“Go away!” “Forget about it!” “We don’t need it!” These are typical responses you can get when you try to gain access to the market with your new consumer brand. It is a shame to see perfectly good consumer package goods (CPG) brands getting shut out of distribution and retail. We recently read about an investor who was totally in love with his client’s idea and backed it. He quickly found out the market was already sewn up by the big boys. Guess someone should have done some market access research first…
Most startups will do market research alright, but not market access research. Too many take access to the market for granted. They assume that because their idea is so great that the market will welcome them with open arms – and that the consumer will demand it.
But not so fast! You still have to get by the gatekeepers to access to your consumers, and they have at least five good reasons to say “No!”
- The Space. Retailers already have plenty of shelf space, and they are not building more any time soon. They need fast-turning items, not more choices. They regularly discontinue items that are underperforming. They would have to discontinue another brand just to make room for yours. This “cut” generally happens at the beginning of the new year.
- The History. You are up against brands that have been around for years and have an increasing history of sales. These are national brands with great name recognition and demand from their loyal consumers. You may not have any history of sales, especially if you are a new consumer brand. If the retailer or the distributer doesn’t see a history of sales, they are less likely to put it in.
- The Competition. Every distributer and every retailer knows which side his bread is buttered on. And it’s not on the side of a new, unproven brand. It’s on the side of their biggest fastest sellers. These big boys tend to monopolize the distributers to prevent openings for new brands like yours that might compete with them.
- The Money. Both distributers and retailers want one check from one entity for many products. The conglomerates can offer a wide range of products to a distributer, who then offers an even wider range of products to the retailers. They can bill a hundred products to a retailer on one invoice. “I’ll just sell direct,” you might say, but imagine what it would be like for the retailer to pay each independent supplier separately? Further, the retailers are inclined to pay the Big Boys first, since they represent so much of their business. Independents get paid when they get around to it.
- The Risk. Shelf space is an expensive investment. Retailers want a secure, sustained return on that investment. The way they see it, putting a new, unproven brand on the shelf and hoping it will sell, is just too risky. As we like to say, “Everybody wants to milk the cow. Nobody wants to raise the calf!”
Discouraged yet? Don’t be. We faced every one of these road blocks and more! We still got our “new” brand past the gate-keepers, and into the marketplace. But even more importantly, we kept it there. By really understanding why the gatekeepers say “no” before you even start, you’ll be able to craft an approach to market access that works. Don’t find all this out after you’ve completed your design, plan, and secured financing. Make access to market job #1!
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders