MODULE 6 - DISTRIBUTION CHANNELS FOR HEALTHY FOOD

1. MODULE 6 - DISTRIBUTION CHANNELS FOR HEALTHY FOOD

2. Overview This module will look at the challenge of distributing your healthy food product. Learners will gain a better understanding of different distribution systems and the benefits that each offers.

3. Food Distribution Distribution is a critically important part of your business strategy and must be seen as central to success. Distribution covers both the physical movement of goods and the establishing of intermediary relationships to support such product movement. Successful distribution is intrinsically linked to the level of a company’s sales. It must be part of an integrated and well-managed supply chain.

4. Issues surrounding FOOD DISTIBUTION Food is responsible for a quarter of the distance lorries travel in the UK, and shoppers drive around 12 billion miles a year to buy it. In the UK, the Government puts the social and environmental costs of food transport at £9 billion a year, with well over half this figure resulting from congestion. The scale and visibility of food distribution have helped to make it a focus for public, government and business efforts to promote sustainable development and most effective approaches.

5. Distribution Chains vs Long Supply Chains • Intermediaries involved • Reduced Costs Short Supply Chains • Few intermediaries used • Usually more costly • Greater control over marketing of product • More time consuming for the producer

6. Short Food Supply Chains Producer Consumers Producer Retailer Consumers Long Food Supply Chains Producer Wholesaler Retailer Consumers

7. LONG SUPPLY CHANNELS can be very complex! Direct Markets Exports General line grocerywholesalers Retail Growers and grower-shippers Specialty produce wholesalers Food Service Establishments General line grocery wholesalers Brokers Imports

8. ISSUES WITH LONG SUPPLY CHANNELS • Contribute excessively to climate change, especially when food travels by air • Depend on dwindling oil reserves and are geopolitically vulnerable. • Widen the gap in understanding between consumers and producers. • Can compromise animal welfare by transporting livestock long distances. • Can harm local economies and the communities they support. .

9. Local Sourced Food – UK Strategy against Long Supply Chains The market for ‘locally sourced’ food has boomed, with around two thirds of people in the UK saying that they buy local food. In response to this, Government and business initiatives such as the UK Food Industry Sustainability Strategy have sought to mitigate some of the problems attributed to long supply chains. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69283/pb11649-fiss2006-060411.pdf

10. Local Food - Healthy and Sustainable Distribution • Short Supply Chain - The premise of local food is minimising the distance between agricultural producers and food consumers. • As a rule, local foods use less processing and packaging which results in a fresher, healthier product • Local food builds community vibrancy and retains local traditions while establishing a local identity through a unique sense of community.  

11. Local & Regional Food Systems

12. Local and Regional Food Commonly, “local food” refers to food produced near the consumer (i.e., food grown or raised within X miles of a consumer).   However, because there is no universally agreed-upon definition for the geographic component of what “local” or “regional” means, consumers are left to decide what local and regional food means to them. 2008 survey in the US found that half of consumers surveyed described “local” as “made or produced within a hundred miles” (of their homes).

13. What is a “local (or regional) food system”? The term “local food system” (or “regional food system”) is used to describe a method of food production and distribution that is geographically localized, rather than national and/or international. Food is grown (or raised) and harvested close to consumers' homes, then distributed over much shorter distances than is common in the conventional global industrial food system. In general, local/regional food systems are associated with sustainable agriculture, while the global industrial food system is reliant upon industrial agriculture. They are particularly relevant to the area of ‘healthy’ foods.

14. Who Buys Local and Regional Foods and Why? • Studies suggest that consumers who buy local/regional foods are: • concerned about supporting the local economy • strongly influenced by others around them, and felt confident that their actions “make a difference” for public and private outcomesconcerned for the environment which increased the likelihood of buying locally

15. Food Distribution: the Way Local Food Reaches the Consumer The ways in which food reaches the consumer vary widely. Local food systems value a shorter distribution distance between grower/producer and consumer. In addition, local food systems often cut out the middlemen involved in processing, packaging, transporting, and selling food. Local food distribution networks rely on two primary markets: the direct-to-consumer market and the direct-to-retail, foodservice, and institution market.

