As a former senior buyer for Lidl Ireland & Northern Ireland, Stephanie had the opportunity to work closely with food and drink producers and witness first-hand the opportunities a retailer can offer new product launches. New product launches have the potential to transform a producer’s business by boosting turnover, increasing profit, and providing a solid foundation for business growth. However, Stephanie also witnessed the obstacles that producers encountered while attempting to launch new products into the market. These challenges often stem from insufficient market research or a lack of understanding of the retailer’s strategy, leading to prolonged negotiations or potentially no listings. Here, Stephanie outlines some key tips on how to present your product effectively and how to negotiate the best possible outcome.

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Negotiation tips

Before you start your negotiation, be sure to do your homework. No two negotiations are the same. Whether you are negotiating in relation to a brand-new product or an existing line, the following tips will help you achieve a more successful, efficient result.

• Understand your sales data versus the previous tender. This will be essential in understanding your current position and the retailer’s proposal.

• Understand the retailer and what impact they will have on your business. Be aware of the retailer’s position within the market and what macro trends may affect this. For example, the ongoing cost-of-living crisis is impacting consumer spending habits, this may influence retailers to increase private label products to give consumers more affordable options.

• Understanding your competitor landscape is essential. This is important so that you understand if there are competitors that could potentially replace your business. For example, a fresh pizza supplier should know the suppliers in their subcategory (stone-baked, thin and crispy, chilled bases, pizza sauce and slices) but also the overall convenience category. This will give an understanding of direct and indirect competitors’ capabilities.

• When completing your costings, ensure they are meticulous, that you understand them, and that you can

• stand over them.

• Industry data is useful to back up your argument; ensure it is from a credible source. This includes data on any input costs that affect your price. Raw materials, electricity, packaging and staffing costs are some elements to review and have industry data on.

• When sourcing and buying ingredients for a product, ensure you are aware of the seasonality of products. This will affect the demand, supply and prices. Buying products during harvesting periods can be cost-effective, depending on the harvest.

• Keep up-to-date on the main ingredients in your product. Be aware of the harvest quality, as this will impact your prices in the future.

• Know your walk-away price. This is essential to know and understand. This means having a bottom-line price that you are happy to walk away from the retailer on.

 

Pitching a new product to a retailer

You have spent the time perfecting the product, tweaking the recipe, creating the branding, and managing costs – now you have to sell the product! This can be a daunting task, but preparation is key. Here are some tips to help you prepare for the presentation:

• Research the retailer before presenting to them. Understand their product range, market share, and sustainability targets that may affect your proposal.

• Conduct research on retail pricing in your product category to understand the pricing expectations of the retailer and consumers.

• Create a professional and consistent presentation that includes information about your company, product, and unique selling points. Incorporate information on shelf life and any other essential details.

• Ensure your product is labelled correctly and not over-packed, so the buyer can easily navigate the samples. It’s imperative to send the products in the correct logistics route; for example, chilled products should be kept chilled in a polystyrene box.

• Have the real-life product design and format ready for the retailer to view. Most packaging and design agencies provide trial runs to help you with this. Having the product ready for the retailer to taste is also essential.

• Show the retailer the opportunity of the product in their business by providing feedback from consumer tastings, category gap analysis and other relevant data.

As a buyer’s role is often very busy, making a good first impression and being time-efficient is essential. By following these tips, you can negotiate effectively and present your new product to a retailer with confidence, increasing the chance of success for your business.

 

Ifac recently launched Cracking the Retail Code, a guide for food and drink businesses which provides practical knowledge, tips, insights and tools to help create successful products, and highlights what retailers look for from new products. The guide begins by clarifying the different product categories and identifying sources that can provide producers with valuable information. Understanding your competitor landscape is a key chapter and is relevant to all food and drink producers, even if you aren’t creating a new product. Having a comprehensive understanding of your category will provide you with invaluable information that will aid in successful category management and product launches. Using the knowledge from this guide, you will be ready to present a new product to a retailer and negotiate effectively. You can download your free copy of the guide at: www.ifac.ie/cracking-the-retail-code