The Distribution Illusion: Why Being “National with UNFI and KeHE” is Not Enough

I just returned from a trade show, and one of the most common responses I heard when asking about distribution was:

"Oh, we’re national with UNFI and KeHE."

That statement sounds impressive at first. It gives the impression that a brand is widely available and being sold across the country. But the reality? Most brands that say this have a huge gap in their actual distribution footprint—and they don’t even realize it.

The Distribution Illusion: Why KeHE & UNFI Are Just the Beginning

KeHE and UNFI are excellent distribution partners, particularly for natural and specialty food and beverage brands. They have relationships with major retailers such as Whole Foods, Sprouts, and independent natural food stores. But here’s the problem:

• KeHE and UNFI service a very limited number of retail accounts.
• In New York City alone, there are about 25,000 independent retailers that sell food and beverages. If I had to estimate, KeHE and UNFI combined service only approximately around 1,000 of them.
• Many brands assume they are “national” just because they’re in these distributors’ warehouses. But having product sitting in a warehouse doesn’t mean it’s on store shelves—or more importantly, that it’s actually selling.

The KeHE and UNFI Illusion: Warehouse Placement Doesn’t Equal Retail Success

One of the biggest misconceptions in food and beverage distribution is the belief that once your product is in KeHE or UNFI, you’re “in” everywhere.

I hear it all the time from brands: "We’re national with KeHE and UNFI."

But what does that really mean? Being in one of their distribution centers does not mean you’re in all of them. It also doesn’t mean that retailers are actually stocking your product or that consumers are buying it.

The Distribution Center Myth: You’re Not in Every Warehouse

Many brands assume that once they’ve secured placement in a KeHE or UNFI distribution center, they now have full national access. But that’s not how it works:

1. KeHE and UNFI operate multiple warehouses across the country. Just because you’re in one doesn’t mean your product is available to every retailer in their network.
2. Retailers only pull from specific distribution centers. If your target stores get their products from a different warehouse than the one you’re in, you’re out of luck.
3. They won’t carry all your SKUs. Many brands find that only a fraction of their product line gets accepted, meaning some sizes, flavors, or packaging formats won’t be available to retailers.

It’s a classic case of thinking you have national coverage when you really don’t.

The Real Challenge: Getting from the Warehouse to the Shelf

Even if you’re in the right distribution center, that doesn’t mean retailers will automatically start stocking your products. KeHE and UNFI operate on a pull system—meaning stores must request your product for it to move out of the warehouse.

KeHE and UNFI Sales Teams: They’re Not Selling for You

A common misconception is that KeHE and UNFI have sales teams that push products into retail. That’s not how it works.

• KeHE and UNFI have very few salespeople relative to the number of brands they carry.
• They are order-takers, not brand builders. Their job is to service retailers, not actively sell your product.
• Think of them as UPS delivery trucks. They deliver what’s already been requested, but they aren’t out there convincing retailers to put your product on the shelf.

In other words, you still have to do the selling. If you’re not actively getting retailers to place orders, your product will sit in the warehouse collecting dust.

Two Steps to Success: Getting In and Pulling Off

For a brand to succeed in KeHE or UNFI’s system, it needs to focus on two key phases:

Step 1: Getting into Stores

Before your product can sell, it has to be on the shelf. That means:

? Retailer Outreach: You need to convince stores to place orders and add your product to their planograms. ? Broker or Sales Support: Many brands work with brokers or independent sales reps to drive store adoption. ? Incentives for Retailers: Some retailers require promotions, discounts, or free fills to bring in a new product.

Step 2: Pulling Product Off the Shelf

Once you’ve secured placement, your job isn’t done. You need to make sure consumers actually buy your product.

? In-Store Promotions: Discounts, BOGOs, and signage help increase trial and sales velocity. ? Sampling and Demos: Especially in natural and specialty retail, in-store demos are crucial for driving trial. ? Digital and Social Media Marketing: Driving awareness among your target consumers increases demand. ? Local Partnerships and Events: Getting involved in community events, influencer campaigns, and regional activations can drive store traffic.

If You Don’t Drive Sales, You’ll Be Dropped

KeHE and UNFI don’t keep products in their system just because you’re in their warehouse. If your product doesn’t sell, retailers will stop ordering it—and eventually, your distributor will discontinue it.