16. The Direct-to-Consumer Market The direct-to-consumer market is currently the most established sector of local food distribution. Direct-to-consumer means that middlemen are cut out of the food distribution equation – producers sell their products directly to consumers, rather than through third parties, such as supermarkets. Examples include Farmers Markets, Regional Food Distribution and Online /subscription models

17. Farmers' Markets Farmers’ markets are usually held out-of-doors, where producers can sell their produce to the public. Products at such markets are typically locally-grown, very fresh, and sold directly to the public by the producer themselves. Farmer’s markets in Ireland - www.irelandmarkets.com and www.bordbia.ie Farmer’s markets in Northern Ireland -http://www.discovernorthernireland.com/Ulster-Farmers-Markets-A1930 Farmer’s markets in UK –www.farmers-markets.co.uk

18. Community Supported Agriculture Community Supported Agriculture (CSAs) are direct-to-consumer programmes in which consumers buy a “share” of a local farm’s projected harvest. Consumers are often required to pay for their share of the harvest up front; this arrangement distributes the risks and rewards of farming amongst both consumers and the farmer. CSA participants often pick up their CSA shares in a communal location, or the shares may be delivered directly to customers. 

19. Community Supported Agriculture A community supported agriculture system is extremely beneficial to a community because it “enables consumers to support local farmers, obtain food that might be fresher than store-bought food, and learn more information from farmers about how the food is grown." Local eating can promote community interaction by fostering relationships between farmers and consumers.

20. Community Supported Agriculture – EXAMPLE in Ireland Derrybeg Farm is a Community supported agriculture (CSA) scheme based in Celbridge. They grow organic produce for their members and everybody shares a portion through their weekly box scheme http://derrybegfarm.ie/

21. Community Supported Agriculture EXAMPLE in UK Chagfood is a subscription farming scheme based on the idea of Community Supported Agriculture. This is a relatively new approach to farming where consumers become members of the farm and commit to buy a share of the farm’s harvest for 12-months at a time. The farm also produces goats milk dairy products but also free-range pork, woodland poultry and honey. http://www.chagfood.org.uk/

22. Other Direct to Consumer Routes to Market A much smaller proportion of the direct-to-consumer market are options such as pick-your-own farms, on-site farm stands and stores, and gleaning programs, in which consumers are invited to harvest crops that are left in fields, usually after harvest.

23. Regional Food Events Collaborative events where producers come together to market their products. Eg. Cork & Kerry Food Forum, IRELAND The Cork and Kerry region is renowned nationally and internationally for its high quality food produce. The Cork & Kerry Food Forum is an annual showcase of more than 70 local food producers all under one roof, with tastings and demonstrations of an incredible variety of food as well as cookery demonstrations http://www.foodforum.ie/

24. Regional Food Events Eg. Cork and Kerry Food Forum, IRELAND

25. Local Food Distribution Co-operative Collective ownership to enable members access markets for their produce which they could not supply on their own. Being trialled in Ireland and some success …

26. Irish Food Coop • A producer owned not for profit co-operative of artisan food producers • For the Producer: Nationwide reach, increased exposure, increased sales • For the Retailer: One contact access to quality artisan products, a single non- disruptive delivery, one invoice/ payment

27. How Irish Food CoopWorks Customer pays Co-op Order is Packed & Dispatched Order Comes in to Trade Desk (email or phone) Product Consolidation A Single Invoice is Produced Sales for Individual Producers Reported Non-disruptive ‘drop’ to customer Cope of Order sent to Warehouse & Producers Delivery Confirmed to Trade Desk Sales less Commission http://www.irishfoodcoop.com/

28. Local Food Systems Selling to Food Service

29. Direct to Food Service Market A growing component of local food systems is the direct supply to retail, foodservice, and institutions either directly by the producer or through a “food hub,” which is a centralised location where many producers drop off their food products for distribution amongst multiple establishments.

30. Eg.- Farmer to Chef - Colorado Crop to Cuisine Example Colorado Crop to Cuisine (CCC) was organized to promote relationships between Farmers and Chefs and increase market opportunities for local producers of fruits, vegetables, herbs, artisanal produce and lightly processed foods. The CCC provided direct marketing opportunities for a group of small and specialized agricultural producers who were looking for appropriate distribution strategy for their niche and value-added products.

31. Colorado Crop to Cuisine – How it worked • Although, no longer operational, the business model for CCC is very interesting and adaptable in an EU context. • It promoted partnerships between local food producers and food service. It targeted: • Northern Colorado farmers produce high quality, specialty produce that has superior flavour and freshness. • Chefs, consumers and food institutions looking to make a local connection, become a member and partner in our organization!

