Beg and borrow
Finding finance will be a continuous challenge, warns John Teeling.
Dealing with early-stage distribution
MENTORS
Declan Droney
Declan Droney is the owner manager of Kinvara Smoked Salmon Ltd, the first Irish company to offer Irish organic smoked salmon to the market. Its customer base includes Superquinn and Supervalu in Ireland and Waitrose and Wholefoods in the UK, which represents 60pc of its business. It also supplies to the US, Hong Kong and Japan and operates a worldwide e-commerce mail-order and corporate-gift service.
Kinvara Smoked Salmon Ltd has won numerous awards for its product and marketing, including the Irish Food Writers Guild Food Awards 2005; the Western Region Marketing Institute ‘Excellence in Marketing Practice' award in 2004; and the (National) Marketing Institute ‘SME Marketing' award in 2005. In 2006 Kinvara Smoked Salmon Ltd was runner-up in the Small Firms Association National Awards for Innovation and Excellence and was a finalist in 2007 and 2008.
Droney has a (level 7) diploma in strategic management and a master's in business (MBA).
Dealing with early-stage distribution
07.04.2010
Distribution is often an area that challenges food-related start-ups. Declan Droney, owner manager of Kinvara Smoked Salmon, shares his thoughts and experience.
Most food-related businesses at the start-up stage will handle their own distribution and deliver their product direct to local shops or direct to consumers through farmers markets, shows and so on. This is a really satisfying time for the producer as they can see and control their product from the raw material stage through to the retail shelf or to the consumer and there is constant interaction between the producer and the retailer/consumer.
Taking things to the next level
It is when they want to take their businesses to the next level that they need to look at distribution and the thought process for the producer is always the same: whether to give up 20–25pc margin in return for the greater volume the distributors will promise.
In the 10 years I have been in business I dealt with about 15 different distributors in various markets. Despite what they may say, in the vast majority of cases, distributors will not sell your product, it will be one of hundreds of “lines” they carry. It’s important for the producer to understand the distributors’ business and to have realistic expectations of what they can do.
A common trap to avoid
It’s extremely important not to fall into the trap of handing the product over to a distributor and forgetting about it. The producer must try to develop a partnership with the distributor whereby they are the wheels that take your product to market while the producer, in so far as possible, is the account manager.
The producer must continue to be the face of the brand – nobody will sell the product better than the person who produces it. When dealing with multiple retailers the producer must always manage the account and be the point of contact for the many issues that arise. There are many excellent distributors but there are also many bad ones. Most of the bad debts I have had have been through distributors going out of business. Do thorough checks before you choose a distributor; ask other producers and retailers for recommendations.
Contributed by
Declan Droney
Kinvara Smoked Salmon
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