Distributor Dialog – Published in APPMA Advisor
Fall 2003

In the past several issues of APPMA Advisor, we’ve talked about the components that make a successful manufacturer/distributor relationship. This month, we’re going to look at an example of a manufacturer that launched a highly successful product and the obstacles they overcame in building a relationship with a key distributor.

In the Beginning…
The founders of S & M Nutec, Judy and Joe Roethlie, developed a dog treat that was healthy, appealing to dogs and freshened the dogs’ bad breath. Initial sampling in Kansas City pet and grocery stores indicated that the product had high appeal and, in 1999, they decided to make a nationwide launch.

However, getting nationwide distribution in the pet industry isn’t as simple as making a few phone calls. The average distributor carries between 12,000 and 15,000 different products from about 200 manufacturers.

“The biggest challenge in getting initial distribution is that no one knew what the product was,” says Jay James, vice president of sales, retail division for S & M NuTec. “Nobody wanted to take a risk on a product that hadn’t been proven yet.”

So S & M NuTec pounded the pavement. They attended trade shows, dog shows, consumer shows – anyplace where dog owners gathered to build some recognition for Greenies. Once the dogs got the bones in their mouths, demand for Greenies began to grow, as did interest from pet industry distributors. However, S & M NuTec was far from a distributor’s dream.

“In the beginning, we had more issues than we had help,” says Fred Schober of Super Dog Pet Food Company in Leola, Pa., a Greenies distributor. “They had different policies for different customers, fill rates were not high, order accuracy was a problem and their packaging was not ideal.”

“We probably rolled out the product too quickly,” agrees James. “We probably should have started regionally. We just didn’t have the production force for nationwide distribution.”

So how did S & M NuTec come to be one of Super Dog’s integral suppliers?

When asked about what separates the their top suppliers, distributors point to these key issues:

1. Reliable shipping and good fill rates so distributors can count on having products when they need them. This increases turns and reduces inventory costs.
2. Proper packaging to make the product more at retail, but also to facilitate its movement through distributors’ warehouses.
3. A comprehensive marketing plan that carries through to retailers and consumers. Distributors are better able to help manufacturers who help themselves by building brand recognition.
4. Positive responses to distributor feedback. No relationship is perfect, but distributors want to know that, if there is a problem, that problem will be addressed.

Here’s how the S & M NuTec/Super Dog relationship measured up – then and now.

“When we first started out, we just didn’t have the production capacity to meet the demand,” adds James. “We shipped what we could and there were five and six-week lead times.”

This was the first problem S & M NuTec addressed. With their sales volume literally doubling by the quarter, they added production capacity, and now, when a distributor orders Greenies, orders are shipped within a week.

Packaging
“After the fill rate, the next improvement we started to see was in packaging,” says Schober. “They got away from the loose, bulk stuff and got the Greenies name on the product. They started to work on their identity.”

“When we started, we had products in value packs, which were just polybags, and large bulk cases,” says James. “We didn’t get any brand identity from the individual bones. People just put them in a bowl next to the cash register.”

The first improvement was stamping the word Greenies on the side of the bones. Then, instead of selling them in bulk, S & M NuTec put the products in “try-me” merchandisers which allowed them to be displayed. The bones are also wrapped individually. The packaging is now UPC scannable and carries the Greenies name.

Promotion
Once the production and packaging issues were addressed, S& M NuTec turned its attention to promotional support. The initial Greenies promotions focused on providing extra product when certain amounts were purchased.

“Our goal with promotions is to leverage the product to the consumers,” says James. “The free product relates to a discount which can be passed along to entice the retailer to buy the product.”

Execution at the retail level is the key element S & M Nutec seeks from its distributors.

"We want our distributors to handle all of our merchandising,” says James. “We want them to make sure our materials get into the retail stores and the displays go up. The more we can get our brand in secondary locations around the store – around the perimeter of the store, clip strips near the dog food, transaction areas and, of course, on the shelves – the more sales will be made. We’re asking our distributors to execute our plan at the retail level."

Partners in Profit
Most recently S & M NuTec has launched its “Partners in Profit” program.

“We went to key distributors and told them we want to partner with them to get the products out better,” says James. “We built sales criteria into the program as well as performance incentives.”

"They came to us with a very good presentation about the issues they have had with their customers and how they were going to address those issues,” says Schober. “The presentation also detailed their marketing plans and laid out their promotional strategy for the next six months.”

James noted that advance notice of promotions helps get Greenies into distributor flyers and gets distributors on board with the S & M NuTec program by allowing them to plan better. The efforts are appreciated by Super Dog.

“They have made some great inroads,” says Schober. “They are really grabbing the bull by the horns in terms of addressing distributor issues at the pace they are growing.”

Have a question on distributor relations that you would like to have addressed in a future column? E-mail questions or comments on something you’ve read in this column to Steve King at steve@ksgroup.org.