they want to partner with a company that can give them the answers they need. Customer retention is far more likely when they have confidence in their food and beverage distribution partners.
 
To better understand customers, AI tools analyze customer feedback and sentiment to give companies accurate, data-driven feedback on how to respond, whether with pricing, or other actions. AI tools can also generate highly personalized responses that immediately address customer issues, creating a more efficient resolution process.
 
Using AI, distributors can:
• Instantly find the right products for their customers using CPQ software
• Generate polished, error-free proposals
• Shorten the sales cycle
• Identify revenue and margin leaks
 
Adding value to their company was top-of-mind for Fonterra Foodservice. As a part of the Australian-New Zealand strategic unit for global dairy supplier, Fonterra, they tapped price optimization tools to help increase revenue. Thanks to the dynamic pricing tools offered by PROS, they improved the value of optimization by $20M per quarter.
 

 

Analyzing sales for food and beverage distributors

 

Use Data to Inform Sales Teams


You may have growth opportunities hiding in plain sight, but without proper information, you may be missing them. With AI-powered sales growth software, sales teams can see increased revenue almost immediately, selling bigger and smarter.
 
The secret lies in detecting inconsistent buying patterns. Sales teams can access who is buying what and if they’re buying sporadically to understand what the customer needs. This allows for more personalized relationships with customers, enhancing customer retention and increasing sales.
 
Sales teams will tangibly benefit by:
• Effectively upselling and cross-selling
• Identifying customers with similar portfolios to give quick, simple comparative analysis to aid reps towards sales opportunities
• Integrating with a CRM system to have a comprehensive understanding of customers
 
The B2C market has been driving customer personalization for years. High customer demands continue to influence the way companies approach sales. With the assistance of AI-powered pricing tools and management software, sales teams can offer that same kind of personalized attention in the B2B market space.
 
With a growing number of AI tools available to food and beverage distributors, they can easily make sense of data to create better pricing strategies. Whether you’re managing a high-volume distributing operation, or a wholesale warehouse, the benefits of using machine-learning for pricing optimization abound. 
 
Are you a food and beverage distributor that’s ready to harness the power of machine learning and take control of the end-to-end sales process? Learn more about how our innovative technology is getting results for distributors just like you.

 

About the Author

Richard Blatcher

Richard Blatcher, Director, Industry Marketing & Business Intelligence at PROS, manages the global go-to-market strategy for PROS in its strategic industries. He has over 30 years’ experience in the industry originally based in Europe moving to the US in 2010. He spent the first part of his career in media, publishing and direct marketing managing the delivery of marketing and sales enablement services to many manufacturing and distribution blue-chip enterprises. He has also held EMEA and Global Marketing roles for $2Bn+ software company Autodesk including being responsible for launches of market disrupting SaaS software solutions into the market.

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