The New Zealand dairy snack brand MChews has been introduced to food distributors in the US. This article is based on impressions gained during the process of finding distributors for the MChews brand.
MChews: Healthy snacks for kids
MChews belongs to a group of companies based in New Zealand’s South Island that develops and produces innovative healthy food products. Entering the New Zealand market in mid-November 2019, the MChews brand has experienced rapid growth thanks to an effective branding and marketing process.
US snack market situation
In recent years, the market for specialty healthy foods in the US has shown rapid growth. A major factor in this rapid growth is the focus of distributors and agents on specializing in this area. At a time when healthy snacks are often associated with fruit bars and dried fruits, it can be said that there are no alternatives to products like MChews made from natural milk.
As in the rest of the world, retailers in the US also prefer to offer a much more diverse product range compared to previous years. The main reasons for this are the rapid spread of new product awareness due to the growth of online marketing and the swift changes in demand for niche products such as organic, non-GMO, vegan, and artificial color-free items. Additionally, particularly consumers who are open to trying new products place importance on transparency regarding product content and production processes. These demands and changing market reactions create opportunities for small companies while large companies try to keep up with the trend through specialized distribution networks, online platforms, and large chain stores.
Since the 1930s, it can be said that snacks have begun to replace main meals. With the trend towards healthier lifestyles, consumers have started looking for healthier snack alternatives, leading to industry development. In the US market, healthy snacks are generally limited to fruit bars and dried fruits, and there are not many alternatives focusing on milk-based products for children. Many distributors and agents actively operating in the market see opportunities for innovative products like MChews.
The presentation of MChews in glass jars has created the impression that the product falls into the food supplement category and has raised questions about how many a child can consume per day. Presenting such products in a pouch or more practical packaging would strengthen the snack perception and facilitate sales.
Distributors
The first option for selling food products in the US is to partner with “importers and wholesalers,” who are medium-sized companies. These firms will buy and import your products themselves and handle all subsequent distribution arrangements. This approach requires less investment (in terms of time and money), but you will have less control over the market. Someone from your company would need to manage the distributors, and doing this from outside the US can be challenging.
The second option is to work with large distributors who cover all or specific states in the US. These companies have a high level of development and connect you directly with major retailers and other sales channels. These distributors are effective for you if you already have significant sales volumes. If you choose this route, you need to have a strong marketing strategy and must have convinced the retailers about your product. KeHE and UNFI are the two largest distributors in the US specialized in natural and healthy foods.
When starting to work with large or medium-sized distributors and retailers, it is highly recommended to engage a food broker. The broker will “knock on the doors” of retailers and distributors’ salespeople on your behalf, ensure that your product is given priority, and help you develop your marketing strategy based on market reactions.
Margins and prices
MChews was introduced to importers, wholesalers, two large distributors, and brokers in this project. When determining the retail prices for MChews, various stages of the value chain, costs, and profit margins of the involved companies were considered. On the other hand, it was decided that MChews should be sold at a similar price level as other healthy snacks in the mid-high segment.
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