STUDY: BROKERS WILL RETAIN VITAL PACKAGED GOODS ROLE

JAMES TENSER

NEW ORLEANS -- While the food brokerage business will continue to consolidate in the next half decade, the industry will employ technology, local market expertise and value-added store-level services to remain a vital part of the go-to-market system for consumer goods.

"In today's industry, brokers can manage change. And as we look to the end of the century, the high-performing brokers in the year 2000 will drive change," said Vic Orler, strategic services partner in consumer products practice at Andersen Consulting, Chicago.

Many of the nation's food brokers were witness to this optimistic vision of their future role in brand marketing at the annual convention of the National Food Brokers Association, which ended here last week.

In a keynote presentation titled "Broker 2000," delivered here Dec. 3, Orler and Gary Singer, a manager in Andersen's consumer products practice, outlined a long-term scenario for the sector based on a combination of original and secondary market research.

"The future is already in sight, as we see successful consumer packaged goods companies beginning to invest in their go-to-market resources, rather than merely trying to streamline them," Singer said.

"We contend that brokers should be the ones to introduce to their principals -- and to the industry -- new, more effective go-to-market strategies," he continued.

In 1985, Singer said, there were 2,500 brokers representing 45% of the all-commodities volume. Today there are 1,300 brokers representing

55% of the ACV. "As this evolution occurs, brokers are organizing around their customers," he Singer.

For the study, Andersen conducted in-depth surveys and interviews with more than 80 manufacturers, retailers, wholesalers and brokers. The researchers also conducted focus groups with brokers and principals. This original research was correlated with NFBA and third-party research to form the basis of the Broker 2000 presentation.

From their analyses of the results, Orler and Singer derived the following list of characteristics, which they predicted would define the market-leading brokers of the next century:

They will lead the change in defining the most effective way to go to market.

They will provide unmatchable micromarketing capabilities.

They will use their competence in store-level execution to help their trade partners achieve a competitive advantage.

They will embrace value-based compensation.

They will find new opportunities by migrating up and down the value chain.

Micromarketing is one key area in which the broker community appears to be anticipating brand marketers. NFBA's technology survey found that 54% of brokers surveyed are using micromarketing systems. In Andersen's Broker 2000 survey, 34% of manufacturers rated micromarketing as somewhat or very important today, while 77% said they believe micromarketing will be somewhat or very important in five years.

Singer said brokers are well positioned to do micromarketing due to a combination of their local market presence, their critical mass in retail stores, and their investments in people and technology.

Brokers' multiple brand presence at retail offers them the opportunity to be more cost-effective in applying micromarketing tools. "This size advantage enables brokers to be more economical in providing greater in-store presence on behalf of their principles," Singer added.

The report also predicts that brokers will leverage their market presence to provide more in-store coverage and execution of headquarters plans at retail.

Leading-edge brokers, Orler said, "will lead the industry from shelf management to shelf marketing as they help manufacturers and customers use shelf space as a marketing vehicle to target and reach the right customers."