Confidence in distributor and manufacturer branded products and increased awareness of distributor brands are contributing factors in foodservice operators purchasing decisions, this from a new study by Affinity Group Sales and Marketing. The study, done in May 2023, talked to 841 operator decision makers nationwide, including commercial foodservice (70%), non-commercial foodservice (13%), K-12 foodservice (11%) and college and university foodservice (6%).
In the past, operators were less knowledgable about distributor brands, the findings of the study make it clear that today’s operator is very much aware of the alternative to manufacturer brands. 93% of all operators are familiar with there “private label” and 98% are familiar with the term “distributor brand”.
“Consumers may be less knowledgeable about distributor brands, but we found that the concept is well understood among operators,” said Megan Teates, Executive Vice President at Affinity Group Sales and Marketing. “Operators comprehend the concept- they can identify which is which and they have a good idea why distributors offer them.”
Operators are savvy about the distributor brands’ competitive positioning. They view their opponents as lower priced alternatives to manufacturer brands and sometimes of similar-but never better-quality. The distributors score poorly on “premiumness” and on quality but do very well in value.
While the study shows that operators are willing to purchase distributor products, manufacturer brands are seen as being better quality and of having better brand equity. Although, the study indicates there is less differentiation between manufacturer and distributor brands than the manufacturers may like. Manufacturers win on best quality and the so-called “premimumness”. But for a great many other attributes, operators say manufacturer brands and distributors are equal.
When asked which attributes best describe manufacturer brands, distributor brands or both:
- 71% of operators say “availability” best describes both types of products
- 64% of operators say “dependability” best describes both types of products
- 56% of operators say “consistency” best describes both types of products
- 48% of operators say “authenticity” best describes both types of products
Operators says they were more comfortable buying non-food items from distributor brands, or they would also buy commodity ingredients like oil. Currently, distributors win in non-food categories where the quality is seen as less of a risk. Operators say they are comfortable buying distributors for paper products (64%), plastic cutlery (63%) and cooking oil (53%).
Operators avoid the distributor brands for categories where things like quality, taste and texture influence the final product; beverages (19% say they were comfortable), prepared soups and sauces (20%), French fries (28%), fresh meat and poultry (30%) and baking supplies (34%). But the operators may not be willing to stick with distributors long term. Nearly 8 in 10 (79%) of operators said they plan to return to the manufacturer brands when they can citing quality and consistency.
The study shows many reasons that the operators will switch of have switched to distributor brands. The number one is “sometimes its the only one in stock” followed by “costs less, quality as good.” 75% of operators have received distributor brand swaps unplanned, 84% say the swap was because the manufacturer brand was out of stock. Many say they don’t return to the manufacturer brand after trying the distributor one. Product supply seems to be even more important that strong brand awareness to maintain manufacturer brand position.
While price is the key distinction between manufacturer and the distributor brands, so is quality. While the manufacturer brands are regarded as having better quality, brand equity; more and more manufacturer brands will need to prove if the higher quality is worth the higher price.
“In any market where distributor brands compete, manufacturer brands must continue to innovate to stay ahead,” said Enzo Dentico, Chief Executive Officer of Affinity Group Sales & Marketing. “Whether the innovation is in packaging, formulation or even product bundling, being a leader in new ideas is an important strategy to maintain the prevalence of manufacturer brands.”
Operators are more informed and accepting of distributor private brands than ever before since they have encountered inconsistencies in recent years-particularly in availability and cost. The study reiterates the need to impactful actions by both distributor and manufacturer brands while operators continue to pivot and adjust to the needs of the costumers.
Affinity Group’s Distributor Brands Study was based on the responses of 841 food service operators, they represented decision makers for dining operators in all food service segments and geographical regions.