According to Grant Leach, managing director of Crossmark NZ, a growing number of big food and grocery businesses are looking for specialist help from sales and merchandising agencies, as cost and margin pressures increase.
Typically, he added in a recent FGC Leaders Series video interview, around 10 percent of NZ companies have outsourced such activities, but the trend is now taking off. Leach mentioned three reasons for this. Firstly, New Zealand’s geography makes a sales team a very expensive model to service. Secondly, manufacturers can come under increased pressure from cost of goods, which they can’t necessarily pass on to the retailer. Lastly, a manufacturer may also be under increased margin pressure from the retailers themselves.
The type and size of manufacturers that are considering using SMAs are also changing. “Previously, it was probably a manufacturer with a turnover of up to around the $25 million mark. Now we’re seeing that that has changed, with manufacturers’ turnover up to about the $60 million mark, and I would predict that in the next 12-18 months it’ll be substantially higher than that threshold point.”
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