This article is written by guest contributor, Holly Fowler, Co-founder and Managing Director of Northbound Ventures, a sustainability consulting firm based in Somerville, MA and focused on developing sustainable communities, regional food systems, and institutional procurement practices.
Directly or indirectly, corporations and other institutional buyers of food play a key role in the local, regional, and global food systems. With Americans spending more than 40% of their food budget on meals outside of the home, companies, hospitals, universities, schools, and governments are increasingly in a position to influence public health, the environment, and the economic development of communities through their procurement practices and food promotion activities.
For food entrepreneurs, gaining access to institutional buyers can seem like a quest for the Holy Grail: the target is highly alluring, yet frustratingly elusive.
The procurement process can be lengthy and complex, with multiple parties influencing the final decision to buy a product or not. Procurement policies vary by organization and even among those within the same segment or market. For instance, a public K-12 school sources products differently than a university; and a hospital operating its own food service may have more or less procurement flexibility versus a hospital that contracts to a food service management company. Gaining approval to feature your product in the institution’s supplier portfolio can take several weeks, if not months to complete. Here are a few questions for sustainable food and food-service related enterprises and entrepreneurs to consider when crafting a strategy to approach institutional markets:
- Will you sell direct or indirect? The majority of institutional purchasing happens through well-established national and regional distributor partnerships (eg. Sysco, UNFI, Freshpoint, etc.). Some companies, health care facilities, and schools have formal or informal flexibility to buy direct. Working with a distributor may offer a pathway to scale sales more efficiently than selling one by one to individual locations. Determine what options your business model allows, and select target institutions or distribution partners accordingly.
- Who is your buyer/client? Institutions may operate their own food services program, or outsource all or part of it to one or more food service management companies. How you position your messaging will need to be customized depending on who you’re pitching and the responsibilities and goals of the potential buyer.
- How does your product meet the institution’s sustainability goals or position the food service management company to add value to its client relationship? The definition of sustainability varies widely among individuals and so too among institutions. Sustainability may mean just environmental sustainability to an institution, or it may represent a more holistic orientation that includes health and wellness, community investment, diversity and inclusion, and other factors. The key is not to assume that the company or institution you hope to convert to a client shares your definition of sustainability or motivation for change. Instead, understand their definition, and illustrate how your product/solution can help the potential buyer meet established business objectives or respond to an industry trend.
- What product or service are you trying to replace or displace with a more sustainable alternative? What are the potential barriers to conversion? In some cases, the benefits of a solution can seem irrefutably compelling and yet, buyers aren’t biting. Let’s say, you offer a sustainably produced soda made with all-natural, local ingredients. Why don’t they want it? Consider other potential direct and indirect impacts the new product might have to an institution. Can you provide consistent quality in adequate volumes? How many other similar beverage options are already on the shelf? What is the cost to the institution of adding and managing new suppliers? Does the institution have a wellness goal to reduce sales of soda of any kind?
The good news is, selling to institutions can be done and many wonderful, innovative products have made the journey. Be clear in your product’s or service’s value proposition. Build a compelling case for change by aligning the unique attributes of your solution to institutional goals. Research and understand supply chain options, procurement policies, and decision-makers in play. You are now on your way to becoming a successful supplier to institutions and having even more positive impact in the world through those partnerships.
Need more help pitching your products to institutional buyers? Contact Holly for more info at firstname.lastname@example.org or 617-899-9690.