---
title: "Manufacturers Seeking Growth Cannot Do Without Distributors!"
description: "A beer distributor worries about being bypassed as manufacturers experiment with direct supply to chains. However, distributors will not disappear; manufacturers need competitive distributors to win market share, and those who adapt will thrive."
author: "金名"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-05-06"
categories: "Dealer Operations, Management & Methods"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/manufacturers-seeking-growth-cannot-do-without-distributors-c9601d14/"
markdown: "https://xinjignxiao.com/en/articles/manufacturers-seeking-growth-cannot-do-without-distributors-c9601d14.md"
original_source: "https://mp.weixin.qq.com/s/3RG9uJ7fRlH_5wxJ2u7UOw"
translation: "https://xinjignxiao.com/zh/articles/%E6%83%B3%E5%A2%9E%E9%95%BF%E7%9A%84%E5%8E%82%E5%AE%B6-%E7%A6%BB%E4%B8%8D%E5%BC%80%E7%BB%8F%E9%94%80%E5%95%86-c9601d14.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/manufacturers-seeking-growth-cannot-do-without-distributors-c9601d14/"
citation: "金名. “Manufacturers Seeking Growth Cannot Do Without Distributors!.” New Distribution, 2026-05-06. https://xinjignxiao.com/en/articles/manufacturers-seeking-growth-cannot-do-without-distributors-c9601d14/"
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---

# Manufacturers Seeking Growth Cannot Do Without Distributors!

> A beer distributor worries about being bypassed as manufacturers experiment with direct supply to chains. However, distributors will not disappear; manufacturers need competitive distributors to win market share, and those who adapt will thrive.

“Several major chain systems are now sourcing directly from manufacturers. We can only serve traditional supermarkets and mom-and-pop stores. After 20-plus years as a distributor, I don't know when we'll suddenly be abandoned by manufacturers.” A beer distributor is anxious.

In recent years, with the rapid development of online channels and chain systems, many manufacturers have tried to cooperate directly with system stores/platforms, “de-distributorization,” where manufacturers supply directly, bypassing intermediate distributors.

At the same time, more and more distributors have exited the FMCG industry. Those still operating are also anxious, worried that manufacturers will eliminate the intermediate distributor link.

**Distributors Will Not Disappear**

The FMCG industry is undergoing profound channel transformation. The role of distributors is being reshaped, but it is premature to assert their “disappearance.”

1. **Direct supply to terminals is just an exploration of a channel model, and so far, it has only had a short honeymoon period; it hasn't worked out in the long run.**

Many chain systems proactively approach manufacturers to discuss direct supply, and manufacturers are also willing to try “de-distributorization,” even treating it as a new channel model.

With “de-distributorization,” the expectation of manufacturers and chain systems is that both sides will have more room for profit, increasing their respective profits. Additionally, manufacturers use this direct supply channel model as a bargaining chip to constrain other distributors, preventing them from becoming too powerful.

In reality, this direct supply model doesn't last long, at least according to the feedback from manufacturers currently cooperating.

At the beginning of cooperation, the rapid development of the chain system can better meet the growth needs of both parties. But over time, manufacturers find it increasingly difficult, eventually stopping cooperation or re-engaging distributors.

Why?

We are in an era of overcapacity. Chain channels are more powerful than manufacturers; they can't be forced to stock up, and they won't allow any single supplier to dominate. The longer the cooperation, the more uncontrollable sales become. Moreover, chain channels also need to increase profits and sales each year.

From the chain channel's perspective, it's inevitable to increase rebates, display fees, and other costs annually. A salesperson from a large manufacturer said: “Our company directly supplies XX convenience store chain. Their procurement demanded a higher rebate rate, threatening not to stock if we didn't comply. In the end, the manufacturer's leadership, fearing impact on their performance, conceded.”

When costs increase to a certain level, manufacturers may not even make a profit. At that point, cooperation naturally breaks down.

“According to financial calculations, last year we lost XX amount on direct supply to XX chain system. Leadership requires profitability this year, but the other side is tough and won't budge. Now both sides are in a stalemate.”

