Distribution Guide
CPG distribution explained.
How the distribution chain works, what it costs at every level, and how to get your product from production line to retail shelf.
The Distribution Chain
Every packaged food product travels through a chain to reach the consumer. Understanding this chain is the difference between a viable business and an expensive hobby.
The traditional chain has four levels: manufacturer, distributor, retailer, and consumer. Each level adds value — warehousing, delivery, shelf space, marketing — and each takes a margin for that value. By the time a product reaches the consumer, 60 to 75 percent of the retail price has been absorbed by the chain.
The Chain
MANUFACTURER DISTRIBUTOR RETAILER CONSUMER ──────────── ─────────── ──────── ──────── ┌─────────────┐ ┌─────────────┐ ┌─────────────┐ ┌─────────────┐ │ │ │ │ │ │ │ │ │ Produces │────────────▶│ Warehouses │────────────▶│ Shelves & │────────────▶│ Buys & │ │ & brands │ sells at │ & delivers │ sells at │ sells to │ pays │ consumes │ │ product │ wholesale │ to retail │ wholesale │ consumers │ retail │ product │ │ │ │ + markup │ │ + markup │ price │ │ └─────────────┘ └─────────────┘ └─────────────┘ └─────────────┘ YOUR COST: $3.00 THEIR COST: $4.80 THEIR COST: $6.00 THEY PAY: $9.99 YOUR PRICE: $6.00 THEIR PRICE: $6.00 THEIR PRICE: $9.99 YOUR MARGIN: 50% THEIR MARGIN: 20% THEIR MARGIN: 40% ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ DIRECT / MARKETPLACE MODEL (BoxNCase, DTC): ┌─────────────┐ ┌─────────────┐ │ │ │ │ │ Produces │────────────────────────────────────────▶│ Wholesale │ │ & brands │ sells at wholesale via platform │ buyer │ │ product │ (10-15% platform fee) │ (retailer, │ │ │ │ restaurant)│ └─────────────┘ └─────────────┘ YOUR COST: $3.00 THEY PAY: $6.00 YOUR PRICE: $6.00 (no distributor YOUR MARGIN: 50% markup added) PLATFORM FEE: ~$0.75
Types of Distributors
Five distribution channels, compared.
Broadline distributors
Sysco, US Foods, Performance Food GroupCarry 400,000+ SKUs across every food category. They serve restaurants, hospitals, schools, and large retail. Getting listed requires volume commitments, slotting fees, and typically a broker relationship. Best for brands doing $2M+ in annual revenue with proven demand.
18-25%
High
Specialty distributors
UNFI, KeHE, DPI Specialty FoodsFocus on natural, organic, specialty, and ethnic food products. Lower volume thresholds than broadline but still require broker representation and promotional budgets. The primary path to Whole Foods, Sprouts, and natural grocery chains.
20-30%
Medium
Regional distributors
Chex Finer Foods, Haddon House, Liberty RichterServe specific geographic markets, typically 3-5 states. More willing to take on emerging brands with lower volume requirements. Personal relationships matter. A regional distributor who believes in your brand can be more valuable than a national one who doesn't know your name.
15-22%
Low-Medium
DSD (Direct Store Delivery)
Frito-Lay, Pepsi, local bread/snack routesDeliver directly to retail stores, bypassing the retailer's warehouse. DSD distributors handle merchandising, shelf stocking, and rotation. Common for beverages, snacks, and baked goods. Higher margin requirement but lower spoilage and better shelf presence.
25-40%
Medium-High
Wholesale marketplaces
BoxNCase, Faire, AboundDigital platforms connecting brands directly with wholesale buyers. No slotting fees, no broker required, no minimum distribution commitments. Buyers discover products through search, AI recommendations, and curated collections. The fastest path from production to wholesale distribution.
Platform fee only (10-15%)
None
How to Approach Distributors
Six steps to getting distributed.
Prove demand first
Distributors don't launch brands — they scale proven ones. Before approaching a distributor, show traction: DTC sales velocity, farmers market sell-through, wholesale marketplace orders, or retail velocity in 5-10 stores you placed yourself. 'I sell 200 cases/month through BoxNCase and 15 independent stores' is a pitch. 'I have a great product' is not.
