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Insights

5 points to consider before you tie-up with an importer-distributor to sell your food products in India

The consumption of packaged food and beverages has been on a rise in India over the last decade. In industry terminology these are the tertiary processed products and form almost 40% of all the processed food items being consumed currently.

Key growth drivers for these value-added products include rise in nuclear families with working couples, higher number of women in workforce, and a wide middle class with the purchasing power and intent to spend on new and healthy food options. Increased urbanization, better distribution network and innovative marketing strategies of food companies will continue to further push the sector’s growth.This segment also sees a constant trickling in of foreign brands in categories such as branded edible oils, breads, biscuits, snack foods, juices, jams, sauces, cereals, confectionary, processed dairy products, chocolates and wine. The trend is likely to continue as the number of well-travelled urban citizens and the travellers and expats to India continue to grow. Although there has been a rise in the international brands starting their own manufacturing or sourcing from India, a large number of companies resort to launch their products via an export-driven model by tying up with a domestic distributor/importer. So, if you have chosen to take-up or start with a similar model to tap into the growing Indian market – this document should be your ‘go-to’ checklist to evaluate your potential/current partner and ensure you have a safe landing on the right retail shelves!

#1 FSSAI compliance

Make sure that your potential partner is has the right processes, intent and network in place to ensure that your products are compliant to the stringent regulations mandated by the Food Safety and Standards Authority of India (FSSAI). The agency has stringent guidelines related to the 1. Product Approval/Registration 2. Packaging and Labelling which are mandatory for all companies – domestic or foreign. Although there were ambiguities in the regulations over last few years, processes are much clearer now and most companies have managed to abide by the compliances.

#2 Presence – National vs. Regional

India is a vast and diverse country and therefore, it is important to evaluate the kind of presence the company has. Over last few years there has been a consolidation in the number of distributors in key F&B food categories and few leading players have emerged with wide network and reach. However, most of these are still stronger in certain regions compared to others. So, it is important to evaluate the physical presence (regional offices, sales offices, warehouses) and distribution reach (sub-distributors, own and contract sales team), along with the final end-user reach (number of stores).

#3 Core strength in terms of clientele - HORECA or trade

It is important for a distributor to have extensive relationships and network with the targeted end-user segment and business in India does work a lot on relationships. So, typically distributors have clear focus areas and dedicated network focusing on either the HORECA Hotels, Restaurants and Catering) segment or trade. Within Trade as well, it is important to assess the actual reach in terms of traditional (mom and pop) retail stores vs. modern trade (which forms a significant contributor to sales of premium imported food items).

# 4 The brands portfolio and performance of these brands

While many distributors dabble into different product categories, it is important to assess the performance of the brands handled by them – currently as well as in the past. This gives an idea of the financial stability, strategic alignment, marketing capability and cross-sell opportunity of a potential partner. For instance, a distributor who handles premium pasta brand has the network to push olive oil or cheese more easily compared to the one who specialises in confectionary.

#5 Infrastructure

Last but not the least, it is important to objectively evaluate the infrastructure including the logistics capability of the distributor. This includes the warehouses, fleet of vehicles, tie-ups with logistics partners, cold chain capabilities etc. Although the transportation systems and infrastructure has improved in India over the last few years – there may be bottlenecks, especially on cold chain management that can largely affect the experience you want to provide to the customers.
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