A dairy business manager sighed, “We're in a dilemma. Continuing under the original terms won't meet the company's profit requirements, but giving up cooperation will affect overall performance.”

**Manufacturers that have tried direct supply have already figured it out: it's better to supply goods to distributors, earning real profits without the hassle of negotiating and communicating with systems, or even repeated back-and-forth. They can relax and still make a profit.**

20 years ago, Yili began laying out direct terminal operations, bypassing distributors, trying to explore another channel model. More than 20 years later, this path still hasn't worked out. Too many problems emerged along the way. Most critically, direct operations have been losing money. Some markets that appeared profitable on the surface actually left a trail of terminal problems; salespeople changed frequently, taking a cut and leaving. Now, some markets have canceled direct operations and handed them back to distributors.

**The manufacturer's goal is to make more money and gain a larger market share, not to eliminate middlemen. The reason for choosing direct cooperation with terminals is to explore different channel models and achieve balance among channels.**

2. **Manufacturers' cost and risk considerations:**

Direct supply to chain systems hasn't worked, and direct supply to scattered stores is even less feasible. If manufacturers supply directly, they would bear huge capital pressure (accounts receivable), logistics and distribution costs, personnel management costs, as well as regional customer relationship maintenance and market order management.

Additionally, the manufacturer's internal staffing would need a comprehensive upgrade. An individual's energy is limited. If all scattered stores were direct-operated, one person responsible for 200 terminals would be the maximum. The number of scattered stores nationwide is enormous. How many salespeople would be needed? Salespeople need management; a manager can directly manage 20 people (based on many companies' practices, directly managing 20 people is already at the limit of personal energy; with more, many aspects would be neglected, and management efficiency would decline). How many grassroots managers would be needed? Above grassroots management, set middle management, also with a direct span of 20 people, layer by layer. Calculating this way, the labor and management costs for manufacturers would be unimaginable for national manufacturers.

**Therefore, from the perspective of maximizing manufacturers' own interests, direct supply to terminals is extremely uneconomical, whether for chain systems or scattered stores.**

**Manufacturers Need Competitive Distributors**

Distributors are indispensable in the offline market. In the current era of intense competition, manufacturers need competitive distributors to grab share and win competition and development.

In recent years, many distributors have exited the FMCG industry, fundamentally due to lack of competitiveness. In business analysis meetings, when distributor sales decline year-on-year, an important reason is that competitors have increased promotional efforts at terminals, taking away our product's sales.

The underlying reasons for this outcome are: when facing competitors' volume grabbing, distributors have a passive mindset, waiting for things to happen, without taking proactive measures; they don't understand competitor distributors; they don't understand terminal needs; even if they take action, it's just for the sake of doing something, seeking inner peace of mind.

**I. Proactively respond to external competition and defend your market.**

The author has visited many clients with declining sales, and the most common reason cited is: competitors grabbed market share.

When a competitor comes, they can take a bite out of your market. In an era of competition, such client value is negligible.

Today, competition is intense and normalized. Distributors who passively wait for manufacturer policies and resources can no longer cope with the current situation. **Only by proactively responding and maintaining resilience can you defend market share.**

A beer distributor mainly handles 10-yuan tier products and holds an absolute dominant position in the local market. The main competitor, to seize sales in this tier, imitated and launched a similar product with similar packaging and taste. Additionally, the competitor's manufacturer invested resources to strongly support it, determined to capture the market.

Facing the competitor's challenge, the distributor quickly organized a team and launched a special campaign to grab volume: “Held mobilization meetings, divided routes, offered team rewards, engaged in a tug-of-war with the competitor store by store, and invited core terminal owners to appreciation dinners.” This combination of actions suppressed the competitor's expansion momentum.

During the process, the distributor collected information from multiple sources, analyzing the competitor's situation thoroughly for the team. The competitor distributor newly took over XX main product. Based on last year's sales volume of that product in the market, they would need at least XX funds (including inventory capital, terminal credit, etc.), but the distributor's funds couldn't meet that, couldn't even handle last year's sales volume of XX product, let alone have the strength to operate a new product positioned against it.