Build your sell sheet
One page, both sides. Front: product photo, key selling points, case pack configuration, wholesale pricing, UPC codes. Back: brand story, velocity data, retail margin analysis, promotional calendar. This is the document that gets passed from the sales rep to the category manager. Make it undeniable.
Choose your broker (or don't)
Brokers represent your brand to distributors and retailers. They cost 3-7% commission on all sales through their accounts, plus a monthly retainer ($2,000-$5,000). Worth it if you're targeting broadline distributors or national retail chains. Not worth it if you're selling through wholesale marketplaces and independent stores — those channels don't need broker representation.
Target the right distributor tier
Match your volume to the distributor's expectations. A brand doing $50K/year in wholesale doesn't belong at Sysco — you'll be their smallest account and get zero attention. Start with regional distributors or wholesale marketplaces, build to specialty nationals (UNFI, KeHE), and graduate to broadline when you have the volume to command attention.
Negotiate terms carefully
Distributor agreements include: margin/markup structure, payment terms (Net 30-60 typical), promotional allowances (expect 10-15% annually), MCB (minimum case buy) requirements, and termination clauses. Read every line. The promotional allowances alone can eat 15% of your revenue if you're not careful. Get a food industry attorney to review before signing.
Support the relationship
Getting into a distributor is the beginning, not the end. You need to drive demand to their retailers (trade marketing), participate in promotional cycles, respond quickly to chargebacks and quality issues, and visit key accounts regularly. Brands that treat distribution as 'set and forget' get discontinued within 12 months.
The Economics
Margins at every level of the chain.
Manufacturer (you)
30-55% marginProduce the product, set wholesale price, manage brand
You receive your wholesale price minus any platform or broker fees. This must cover COGS, overhead, marketing, and profit.
Distributor
15-30% marginWarehouse, deliver, and invoice retailers on your behalf
Buys from you at your wholesale price minus their margin (or sells at wholesale plus their markup — same math, different framing). They carry the receivables risk with retailers.
Retailer
35-50% marginShelf space, consumer traffic, checkout, returns
Buys from distributor at wholesale, sells at retail. Their margin covers rent, labor, shrinkage (spoilage/theft), and profit. Grocery net margins are 1-3% — their gross margin funds the operation.
Consumer
— marginPays the retail price
The final price includes every margin in the chain. A $12.99 jar on the shelf might contain $3.00 of ingredients and production, $3.00 of your margin, $1.50 of distributor margin, and $5.49 of retailer margin.
BoxNCase as a Distribution Partner
Distribution without the traditional gatekeepers.
BoxNCase operates as a wholesale marketplace — connecting food brands directly with 13,000+ wholesale buyers including restaurants, caterers, specialty retailers, and institutional buyers. No brokers, no slotting fees, no minimum distribution commitments.
You list your product with complete data — ingredients, certifications, case configurations, wholesale pricing — and buyers find you through search, AI recommendations, and curated collections. When they order, you ship direct or through integrated logistics partners.
The platform handles discovery, payments (including Net 30 terms for qualified buyers), and provides analytics on what's selling, who's buying, and where demand is growing. For emerging brands, it's the fastest path from production to wholesale distribution.
$0
Slotting fees
No upfront cost to list
13K+
Wholesale buyers
Restaurants, retailers, caterers
Day 1
Distribution
List today, sell tomorrow
Agent Commerce
How AI agents are changing distribution.
In 2026, a growing number of wholesale purchases begin not with a sales rep or a catalog, but with an AI agent. A restaurant manager asks their AI assistant to find organic truffle oil under $40 with next-week delivery. The agent searches, compares, and places the order.
This is agent commerce: AI systems acting as purchasing agents for businesses. It changes distribution because discoverability is no longer about shelf placement, broker relationships, or ad spend. It's about whether your product data is machine-readable and accessible through the protocols AI agents use.
BoxNCase supports four agent commerce protocols: MCP (Model Context Protocol) for direct AI agent queries, UCP (Unified Commerce Protocol) for Shopify-ecosystem agents, ACP (Agent Commerce Protocol) for OpenAI/Stripe-powered agents, and x402 for HTTP-native agent payments. Products listed on BoxNCase are discoverable by any AI agent on any platform.
