---
title: "Is the Foodservice Channel a New Wealth Opportunity for Distributors?"
description: "Recently, the author interviewed a beverage distributor and discovered a unique regional business case: a private-label new product generated over one million yuan in sales within a week of launch, with a gross margin as high as 50%. The author consulted the distributor and gathered insights from other distributors and brand marketers, offering a perspective for distributors seeking business opportunities. It should be noted that this case may reflect maximum results under specific regional conditions and does not represent the national market."
author: "澄韵"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-09-19"
language: "en"
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# Is the Foodservice Channel a New Wealth Opportunity for Distributors?

> Recently, the author interviewed a beverage distributor and discovered a unique regional business case: a private-label new product generated over one million yuan in sales within a week of launch, with a gross margin as high as 50%. The author consulted the distributor and gathered insights from other distributors and brand marketers, offering a perspective for distributors seeking business opportunities. It should be noted that this case may reflect maximum results under specific regional conditions and does not represent the national market.

Recently, the author interviewed a beverage distributor and discovered a unique regional business case: **a private-label new product generated over one million yuan in sales within a week of launch, with a gross margin as high as 50%.** The author consulted the distributor and gathered insights from other distributors and brand marketers, offering a perspective for distributors seeking business opportunities. It should be noted that this case may reflect maximum results under specific regional conditions and does not represent the national market; it serves as a reference for distributors in other regions. (Names of the distributor and trading company are pseudonyms.)

**Is it true that "those who win the foodservice channel win the market"?** Distributor Wang Xiaobin has been in the beverage industry for over 30 years, growing with a brand, and now runs his own private-label business in his small region. Within less than six months, he has deeply felt the power of the channel. The transition from distributor to brand owner has been eye-opening for Wang, validating his profound understanding of channel business. He specifically mentions the foodservice channel, which he has always deliberately maintained in his beverage business.

From Wang's perspective, very few brands and distributors can directly control and serve foodservice outlets. Although the importance of the foodservice channel is often talked about, attitudes and actual execution often fail to align.

**Currently, most foodservice channels are managed extensively, and compared to the intensive distribution of traditional channels, brand investment in personnel and expenses for foodservice is relatively low.** Even giants like Coca-Cola and beer companies, which have penetrated deeply into foodservice, have weak control over foodservice outlets.

He specifically explains that in his prefecture-level city, the giants' energy and investment are limited. The so-called coverage of foodservice outlets only includes some high-volume key accounts with maintenance; most outlets have no personnel. These small outlets neglected by giants are the best entry point for distributors doing local brand business. **Currently, Wang has 12,818 effective controlled outlets in City A, of which 6,964 are foodservice outlets, accounting for 54%, and the number is growing rapidly.**

Why does he value foodservice outlets so much? Wang's view is that as a local, he grew up in City A, walking its streets and witnessing changes. But some things remain constant: new foodservice outlets are always opening, and the ratio of foodservice outlets to traditional small stores has grown from 1:1 initially, to 2:1, to nearly 6:1 now—astonishingly numerous. He thinks, putting himself in a consumer's shoes, under what circumstances would he never refuse a drink? **The answer: in a restaurant.**

Also, when ordering drinks at a restaurant, does he really care about the brand? If the desired product is unavailable, would he choose another? **The answer: yes.**

So, as a beverage distributor, aren't these foodservice outlets his biggest sales channel? After over 30 years of agency business, with shrinking profits and little left after costs, Wang began to think and act. He formed a professional team and developed a flexible strategy.

**Is the foodservice channel really that difficult? That's because you're not using the right methods!** In the perception of most frontline FMCG professionals, the foodservice channel is a tough nut to crack. To be a professional channel player, Wang has his own approach. For him and his team, they just need to replicate the traditional channel with targeted adjustments, and conquering the foodservice channel is entirely feasible. Here are some key points:

**—What products sell well in the foodservice channel?** By category, mainly water, tea, juice, soda, milk, and alcohol. By packaging, mainly glass bottles, cans, cartons, and PET.

