---
title: "How Should Distributors Consolidate Their Agency Product Lines?"
description: "Three years ago, the author conducted market research in Heilongjiang and found a county-level distributor representing 38 brands of various sizes, from Shuanghui and Yanjing Beer to obscure condiments and pickles. Despite a 1,500-square-meter warehouse, eight delivery trucks, and 21 employees, annual revenue was under 30 million yuan, and the company was unprofitable year after year. The article explores how distributors should integrate their product portfolios, offering methods based on brand awareness, product life cycle, unique features, category space, category momentum, and gross margin."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-07-02"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/how-should-distributors-consolidate-their-agency-product-lines-d8e0cd3e/"
markdown: "https://xinjignxiao.com/en/articles/how-should-distributors-consolidate-their-agency-product-lines-d8e0cd3e.md"
original_source: "https://mp.weixin.qq.com/s/O-BiD0BdqIHx34lHXuLEpg"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E5%A6%82%E4%BD%95%E6%95%B4%E5%90%88%E4%BB%A3%E7%90%86%E4%BA%A7%E5%93%81-d8e0cd3e.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/how-should-distributors-consolidate-their-agency-product-lines-d8e0cd3e/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# How Should Distributors Consolidate Their Agency Product Lines?

> Three years ago, the author conducted market research in Heilongjiang and found a county-level distributor representing 38 brands of various sizes, from Shuanghui and Yanjing Beer to obscure condiments and pickles. Despite a 1,500-square-meter warehouse, eight delivery trucks, and 21 employees, annual revenue was under 30 million yuan, and the company was unprofitable year after year. The article explores how distributors should integrate their product portfolios, offering methods based on brand awareness, product life cycle, unique features, category space, category momentum, and gross margin.

**Warm Tip: Click the blue text above “FMCG Distributor Professional Consulting” to learn more about marketing and distributor internal management.**

Three years ago, I went to Heilongjiang for market research and found a county-level distributor representing 38 brands of all sizes! Among them were big names like Shuanghui and Yanjing Beer, down to obscure oil, salt, soy sauce, vinegar, and pickled vegetables—everything. Additionally, the warehouse was nearly 1,500 square meters, with 8 delivery trucks and 21 employees, yet annual revenue was less than 30 million yuan. The most critical issue was that the boss felt no product had a low gross margin, but at year-end settlement, the company was unprofitable every year. The boss sensed a problem but didn't know where it lay! An expert advised: too many products, no promotional focus, excessive inventory, too much slow-moving stock, too much capital tied up, high financial costs—each product sells a little, but none achieve volume, and none can become the local number-one brand.

In fact, there is no direct proportional relationship between the number of products a distributor represents and their business scale or profitability. It's not that more products mean higher sales and profits. Truly successful distributors have fewer but more refined product lines, allowing them to concentrate resources and energy to achieve breakthrough in single products. So, how should distributors consolidate their agency products? Which ones should be cut? Which should be kept? How should they be combined? What standards and methods exist?

**Brand Awareness Determination Method**

How to assess which agency brand has high awareness? The method isn't complicated: if you represent two brands in the same category, keep the first-tier brand and drop the second- or third-tier one. For example, if you represent instant noodles from both Master Kong and Jinmailang, keep Master Kong. If you represent two first-tier brands, such as Wahaha and Nongfu Spring, keep the one with better trends, higher profits, and better service. The benefits of keeping brand products are:

1. Brand products have standardized management; following a well-managed company helps distributors grow faster.
2. Brand products are easier to distribute, creating stickiness and loyalty among channel customers.
3. They can drive the distribution and sales of other products, especially those with attractive margins.
4. When a brand product faces a crisis, sales are least affected and recover fastest, while second- and third-tier brands and unbranded products often see larger declines and longer recovery periods.

**Product Life Cycle Determination Method**

Every product or category has four stages: introduction, growth, maturity, and decline. No matter how strong the brand, if the product enters maturity or decline, even the distributor's exceptional operational ability and network cannot reverse the downward sales trend.

For example, with the spread of electricity, as a candle distributor, no matter how hard you try, you can't change the declining sales trend. Similarly, carbonated beverages are seeing a global decline in consumption and have entered a decline phase; despite current large sales, future expectations are inevitably lower. Instant noodles have a worsening consumer reputation, and repeat consumption is decreasing—what methods can guarantee sales growth? For baijiu priced under 10 yuan, as consumption levels and purchasing power rise, the mainstream price band moves up, and products in this band will inevitably exit the stage. In short, distributors should keep sunrise products and cut sunset products.

**Unique Feature Determination Method**

When shopping, consumers have a mental menu for each category; the products they choose first are either “number one” or “the only one.” Number one may be due to brand or habitual purchase; the only one is about distinctiveness. Number one may not last, but the only one is enduring because it is irreplaceable, and its appeal is far greater than that of number one. No matter how poor the economic conditions, certain new categories with unique features see rapid sales growth. When instant noodles overall lacked growth, Master Kong launched Old Tan Pickled Cabbage Beef Noodles, reviving the company. When Master Kong's beverages were lukewarm, it launched Rock Sugar Pear Drink, and sales quickly rose. While Lulu, mainly selling almond milk, hovered around 2 billion yuan in annual sales, Yangyuan launched walnut milk and grew crazily, unstoppable.

