Distribution in Latin America: who controls the relationship with the point of sale?
For years, many consumer goods companies in Latin America have built their distribution networks under a fundamentally transactional model: the distributor buys, pays and resells.
While sales grow, the model seems to work. But when the goal is to expand coverage, develop new SKUs, improve in-store execution or gain market share, its limitations start to show.
The underlying problem is that selling to the distributor does not necessarily mean developing the market.
At TMC Consultores Comerciales we have supported several manufacturers in evolving their distributor management models. One of the main lessons is that assigning exclusive territories, although an important step forward, is not always enough.
Why?
Because most multi-brand distributors work with very broad portfolios managed by a single sales force. Naturally, salespeople end up prioritizing the brands that give them the most volume, the easiest sale or the best profitability.
How to evolve toward more effective distribution in Latin America?
From our experience, we see three levels of development:
1️⃣ Exclusive distribution by area and channel.
The distributor takes responsibility for a territory and certain channels, with clear coverage, distribution and execution targets.
2️⃣ Distribution with commercial support from the manufacturer.
Salespeople or merchandisers are added to work alongside the distributor's sales force, drive the brands and develop strategic customers.
3️⃣ Distribution with parallel or dedicated sales forces.
The distributor builds a specific commercial structure, where the manufacturer's brands represent a significant share of the business and therefore of the salesperson's priorities.
This last model can drive major progress in coverage, portfolio depth and execution, although it requires a different negotiation of commercial terms and greater investment by the manufacturer.
The key is not choosing the most sophisticated distribution model in Latin America, but the one that best balances coverage, commercial focus, execution control and profitability.
Ultimately, the challenge is to evolve from a buy-sell relationship to a true market development alliance.
Because distribution success should not be measured only by how much we sell to the distributor, but by how much we manage to sell, develop and execute in each point of sale.
💬 In your company, do transactional models still dominate, or are you moving toward more integrated arrangements with your distributors?
What customer information does the manufacturer keep?
Agreeing on territory does not solve commercial control. Define who keeps the customer master, who records sell-out and how coverage, inventory and execution are shared without duplicating visits or incentives.
Data to bring to a commercial review
Prepare your customer universe and active customers, sales by product and customer, visit frequencies, commercial terms and cost to serve. The scope should respond to the decision and the evidence available. TMC integrates assessment, design and implementation, with a pilot, owners and follow-up according to the project.
Related analysis
Book a meeting with TMC
Book an initial 30-minute meeting with TMC to discuss your company's commercial challenge. We will review your category, channels, current operation and available information to assess where a consulting and implementation project can add value.