Final Thoughts: KeHE and UNFI Are Tools, Not Solutions

KeHE and UNFI are great partners for certain brands, but they are not the end-all-be-all of distribution. Simply being in their system is not a guarantee of success.

Brands that thrive in this distribution model: ? Treat KeHE and UNFI like logistics providers, not sales teams. ? Actively sell into retail and build relationships with buyers. ? Invest in marketing and consumer awareness to pull products off shelves.

If you rely solely on your distributor to “get you into stores,” you’re in for a rude awakening. Your real job starts after you’re in the warehouse.

Learning from Coca-Cola and Frito-Lay: Ubiquity Wins

The most successful brands in the world—Coca-Cola and Frito-Lay—didn’t get there by relying on one or two distributors. They built deep, widespread distribution networks that reached all the right retailers, from grocery stores to gas stations, from bodegas to airports. They ensured their products were available everywhere consumers shopped.

No, they’re not in every single store in the U.S.—but they’re close. And the brands that follow a similar strategy have a better chance at scaling beyond the natural channel and reaching mass-market success.

The Triangle Approach: Prioritizing Accounts for Scalable Growth

Instead of assuming that being in a distributor equals being “sold everywhere,” brands need to take a strategic, layered approach to distribution growth.

We use a triangle strategy, which focuses on securing the most attractive accounts first—based on consumer demographics and sales potential—before expanding into broader, lower-volume retailers.

We classify retailers into ABCD accounts, similar to how Coca-Cola and other big brands build their distribution models:

• A-Tier Accounts: High-volume, high-visibility locations that move product quickly (e.g., top independent retailers, premium grocery chains, fitness studios, etc.).
• B-Tier Accounts: Mid-volume locations that have strong foot traffic but require some pull-through effort (e.g., bagel shops, juice bars, regional grocery chains).
• C-Tier Accounts: Lower-volume retailers that provide additional brand visibility but need marketing support to generate sell-through.
• D-Tier Accounts: Mass-market retailers (like Walmart and Costco) that require proof of strong consumer demand before accepting new brands.

For example, a single bagel shop in Los Angeles might sell more of a beverage brand than one location of Ralph’s supermarket. Yet many brands fixate on large grocery chains instead of first dominating their most valuable independent accounts.

The Costco and Walmart Myth: Why You Don’t Start There

A lot of brands dream about landing in Walmart or Costco—and for good reason. These retailers can generate massive sales. But here’s what many brands don’t realize:

• Getting into these retailers too early can kill a brand.
• They demand aggressive pricing and promotional commitments that most young brands can’t afford.
• They require strong consumer pull. Just because a brand gets shelf space doesn’t mean people will buy it. If the brand isn’t well-known or supported by marketing, it will be discontinued quickly.
• They want proof of velocity. These retailers expect fast sales. If a brand doesn’t have existing demand, it won’t survive in their system.

How to Win with the Pyramid Strategy

The smart way to grow is to build demand first, then scale distribution.

1. Start with the right independent and regional retailers (A & B-tier accounts).
2. Expand to larger grocery chains once brand awareness is strong (C-tier accounts).
3. Only go to mass-market retailers like Walmart & Costco when consumers are actively looking for your product there (D-tier accounts).

The Convenience Store Opportunity: Unlocking Mass Availability

Once a brand is more established and recognized, convenience stores (c-stores) become a massive opportunity.

The Numbers: Why C-Stores Matter

• There are over 150,000 convenience stores in the U.S.
• Over 60% of them are independently owned—meaning national convenience distributors don’t reach all of them.
• C-store demographics are changing. Today’s consumers visit them for premium snacks, better-for-you drinks, fresh food, and even organic options.

The Rise of Upscale Convenience Stores

Some of the most successful c-store brands redefining the industry include:

• Buc-ee’s: A Texas-based convenience store chain known for its massive, clean locations and upscale food offerings.
• Wawa & Sheetz: Regional chains offering fresh food, premium beverages, and healthier options.
• Although these are some of the best and most successful, this category, premium convenience stores are adding stores and chains every day.

Over the past decade, the demographic profile of convenience store (c-store) consumers in the United States has evolved significantly, influenced by changing lifestyles, technological advancements, and shifting consumer preferences.

