Expert: Eric Hofer - 12/5/2009

Question
I am starting a brand management and distribution business in Canada which focuses on the food and beverage industry.  My question for you is related to pricing.  I have a very vague idea on what agents of brands charge but further information would be greatly appreciated.  I will be importing alcohol from South America into Canada and will deal with marketing their brand, selling and distribution.  Any ideas?
Thanks in advance

Answer
I've written previously on pricing (RRP, your charges and Wholesale) and how, remotely with so little information (rightly so, as you don't want to give away the niche you've spotted), it is  dreadfully tough on which to advise.  You've got the following challenges:-
- what the market will bear
- competitive pricing
- exclusivity for the product, for the category
- area covered / affluence, demand, et al
- cut through (from other agents for the same product/category from neighboring territories)

Additionally, you have to take into consideration:-
- marketing support from the supplier
- duties, taxes, bonding; quality control costs
- shelf-space costs (e.g. what you have to pay to retailers to get shelf space)
- cost to carry inventory; shelf-life, returns/spoils, damage, pilferage, etc.
- delivery, warehousing, fleet
- remuneration to sales staff

Pricing is just the tip of the iceberg!  Once you've established the pricing though, there's so much more you need to do to ensure you DON'T lose your investment.  Effectively, you need to have back office systems for:-
- taking the orders
- ensuring orders are filled; priced properly, etc.
- ensuring that your field staff don't miss calls; and that you understand the reasons when they do.
- paying commissions
- managing agreements with outlets that promise you space (to be sure they deliver it)
- communicating between head office and sales staff visiting accounts with national agreements (to check pricing, displays, etc)
- structuring the sales calls so so as to maximise those 15 minutes on the ground to take the biggest order

This is something where you could get a bit of support from people with experience that consult; there might be people local to you; and I know of a group at salessuite.net that work in this area.  Write them on info@ ...  They're able to go into collecting the level of information needed to better help; and they can also help you developing your back office, sales teams, incentives, etc.  Note, that they make their money renting systems that they supply over the internet (so that you don't have to invest heavily into the backend).