By:  Rick Abraham | Bob Goldin

June 25, 2019

With the recent departure of one national foodservice sales agency president to a competitor, industry executives are asking questions about the continued evolution of the national foodservice sales agency model and where it is headed. Perhaps it’s a good time to take stock.

Let’s start with a bit of perspective. The national agency model is a relatively new go-to-market option for manufacturers, having begun in earnest in the mid 2000’s. Prior to the creation of national agencies, manufacturers that outsourced sales hired dozens of individual agency companies, spread out across multiple markets, to represent them in their customer segments.

In those days, manufacturers had at least 5-7 solid agency choices per market and enjoyed the opportunity to custom build their agency network and choose the “best” agency network for them. There was little risk to switching agencies as each represented just a small fraction of the manufacturers’ overall business.   

On the flip-side, many manufacturers said it was often cumbersome to deal with 40+ individual agencies all doing business differently for the most part.  Foodservice distributors were scaling up and asking for national, dedicated resources. There was no ability to view the marketplace as a whole, market data was inconsistent at best, and headcount and costs were high managing all the moving parts.   

As the national agencies gained a foothold a dozen years ago, the commonly anticipated benefits to manufacturers that chose that model were:

  1. Manufacturers would have a single point of contact at the agency, simplifying communications, strategic planning, and results tracking.
  2. Manufacturer field headcount could be reduced or redeployed to more customer facing activities.
  3. Manufacturers would be able to receive a single collective view of their markets, rather than many individual views they would need to cobble together. (Remember stacks of “green bar” reports?)
  4. Manufacturers, together with their national agencies, would have the necessary scale and leverage to serve the much larger corporate distributor and chain operator customers that were also scaling up.
  5. National agencies would be large enough to invest in new services and technologies and upgrade their personnel to better serve their clients.
  6. As the national agencies covered more and more of the manufacturers’ markets, a healthy co-dependency would emerge where each had a vested interest in the others’ success. Said another way, a “divorce” would be very painful.
  7. Agency and manufacturer costs would go down as they were spread across a larger base of clients.
  8. Sales execution and street coverage would improve.
  9. Where applicable, the national agencies could give clients total market coverage (retail and foodservice).
  10. Agency reporting would be standardized, and performance would be generally consistent across markets.

Today the questions we most often hear center around whether the national model has delivered on these anticipated benefits, and if not, when they will. It’s dangerous to generalize here as the answer would differ depending on who was asked but, in general, it seems to be a mixed bag of positives and negatives from both sides.

Based on our observations and input received, we agree that the national agency model, to differing degrees, has delivered on the anticipated benefits shown in points 1-5 above. However, manufacturers and agencies are still waiting for the anticipated healthy co-dependency, the cost reductions, improved sales execution, enhanced street coverage, multi-channel representation and upgraded skill sets all around.

The national agencies also have legitimate gripes. They see that manufacturer growth expectations are unrealistic, especially in light of manufacturer disinvestment in innovation and brand building. They note with deep concern that manufacturers continue to lower the rates they pay, while expecting more and more services while increasing their non-commissionable “house” account volume. And agencies are well aware of an ongoing dilemma: manufacturers insist that agencies not let distributors interfere with their sales efforts, while at the same time “caving” to distributor demands for agency time and resources.

We recognize that there are no easy answers to these issues and there is plenty of “blame” to go around on each side. However, we strongly believe that the proverbial pot is heating up and might very well boil over if things do not change soon.

It’s time for manufacturers and the national agencies to truly collaborate and develop an enhanced model for national coverage. Keep what is working well, discard what is not and create truly innovative approaches from which all will benefit.  


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