News

Technomic: Distributor vs. branded manufacturer competition increases

March 24, 2011

Recent research conducted by foodservice consultants Technomic reveals restaurants’ preferences in manufacturer versus distributor brands. Specifically, the study examines how food manufacturers protect and promote their brands while coexisting with distributor brands.

The answer depends on the food product and where it is being served. What’s certain is that the competitive environment between distributors and branded manufacturers is more intense than ever because of added cost pressures and soft sales. The combination has squeezed margins to the point where operators are searching for any kind of cost savings.

"In today’s environment, operators are much more open to considering distributor brands. The perceived lower cost and improving quality of these products have increasingly positioned them favorably against manufacturer branded products in the eyes of operator purchasers and users," said Joe Pawlak, vice president of Technomic.

The study, titled “Status and Outlook for Distributor Brands” explores brand awareness and loyalty, brand switching, quality perceptions, value definitions and segment analysis. Key findings include:

• Distributor brands have consistently increased their share of the foodservice market, and are expected to continue to do so moving forward;

• While operators maintained their loyalty to manufacturer brands used for front-of-house, their preference for use of manufacturer brands for back-of-house prepared foods and commodities dropped 12 percentage points since 2007;

• Awareness of distributor specialty brands is increasing, and many operators do not necessarily associate these brands with specific distributors. Rather, they are often viewed as an alternative manufacturer brand.

The report examines various food categories (frozen french fries, steak sauce, canned vegetables, etc.) based on client specifications, and provides data for different user groups, including limited- and full-service restaurants (independents and chains) and foodservice operators in the travel and leisure, business and industry, schools, colleges and healthcare industries.