Wang told the author that among all his products, soda sells best in the foodservice channel. As a conceptual example, **if tea and juice combined account for 20% of shipments, soda can reach 90% in the same period.** This data comes from Wang's six-month trial of private-label tea, juice, functional drinks, and soda, with soda exploding within just one month.

Moreover, foodservice consumers are extremely price-insensitive, and the closed environment actually favors new brands entering.

**—How to get new products into stores?** An unknown brand is generally called a "generic brand" by store owners. How to sell "generics"? Wang's approach is as follows: If store owners don't want new products, give them away! This isn't consignment; it's free. But is it enough to just drop a case and leave? Of course not. Dedicated personnel are crucial.

**First, your own people must act: don't give whole cases; break them open and place all three flavors in the cooler.** This step is very important and must be done—**doing this can achieve an 80% sell-through rate. After this, other actions can be added as needed, but they are not essential, just icing on the cake.** Wang believes that multi-flavor display is far more effective than single flavor. Many manufacturers' new products end up with only one flavor left, possibly due to three reasons:

**1. Treating entry into the market as the whole battle. 2. Lacking a deep-service team. 3. No follow-up visits.**

The opportunity here is that many brands' control over the foodservice channel is not as good as their data suggests; even Coca-Cola cannot maintain every single store. Additionally, since distributors directly own the brand, many unnecessary steps are eliminated, leading to higher profit margins and more pricing flexibility, maximizing profits for both parties.

Wang adds that pricing logic in foodservice is completely different from traditional channels. Traditional pricing is relatively fixed, but in foodservice, you only need to give store owners a benchmark price; restaurant owners have their own supply price standards, offering more operational space than traditional channels.

**—Channel: from surface to points, visits drive sales** **"Surface" means: visibility rate.** This is the crucial first step: how to make your product as widely and comprehensively distributed as possible, so more people see it.

**"Points" means: single-store shelf space,** how to maximize your product's shelf presence. In the foodservice channel, occupying shelf space almost equals occupying the cooler. Product presence in the cooler can directly equate to sell-through. Wang believes, "Store owners have a simple perception: the more you visit, the better it sells."

In the early stage of new product promotion, visits should be daily or every other day depending on the outlet. Based on current results from gift-to-sale conversion, visiting every other day after the initial gift can successfully convert new stores. Wang has established a guerrilla-style special forces team. Currently, the team uses an integrated vehicle-visit-sales model, with 3-5 people per group and a new energy vehicle.

He has developed an interesting visit model: the vehicle has become a mobile distribution station, or a mobile warehouse or forward warehouse. A new energy vehicle can carry over 100 cases, supporting daily order delivery and providing sample delivery for other team members. Additionally, due to the nature of the foodservice channel, salespeople have flexible working hours; many start in the afternoon to avoid disturbing store owners during busy times.

**Reflection: Has the era of channel dominance brought opportunities to distributors?** Distributors becoming brand owners is not unprecedented. Some brand leaders, like Jiang Xiaobai's Tao Shiquan and Nongfu Spring's Zhong Shanshan, were once distributors. Wang says distributors who want their own stage must take risks and try. He believes that in the soft drink industry, products lack core technical barriers, so channel value outweighs product value.

In the past, the industry equated distributors with channels, but in reality, have 90% of distributors truly done channel work? The channel is defined as all links from production to consumption, but distributors' capabilities often cover only one or two links. In the soft drink industry, brands have done too much channel work that should belong to distributors. For example, Coca-Cola's 101 system, Wahaha's joint sales system, and Master Kong's intensive distribution are all results of brand investment, becoming their key competitive advantages and moats.

Wang believes that distributors should not blame external factors but start from the essence of things, recognize their weaknesses in the manufacturer-distributor relationship, and cultivate their core strengths.

**Instead of complaining about the external environment, strong manufacturers, or fearing risks and clinging to the status quo, it's better to bravely take the step of self-improvement.** Manufacturers and distributors are not dependent but independent entities; they can cooperate, but distributors must have the confidence to stand on their own. Brands are always new, but the channel is there; if you don't seize it, it becomes someone else's opportunity.

**Are you "watching" me?**


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