Industry News | March 25, 2011

Manufacturer Vs Distributor Brands: Who's the Winner?

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How do food manufacturers protect and promote their brands while co-existing with distributor brands? The answer seems to depend on the food product in question and where it is being served, according to recent research from foodservice consultants Technomic.

Across the board, however, the competitive environment between distributors and branded manufacturers has never been more intense, particularly in today's environment, where cost pressures coupled with soft sales have squeezed margins to the point where operators are interested in any kind of cost savings.

"In today’s environment, operators are much more open to considering distributor brands. The perceived lower cost and improving quality of these products have increasingly positioned them favorably against manufacturer branded products in the eyes of operator purchasers and users," says Joe Pawlak, vice president of Technomic. 

The Status and Outlook for Distributor Brands study explores brand awareness and loyalty, brand switching, quality perceptions, value definitions, and segment analysis. Where possible, results are compared to prior research. Key findings include:

  • Distributor brands have increased their share of the foodservice market and are expected to continue to do so moving forward.
     
  • While operators who maintained their loyalty to manufacturer brands used front-of-house, their preference for use of manufacturer brands for back-of-house prepared foods and commodities dropped 12 percentage points since 2007.
     
  • Awareness of distributor specialty brands is increasing, and many operators do not necessarily associate these brands with specific distributors. Rather, they are often viewed as an alternative manufacturer brand.

The report examines various food categories (frozen French fries, steak sauce, canned vegetables, etc.) based on client specifications, and provides data for different user groups, including limited- and full-service restaurants (independents and chains) and foodservice operators in the travel and leisure, business and industry, schools, colleges, and healthcare industries. 

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