What is a food broker?
Food Broker · Also called broker, retail broker, sales broker, CPG broker, brokerage
A food broker is a sales representative who helps your brand sell to retail accounts. What the broker does and how it is paid are set by the brokerage agreement.
What it is
A broker represents your brand to retail buyers. It may present your items, coordinate category reviews, support promotions and manage accounts after launch. Store-level merchandising and deduction management are often separate services, so check what is included.
A broker generally does not take title to your inventory. A distributor buys or handles the product and supplies retailers. Some businesses offer both services, so identify which role each contract covers.
Pay can be a commission, a retainer, a minimum monthly payment or a combination. The contract should name the commission base: gross invoices, net sales, collected sales or another agreed amount. Returns, deductions, freight and excluded accounts all change the calculation.
Why it matters
Getting into larger chains is hard without someone who knows the buyers and the review calendar. A broker’s relationships do not guarantee placement, though: you still need supply readiness, a workable price model and money for the trade support retailers expect.
A broker is an ongoing cost on every sale in its territory. Compare written offers against the work each one will do.
Formula
Annual broker cost = (Covered sales × Commission rate) + (Monthly retainer × 12)
This is the cost when the retainer is paid on top of commission. If the retainer is a minimum credited against commission, you pay whichever is higher.
Worked example
What a broker costs you
- Assume covered annual sales of $100,000 and a 5% commission: $5,000.
- A $1,000 monthly retainer paid on top adds $12,000 a year.
- Total: $17,000, or 17% of those sales.
- If the retainer is instead a minimum credited against commission, you pay $12,000, because $5,000 of commission does not exceed the minimum.
- These rates are illustrative. Your contract must say whether the retainer is added, recoverable or credited.
Common mistakes
- Signing before the scope is defined. Agree on accounts, territory, exclusivity, competing brands, service expectations, reporting, payment timing and termination, including commission on existing accounts and after the contract ends.
- Leaving the commission base vague, so returns, deductions or freight get counted differently than you expected.
- Expecting the broker to fund your launch. You still pay for slotting, promotions, demos and free fills.
- Not tracking results. Measure presentations, new listings and account performance against the agreed scope.
Common questions
- Do I need a broker to enter retail?
- Not always. You can sell directly to some accounts. A broker earns its cost when its coverage and account-management work justify it, and it is not a substitute for shopper demand.