• Food Navigator-USA.com, Monday, October 9, 2006 12:45 PM

A new study finds that packaged-goods firms that outsource their sales and marketing save up to 30 percent in costs. An increasing trend to outsource--driven by the ability of external food brokers to find ways to reduce costs and improve marketing effectiveness--is expected to grow within the next few years, according to the report. Entitled "Value of Outsourcing Sales and Marketing," the study participants included Kraft, Masterfoods, the Coca-Cola Company, Nestle, ConAgra Foods, PepsiCo and Sara Lee.

A manufacturer's decision to outsource is usually based on the needs of specific product categories. Products with scarce shelf space and that require constant attention--such as frozen foods and chilled items--are considered prime candidates for outsourcing. In addition to reducing costs, external food brokers, or Sales and Marketing Agencies (SMAs), have helped consumer packaged-goods companies to improve marketing productivity, enhance core capabilities and ensure product availability in a multi-channel marketing environment, the report says. SMAs currently represent about 54 percent of all CPG company retail sales revenues in the United States--equivalent to $116 billion in actual cash value of commodity revenues for CPG companies.

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