Current Demographics of Convenience Store Consumers:

• Age: While traditionally frequented by younger males, c-stores now attract a broader age range, including millennials and Gen Z consumers seeking quick and convenient options.
• Gender: The gender gap has narrowed, with more female shoppers visiting c-stores, especially those offering healthier and premium products.
• Income Level: C-stores serve a diverse clientele, from blue-collar workers to busy professionals, reflecting a wide income spectrum.

Changes Over the Past 10 Years:

1. Health and Wellness Focus: There has been a growing demand for healthier food and beverage options, leading c-stores to stock items like fresh salads, fruit, and organic products.
2. Technological Integration: The rise of mobile payment systems and loyalty apps has attracted tech-savvy consumers who value digital convenience.
3. Diverse Product Offerings: C-stores have expanded their inventories to include gourmet coffee, craft beverages, and ethnic foods, appealing to a more diverse customer base.

Predicted Demographic Shifts:

• Urbanization: As urban populations grow, c-stores in metropolitan areas are expected to cater more to young professionals and urban dwellers seeking quick meal solutions.
• Aging Population: With an aging demographic, there may be an increased demand for health-oriented and easy-to-consume products.
• Sustainability-Conscious Consumers: Future shoppers are likely to prefer stores that offer eco-friendly products and sustainable practices.

New Types of Food and Beverage Items in Convenience Stores:

C-stores have diversified their offerings beyond traditional snacks and beverages:

• Fresh and Prepared Foods: Items like deli sandwiches, salads, and sushi have become commonplace, catering to consumers seeking quick yet wholesome meals.apnews.com
• Health-Focused Products: There's an increased availability of protein bars, smoothies, and gluten-free snacks.
• Gourmet and Specialty Beverages: Premium coffee, craft sodas, and energy drinks have been introduced to meet evolving tastes.
• Innovative Snacks: Products like flavorless candies and plant-based jerky are now available, reflecting adventurous consumer palates.Wikipedia+1The Times+1

These changes underscore the c-store industry's adaptability to consumer trends and its commitment to meeting the evolving needs of its diverse clientele.

DSD & The Three-Tier Distribution System: The Real Goal

Understanding the Three-Tier System

The Three-Tier Distribution System was originally created for alcohol but applies to most food and beverage brands:

1. Tier 1: Manufacturers (You, the Brand) – Create the product.
2. Tier 2: Distributors – Purchase from manufacturers and sell to retailers.
3. Tier 3: Retailers – Sell to consumers.

DSD (Direct Store Delivery) distributors are the most valuable for long-term success in this system, whether they sell chips, snacks or non alcholic beverages.

What is DSD?

DSD distributors don’t just deliver product—they actively sell it. Unlike UNFI or KeHE, which mostly take orders, DSD distributors place sales reps in stores every week to merchandise, restock, and ensure your product moves.

• Coca-Cola, Pepsi, Dr. Pepper Keurig, and Frito-Lay are all DSD distributors.
• Independent DSD beverage distributors like Big Geyser (NYC), LA Distributing (California), and Polar (New England) do the same for smaller brands.
• Beer distributors (Molson Coors, Anheuser-Busch, etc.) also distribute non-alcoholic beverages but are traditionally weaker, but getting better, in this area. The best beer distributors who sell non alcoholic beverages and snack items usually have separate divisions specifically focusing on these products and not the alcohol items.

Why DSD Distributors are the Real Goal

• They have salespeople in stores every week. KeHE and UNFI do not.
• They control the refrigerators in stores. If it’s cold, it’s sold.
• They have the best relationships with supermarkets, convenience stores, and food service.
• They execute displays, promotions, and pricing strategies.

Beyond Natural Stores: Expanding into Food Service, Drug, and Club Stores

Eventually, the most successful brands don’t just sell in grocery and natural stores—they also sell in:

? Supermarkets (Safeway, Kroger, Publix, etc.) ? Convenience Stores (7-Eleven, Wawa, Buc-ee’s) ? Food Service (Airports, Restaurants, Hotels) ? Club Stores (Costco, Sam’s Club, BJ’s) ? Drug Stores (CVS, Walgreens) ? Military Outlets (Commissaries & Exchanges)

By starting small, building demand, and working towards DSD distribution, brands can break out of the “UNFI and KeHE” bubble and achieve true mass-market success.