After 3 months, the distributor successfully blocked the competitor's volume grabbing.

Defending is the bottom line. If a competitor can cut a piece of the cake with any move, the distributor's share will only shrink until eliminated.

**II. Be able to proactively attack and win market.**

In today's FMCG market, if a distributor's market, products, channels, and market actions remain unchanged, sales will likely decline because the original market capacity is shrinking.

Competition has reached a life-or-death level. If your sales increase, competitors' sales will inevitably decrease. Only by proactively attacking and grabbing competitors' share can you usher in the next round of development.

To grab competitors' share, many distributors immediately ask the company for resources. If resources are given but results are poor, they think resources are insufficient. The FMCG market doesn't succeed simply by relying on company resources.

A leader from a leading company said truthfully: If just spending money could boost the market, we would have no low-penetration markets left.

**In addition to resources, a series of supporting execution actions around the resources are needed to realize their value.**

In one market, product sales declined. The distributor unthinkingly complained: Competitors have a scan-code promotion, but our product doesn't have one, so sales declined.

So, the company provided policy support and launched the activity. As a result, the distributor's sales still declined.

“This product just doesn't sell,” the distributor blurted out.

The company arranged personnel to visit the distributor's market and found that the distributor had only placed the scan-code product in terminals, with 2 boxes per store, and the product was buried under other items. Apart from the activity notice on the box, no other promotional materials were placed. Many store owners didn't even know about the activity. How could the effect be good?

Therefore, when the company provides resource support, distributors also need to execute a series of supporting actions, such as fully informing about the activity, guiding terminals to recommend, and improving measures after poor sell-through, to maximize value.

**Furthermore, extreme confidence, strong execution, and a tenacious spirit to dare to fight and grab are needed.**

A beer distributor for nightlife venues has grown for 3 consecutive years. Industry insiders can clearly feel that the nightlife market capacity is declining. How did he achieve continuous growth? The distributor said calmly: “I just grabbed competitors' share. Now the environment is bad, other distributors lack confidence or have shifted their focus. That's my opportunity to grab share.”

At a Q1 meeting of a leading FMCG company, several clients with the highest sales growth were invited to share their growth methods. Without exception, their growth wasn't simply achieved by spending money.

“These stores, I personally followed for over a year. After the Chinese New Year this year, I finally secured 7 trendy BBQ restaurants,” the distributor shared with pride on his face, but with a hint of bitterness in his tone.

A distributor responsible for a retail system achieved growth even when the system's capacity growth stalled and no stocking pressure was applied.

The distributor's approach was simple: “Grab the key person in the system and take competitors' volume within the system. Due to business nature, it's hard to meet system procurement personnel; appointments are needed. Even when meeting, they make many demands. People are hard to meet, doors hard to enter, faces ugly, words harsh. It's like this for all suppliers. So I need more patience. When competitors can't wait or can't stand it, my opportunity comes.”

While most distributors are still complaining about the environment and manufacturers, a group of distributors has fought their way out of competition and achieved further development.

**Final Thoughts**

The channel game in the FMCG industry has never stopped. As competition intensifies, the value of distributors becomes more important, and the requirements for distributors are higher. Defending is the bottom line; attacking is a necessary requirement.

Distributors pursuing digitalization, terminal operation, and management innovation are not upgrading for the sake of upgrading, but to survive in a fiercely competitive market.

Competitive distributors will not only not disappear but will become stronger through industry consolidation, becoming indispensable partners for brands. Distributors still waiting for the environment to improve and for manufacturer support will inevitably be eliminated by the times.


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## Citation metadata

- Publisher: New Distribution
- Author: 金名
- Published: 2026-05-06
- Canonical: https://xinjignxiao.com/en/articles/manufacturers-seeking-growth-cannot-do-without-distributors-c9601d14/
- Original source: https://mp.weixin.qq.com/s/3RG9uJ7fRlH_5wxJ2u7UOw

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