32. E-commerce - An Emerging Method Of Direct To Consumer Distribution

33. Sell online There are more mobile phones in the world than toothbrushes! Technology is reshaping how consumers buy food and it’s easier than you think !! UK online grocery sales profile Compelling headline statistics… Online accounts for 12% of retail sales Online sales are growing at 12% per year Grocery accounts for 12% of online sales Total UK Grocery sales 2014-2015 178 billion 80% UK Households have broadband 74% UK Residents now own a smartphone 54% Smartphone owners have made a purchase on it

34. https://www.ocado.com Ocado is the world’s largest dedicated online grocery retailer including the largest selection of nutritionally “free from” products in the UK and a strong ethos to minimise environmental impacts. Stocking over 43,000 items on their award-winning webshop and mobile app, they ship over 200,000 orders per week throughout the UK. https://youtu.be/wKpyPO76yZ4 Eating Well pillar, is a plan to support the role of food in health and nutrition and help reduce food poverty in the UK. http://www.ocadogroup.com/our-responsibilities/eating-well.aspx

35. Selling online for the small producer Selling your healthy food products online is profitable and easy! The costs for selling online are really low but you need to carefully put an online sales strategy in place.

36. 6 Steps to Selling Online 6. Delivery 1. Customer Online Store (e-commerce B2C) 5. Expeditioin 2. Online Store 3. Products and Offers 4. Safe Payment

37. Getting Started To sell products on your website, you need 4 things: Your website with a shopping cart an SSL certificate A merchant account A payment gateway

38. Website • There are three essential elements to a website: • Clear navigation. • Easy-to-read information. • A definite focus for the site - make it clear you are selling your products • You should also keep the following points in mind when setting up your site: • Keep it simple. Make sure the site works with all web browsers, not just Internet Explorer. • Ensure your contact information is clearly visible on every page of the site. • If you are collecting personal information from customers, you must have a privacy policy in place.

39. Website Ease of navigation is critical - consider how your customers would shop for your products - by variety, size, feature etc. there are 5 key things to think about …. Product code A product code is a series of characters that defines the product for inventory - tracking purposes. 1. Product image People eat with their eyes- invest in great photography

40. Website 3 Product name Your product name is self-explanatory – it’s the name of the product that you’re selling. 4 Product price Its very important to establish and clearly display your price so customers know how much they’re paying for the product. 5 Product description A well-written product description is important so customers can learn about the intricate details of said product Well-written product descriptions are also NB for SEO and helping your products and your online shop get found!

41. SSL Certificates SSL CERTIFICATES deliver essential data security for you and your customer. Having an SSL cert not only keeps your customers safe, it also gives your business credibility. When customers see “https” in their browser when visiting your site, they know you care about their security. And keeping your customers’ information secure from online threats is every business owner’s top priority.

42. Merchant Account A merchant account is offered by a financial institution and offers businesses the ability to accept and process payments by credit and debit card, in store, on the phone and online. It also deal with chargebacks, installation and service of credit card terminals and many other credit and debit card related services that are necessary to keep an online store running smoothly.

43. Paypal PayPal's Website Payments Standard combines the payments gateway with the internet merchant account. This will provide you with a secure server to accept payments, whether customers are paying by credit card or PayPal. WorldPay (http://www.worldpay.com/emea) offers a similar service.

44. Start with Shopify ? Shopify makes it possible for you to have your online food and beverage store up and running in minutes. Choose from hundreds of professionally designed templates to create your website and sell food and beverages online. Their seamless shopping cart system supports inventory tracking, customer management and reporting. https://www.shopify.com/sell/food-and-beverage Examples:- http://www.shopsanctuaryt.com/ speciality teas online www.mouth.com a webshop for US indie food products

45. Online – combining health & convenience HEADING Paleo Meal Deliveries ‘is here to ensure that you maximize your returns from all that hard work in the gym or simply to ensure you don't graze on junk on a daily basis! We make eating right easy, giving you structure and exactly weighted macro nutrients to align with you, your activity levels, goals and of course taste!’ www.paleomealdeliveries.ie

46. Producer Boxes Delivered http://biabox.ie/

47. New Business Models – Subscription Service HEADING Bewley’s Coffee Ireland set up Coffee Project a subscription service of delivering speciality, hand-roasted coffee to your door each month. https://youtu.be/hBVSnQxSPr8 Subscription is €109 for 12 months or €9.09 per month www.coffeeproject.bewleys.com

48. OnlineHealth Shops HEADING Healthy shopping delivered to your door.http://www.goodnessdirect.co.uk/

49. Selling to Retailers with a Focus on Local/Healthy Food

50. Supervalu– Ireland Supervalu is Ireland's biggest supermarket chain. Most SuperValu stores now have at least one aisle devoted to health foods, from quinoa to cashew butter to coconut oil.