KANSAS CITY, MO — For early-stage brands, getting a product to market ranks right up there with R&D in terms of most challenging steps. While mainstream retailers are the most common route — and often the most desirable for brand awareness — less conventional retailers, such as food cooperatives (co-ops), can be a viable part of a distribution strategy.
In a recent EmergeCPG Retail Readiness workshop hosted by founder Julie Pryor, Heidi Traore, supplier relationship development manager for National Co+op Grocers (NCG), a retail services and purchasing cooperative, shared insights into the NCG model, partnership strategies, distribution and sales requirements, product placement and promotional programs, and best practices for submitting products.
“Co-ops are owned, controlled and used by their member owners,” Traore explained. “NCG is a business services and purchasing co-op that provides retail headquarters services to the grocery co-ops that own it. Our members formed NCG so they could be more competitive with larger chains.”
Co-ops aren’t new; many have been around since at least the ʼ70s and had a hand in laying the foundation for value-based products and building the supply chain for organics, non-GMO and fair trade.
“The supply chain our co-ops have helped build prioritizes the regenerative, resilient food system; an inclusive economy; and the fair treatment of people in a healthy environment,” Traore said.
NCG has 233 locations across 39 states and $2.7 billion in annual sales. Its co-ops have long been champions of sustainability and local sourcing, which often attracts consumers who are interested in supporting ethical, and community-focused businesses.
“Co-op shoppers are early adopters of certified, upcycled, range-free, pasture-raised, certified regenerative and reef safe,” Traore said. “Co-op shoppers purchase with purpose. These are the attributes driving some of the assortments on the co-op shelves.”
NCG programs
NCG has two primary programs: the Core Sets category management program and the Co+op Deals program. Both programs were developed to help brands with product placement and promotional efforts and are available on regional and national levels.
The co-op schedules full category reviews and new-item reviews on a regular basis as well as off-cycle product introductions. Full reviews involve a deep dive during which category managers analyze the 4 Ps of category management: placement, pricing, promotions and assortment planning.
“Innovation is a priority, but it’s got to be innovation that makes sense for the needs of the co-op shopper, and it has to bring something truly different to the table,” Traore said.
New item reviews don’t go quite as in depth, but they are included in resets and cut into shelf placement.
“An off-cycle product must be something super unique that is going to bring early demand,” Traore explained. “It’s got to be something so hot that we know shoppers are going to jump on it right away. Those are a little rarer for us.”
The Co+op Deals program is planned annually and offers brands a way to streamline their promotional process. It’s based on the Core Set strategies determined by the category managers, who set price points and work with the promotional team to plan comprehensive campaigns.
“Co-op shoppers are early adopters of certified, upcycled, range-free, pasture-raised, certified regenerative and reef safe. They purchase with purpose. These are the attributes driving some of the assortments on the co-op shelves.” — Heidi Traore | supplier relationship development manager | National Co+op Grocers
Requirements for working with a co-op
Before approaching either a local co-op or NCG, Traore recommends emerging brands have the following in place.
– Full commercialization
– Comprehensive product specifications, including pricing, certifications and pack size
– Detailed strategy for getting the product to retail
– A plan for scalability
Starting with a local co-op gives young brands the opportunity to learn on a smaller scale while doing the market testing, data building and insight gathering required by regional and national co-ops.
“If a brand owner is doing demos in a local co-op, they can ask for insights into how well the product is doing,” Traore advised. “As for building data, our category managers are steeped in data. That’s the first thing they are going to look at when considering a new item. Data is important”
Traore shared Siete Foods as an example of a brand that started at a local co-op. Eventually, it moved to NCG and was recently acquired by PepsiCo.
How to get into a competitive category
Gaining an understanding of what’s important to co-op shoppers is the first step to getting a foot in the door at the regional and national levels.
“Go into your target retailer and get in front of your category,” Traore said “Look at the different packaging formats on the shelves. Look at the messaging, certifications and other attributes you need to fit on the shelf.”
She also shared the different types of data NCG category managers use to make decisions about products, including basic spec information, attributes and certifications, placement, where the product is currently selling, movement and velocity, pricing, the competitive market, and sales management strategy.
While getting on the shelf is significant, staying there takes another level of planning and promotion.
“You need to have a plan for how you’re going to sell a product once it’s in the store,” Traore said. “First, make sure you submit for review. Category managers aren’t going to run promotions on competitive products that weren’t submitted for the review. Next, have a marketing strategy for those promotions.”
Traore encourages brands that may be considering adding a co-op to their distribution strategy to do their homework. This sales strategy, whether local, regional or national, isn’t for everyone.
“Some brands are right for the local co-op and others are right for the regional and national level,” Traore said. “NCG may not necessarily be for everybody, and that’s okay. You have to do what’s right for your business and growth plan.”