For brands, this means a fundamental shift: the brands that invest in clean, structured, machine-readable product data will be discovered by AI agents. The brands that rely on PDF catalogs and phone orders will be invisible to the fastest-growing purchasing channel in wholesale.
AI agents query your product catalog directly. Supports natural language search, filtering, and real-time inventory.
Shopify-ecosystem agents discover and purchase products through standardized commerce APIs.
OpenAI and Stripe-powered agents handle discovery, checkout, and payment in a single flow.
Agents make purchases via standard HTTP requests with built-in payment authorization. No checkout flow required.
Frequently Asked
Distribution questions, answered.
What is CPG distribution?
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CPG (Consumer Packaged Goods) distribution is the system that moves products from the manufacturer to the end consumer. It typically involves a chain: manufacturer produces the product, sells to a distributor, who warehouses and delivers to retailers, who sell to consumers. Each level of the chain takes a margin for their services. The complexity and cost of this chain is the primary barrier to entry for new food brands.
How much does it cost to get into distribution?
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Entry costs vary by channel. Wholesale marketplace listings: $0 upfront (platform takes a percentage of sales). Regional distributor: $5,000-$15,000 in initial promotional allowances and sell-in costs. National specialty distributor (UNFI/KeHE): $20,000-$50,000 including slotting fees, broker commissions, and promotional spend. National retail chain (direct): $50,000-$200,000+ for slotting fees alone, plus promotional commitments. Start with low-cost channels and reinvest revenue into higher-cost ones.
What are slotting fees?
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Slotting fees are payments made to retailers for shelf space. They compensate the retailer for the risk and cost of adding a new product: resetting shelves, programming POS systems, training staff, and the opportunity cost of removing an existing product. Slotting fees range from $5,000-$25,000 per SKU per retailer for regional chains, and $25,000-$100,000+ per SKU for national chains. Wholesale marketplaces and independent stores typically do not charge slotting fees.
How do I distribute my food product without a distributor?
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Several paths work without traditional distributors. Direct-to-retailer: pitch and deliver to independent stores yourself (works for local/regional). Direct Store Delivery (DSD): hire a delivery driver or do it yourself for nearby accounts. Wholesale marketplaces: list on BoxNCase or similar platforms where buyers place orders and you ship direct. DTC: sell through your own website and ship via UPS/FedEx. Most successful brands combine multiple direct channels before adding a distributor.
What margins do distributors take?
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Distributor margins vary by type and volume. Broadline distributors (Sysco, US Foods): 18-25% of their selling price to the retailer. Specialty distributors (UNFI, KeHE): 20-30%. Regional distributors: 15-22%. DSD distributors: 25-40% (they also handle merchandising). Wholesale marketplace platforms: 10-15% platform fee, no distributor margin. Your effective margin is your wholesale price minus the distributor's cut and any promotional allowances.
How are AI agents changing CPG distribution?
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AI agents are becoming purchasing assistants for restaurants, caterers, and retailers. Instead of browsing catalogs or calling sales reps, buyers use AI assistants to find products that meet specific criteria (organic, price range, certifications, pack size). Brands whose products are machine-readable — with structured data, canonical identifiers, and API-accessible listings — show up in AI agent searches. Brands with PDF catalogs and phone-only ordering don't. BoxNCase's MCP server, UCP, and ACP protocols make listed products discoverable by any AI agent, from any platform.
What is the difference between a distributor and a wholesaler?
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A distributor buys products from manufacturers, warehouses them, and delivers to retailers — they handle the logistics and often the sales relationship. A wholesaler operates a marketplace or warehouse where buyers come to them (physically or digitally). In practice, the lines blur: some distributors have cash-and-carry warehouses, and some wholesalers deliver. The key distinction is service level. Distributors actively sell and deliver your product. Wholesalers provide a platform where buyers find and order it.
Ready to distribute?
List your products on BoxNCase and reach 13,000+ wholesale buyers. No slotting fees. No brokers. AI-discoverable from day one.