What an Ingredient & Packaging Broker Can Do For Your Beverage Business
By Tim Matheson, Director of Purchasing, BevSource
How you find, vet, and negotiate with raw material manufacturers can become a strong competitive advantage for your beverage. There are hundreds of ways to approach this opportunity, and there’s a strong case to be made for working with someone who can help you maximize it.
A sourcing agent or broker can help you navigate the issues and opportunities that come with finding and securing the ingredients and packaging supplies that will give your beverage a leg up.
Advantages of Using Brokers and Sourcing Agents
A broker or sourcing agent works closely with several ingredient and packaging manufacturers on your behalf and can help find ingredients and supplies you might have difficulty locating. A broker can also help negotiate or offer pricing that can be hard for you to access when going direct to the manufacturer. A broker adds value with their knowledge of the sourcing landscape and procurement process and their relationships with suppliers.
While it can be hard to let go of the idea of creating and executing your sourcing strategy on your own, several advantages come along with entrusting someone to source and purchase on your behalf.
1. Personal Attention and Responsiveness
Some massive suppliers and manufacturers in the beverage industry serve a large portion of the market. As a small or mid-size company, it can be easy to get lost in the shuffle. Because they are placing orders on behalf of several companies regularly, a broker often has a better chance of getting a response from a large manufacturer than someone who doesn’t have an established relationship or who hasn’t placed business with that company before.
You can also enlist the power of your broker’s connections when you have a question or an issue, and you need a timely reply from a busy supplier. Brokers are generally in constant communication with manufacturers and know who to contact to get a quick response.
2. One-stop Shopping
From ingredients and flavors to packaging, hundreds of purchasing decisions are involved in managing a beverage business. Working with a sourcing specialist or broker can streamline your buying process, saving you time and hassle. You can place one purchase order with a broker for a wide range of materials from several manufacturers and receive only one invoice.
3. Fewer Surprises
Keeping tabs on all of the moving pieces in your beverage’s supply chain is challenging. As intermediaries, brokers are constantly gathering information from purchasers and manufacturers and analyzing markets. A broker can use their knowledge to help you optimize your purchasing strategy. Whether it’s getting the first word from a manufacturer about a jump in lead times or anticipating the impact of an impending tariff, a broker can help you avoid unnecessary surprises and keep your beverage on track.
4. Flexibility and Purchasing Power
In addition to more information, brokers can also bring more purchasing options to the table. If you’re unable to meet a minimum order quantity, a broker might use consolidated purchasing --grouping your order with another-- to meet the order quantity requirement. Some brokers stock and resell certain materials, allowing you to buy a smaller amount without having to pay that higher per-item cost that typically comes with a smaller order.
When you’re building a purchasing strategy that fits your timeline and goals, more options means more opportunities to get creative and resourceful with your procurement.
5. Another Set of Eyes
The number one criteria when sourcing for your beverage is quality. Using a bad ingredient or faulty packaging could mean a recall that could cost millions. A broker can help ensure you’re working with reputable manufacturers that meet or exceed your standards. Many manufacturers say they prioritize quality, but nothing compares to the experience of working with manufacturing partners over time and across projects to vet their ability to deliver on that promise consistently.
Not all Brokers Are Equal
There is a wide range of brokers out there. Finding the right fit is the first step in building a relationship that will propel your beverage business forward. Some factors to consider when vetting and selecting a broker include:
How ingrained they are in the beverage industry. Working with a broker who knows the beverage industry inside and out will bring a layer of value that someone who is more broadly focused might not be able to deliver.
The number of ingredients and materials they can source. The more extensive the catalog of items they can source, the more streamlined, comprehensive, and efficient they can make your purchasing process.
Their reputation in the market. Working with a well-respected, well-known strategic sourcing partner will set your beverage brand up with the right relationships to build and sustain long-term sourcing success.
Their take on quality. A broker who values quality is the first line of defense in protecting your beverage from decisions, manufacturers, and products that could compromise your brand’s integrity and success.
Their ability to help you grow. Your broker relationship can be a launching point to scale your beverage business. Look for a partner who knows the industry well enough to take a comprehensive view of your business and offer a range of solutions and growth strategies.
Your choice to work with a broker or not, just like every other business decision, should be based on your vision for your beverage. As you align your strategy for success, the right broker, brought in at the right time, can add enormous value to your business and brand.