"Retail" CPG Diving Into Foodservice/Alt. Channel

Key Takeaway: Before exploring which of your Consumer Packaged Goods (CPG) products could be relevant for foodservice and alternative channels, it is important to understand the operationalization behind these on-site or in-home delivery points relative to how they fit with what you know about each product. A look at some of the main components:

1. Packaging Requirements

Packaging for Foodservice Channels Products destined to food service channels usually need bulk or larger size packaging. That the packaging is solid and practicable for being carried through commercial kitchens or institutional use. This frequently includes budget-friendly packaging solutions which successfully protect the product throughout conveyance and despatch.

Alternative Bands: Different alternative bands (online, c-stores and speciality stores etc) have differing needs for packaging so be clear as to what you will require. For example, online needs space to keep safe during long distance shipment and supermarkets require more visual packaging with bold colours,clean photography but only if its sealed well enough so the product doesnt leak.

2. Shelf Life

Foodservice Channels Products with extended shelf life are more likely to be preferred in the foodservice category due to decreased waste and inventory management. Non-perishable products can sit in storage for a while and they don't have to be matched up with high-end restaurants that need the freshest ingredients.

Shelf life requirements in the alternative channels are category and channel dependent. It is common for products sold online to require a longer shelf life because of shipping times, while those in convenience stores need only mild preservatives due to faster turnover.

3. Pricing Dynamics

Food service channels — Foodservice pricing is usually cheaper on a per-unit basis, because they buy at the value pack price. They want value and cost-efficient, not branding. You have to cost your product knowing that the margins will be shaved, but in a way you can still make margin.

Diversification channels : The pricing strategies used in alternative channels can be different. For instance, in the case of specialty stores premium pricing could be allotted due to a niche market availability while online channels may allow for dynamic pricing based on demand, promotions and even shipping costs. Knowing how prices can flex in these channels is critical to servicing at the right levels while offering competitive yet profitable price points.

4. Distribution Complexity

Foodservice Channels: Foodservice distribution are usually less complex due to you selling break bulk or in into distributors as your customer, but trust and relationships must be established early with these key influencers.

Alternative Channels: For an alternative channel, there may be a need for more complex distribution strategies like third party logistic providers in case of online sales or dealing with hundreds of smaller accounts where specialty retail is involved.

5. Regulatory Considerations

For Foodservice Channels, you'll want to make sure that your produce meets food safety regulations (as with any fresh or perishable product). This may entail specific packaging, treatment and transport methods.

Other Channels: Depending on the channel, different regulatory requirements may apply (particularly online sales where shipping regulations govern packaging and product formulation; i.e., specific regions have restrictions for certain ingredients).

6. Branding and Marketing

Foodservice Channels: In foodservice, branding is an important part of selling to chefs or managers. They tend to market their products very B2B, emphasizing quality, cost savings and ease of use.

Alternative Channels- Advertising/Branding and Consumer-facing Marketing is key in Alternative channels. This is where packaging design, online presence and in store displays play a big role to catch the consumer.

Conclusion

Adapting your CPG product to the correct channel also requires an examination of how these factors interplay with foodservice or other channels unique needs. Understanding these will help you shape your strategy for the best success of your product in that specific market segment.