Similarly, as plant-based protein drinks, Yangyuan mainly sells walnut milk, Chengde Lulu mainly sells almond milk, and Yinlu mainly sells peanut milk. Yangyuan also has almond milk, but in consumers' mental menus, Lulu's almond milk is the most authentic. That's the unique feature. So distributors should evaluate the category or product features among their agency brands and keep those with distinct characteristics.

All products on the market have features, but many are pseudo-features. There are simple tools to judge whether a product has a real feature:

1. Is this feature unique? I have it, others don't—exclusive technology or patent. Even if others have it, they are imitating me. For example, Qiulin's kvass, or Moutai in baijiu.
2. Can it make consumers think of you first within the same category? For example, all instant noodle companies make braised beef noodles, but when consumers think of braised beef noodles, they think of Master Kong.
3. One feature is enough; if a product has many features, it equals no feature. For example, Wanglaoji—clears heat; Volvo—safety; Leyuan Fruit Orange—large pulp.
4. Features should be simple, easy to remember, and easy to associate. For example, Nongfu Spring—nature's porter; Six Walnuts—use your brain often, drink six walnuts. A product's selling point must be its most essential attribute. The more essential, the simpler, and the easier for consumers to remember.
5. Quality must support the selling point. Without quality assurance, even the best selling point won't drive sales.

**Category Space Determination Method**

A product's absolute sales volume is directly linked to category space. Products with large category space and capacity are relatively easier to scale, while those with small category space are hard to scale. For example, a county-level distributor can sell 20 million yuan of walnut milk a year, but with the same effort and resources, promoting an apple cider vinegar might not even reach 2 million, because the category space for apple cider vinegar is too small, the consumer base too limited, and consumption frequency too low. Category space determines market capacity, market capacity determines product capacity, and product capacity determines the distributor's sales. So you need to review all your agency brands: keep those with large category space and cut those with small category space.

**Category Momentum Determination Method**

Can pigs fly? Almost everyone says no. But when a typhoon comes, pigs can fly, and people can too. That's leveraging momentum! Distributors also need to leverage momentum in product selection. Some distributors have strong market sensitivity and will take on ahead-of-the-curve categories. However, new categories require time for early guidance, promotion, and market cultivation. Many people struggle to persist with a new category and give up before long, like giving away a child just before they grow up, leaving only regret.

Since 2008, functional drinks have been hot; many distributors with strong sensitivity leveraged the trend and made a fortune. In recent years, plant-based protein drinks have been selling well, and many distributors quickly sought agency rights, rapidly expanding their businesses. That's category momentum marketing. Tea drinks, functional drinks, plant proteins, rock sugar pear drinks, water, herbal tea, old tan pickled cabbage, small bread, potato chips, baijiu—all these categories have had their moment. Did you catch the wave? Can you catch the next wave of banana milk, red wine, or premium water?

**Gross Margin Determination Method**

The ultimate purpose of business is to bear social responsibility, and the premise is to create reasonable profits. Distributors should evaluate the gross margins of all agency products and calculate all operating expenses. If a product sells well but its gross margin can't even cover costs, what reason is there to keep it? Distributors should set minimum gross margin standards: instant noodles no less than 5%, beverages no less than 10%, snacks no less than 15%, and baijiu no less than 30%. Any product below these standards should be cut unconditionally; otherwise, the higher your sales, the greater your losses. So, in product selection, adhere to this: retained products must have gross margins above the average.

It's important to note that even if the retained products meet the above conditions—sunrise trends, unique selling points, large market capacity, good category trends, leverageable momentum, and high margins—distributors must also consider product combination, complementarity, and compatibility, especially factors like peak and off-season, high-profit vs. low-profit trade products, main sales vs. delivery vehicle allocation, and the mix of volume-driving and image products. Otherwise, you might end up with all first-tier brands but low profit margins, or be busy half the year and idle the other half, wasting resources. The ultimate goals of product integration are:

1. From doing more to doing less, from less to refined, from refined to distinctive. Products should be few but refined, refined but unique, so that retained products don't compete with each other but complement each other.
2. Maximize resource utilization and minimize costs.
3. Let secondary wholesalers and retail terminals meet as many of their product needs as possible from your single source. This cultivates as many loyal secondary wholesalers and retail terminals as possible. The more loyal they are, the less impact economic crises and off-seasons have on your sales.

(The author is the president of Beijing Winning Marketing Enterprise Management Consulting Co., Ltd.)

Source: Huatang Business Home

--------------------------------------

**Like this article? Feel free to click the top right corner to share to your Moments;**

About us:
WeChat name: FMCG Distributor Professional Consulting Management
Account intro: 20 years of FMCG distributor operation and management experience, professionally targeting distributor internal affairs:

Click the “Read Original” below to enter our micro-community for interactive communication and questions.

Learning and exchange QQ group: 344257092

Reply 1 to enter the micro-official website to view historical messages.

-----------------------------------------


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671