E.A. Berg & Sons - 'Not Your Ordinary Broker'

September 1, 2007
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E.A. Berg & Sons – ‘Not Your Ordinary Broker’

Story by James Echeandia

The Man in the Van is not only in New York, but also Philadelphia, Baltimore –Washington, Miami and Los Angeles. Read how one broker organization, E.A. Berg & Sons, has met the challenge of the New York market and has thrived in the process. Proving that Frank Sinatra was right when he sang: “If you can make it there, you’ll make it anywhere,” Berg has exported its successful programs to other markets clear out to California.
Most confectionery industry observers consider the Metropolitan New York City area to be the most difficult retail market in America to sell into and manage. The very things that make the market interesting … high population and population density, diversity of retail outlets, a tradition of candy eating, extremely diversified distribution channels … make the market a mighty challenge. It’s a challenge facing any sales organization, and in the case of broker organizations, the challenge is even greater due to their thinnest of operating margins.
Consider the greater New York market, with its 20 million population and the highest population density of any major city in the United States. Retail outlets can be as small as a newspaper stand in the center city areas, and in the absence of true convenience stores, all kinds of outlets serve as convenience or “fast traffic” outlets, even down to the candy stands in the New York subways. (Berg calls such small outlets “pigeonhole” or “cubbyhole” stores.) Independent retailers, where the buying decisions are made at store level, represent something like 95 percent of retailers. The candy store … and the bodega … were born in New York. Crowds and congestion are the norm, and doing any kind of retail business is complicated, expensive and maddening. There are master distributors, distributors, cash and carry wholesalers, rack jobbers, wagon jobbers, sub-jobbers and a few club stores. Factor in that most retailers buy from several sources, and you can understand why the New York Metro market is considered a major challenge by many confectionery marketers. And the key thing confectionery producers wonder is: “how in the world do we get product to retail?”
“Traditionally, candy brokers view their role as making sales to distributors, wholesalers, and retailing organizations, in other words, reaching the first level of distribution. In this company, we’re not satisfied until the product is at retail where consumers can make a purchase decision,” said David Berg, vice president of E.A. Berg & Sons, “and we’ve pioneered ways to make that happen; speed to market is our passion,” he added. David and other key E.A. Berg operatives were interviewed in the Maywood, N.J., headquarters of the company founded by his grandfather, Edward A. in 1923. David, along with his brothers Russell and Michael, are the third generation of Berg management, under the watchful tutelage of their father and company president, Harry J. Berg, a proud representative of the second generation of Bergs.  
Two in one
E.A. Berg & Sons began as a strictly confections broker, which lasted from the founding of the company in 1923 right up until the 1980s, when the company expanded to a full-service brokerage and broadened their coverage to include all major product categories and trade classes. The Brokerage Division headquarter  coverage includes supermarket chains and independents, wholesale grocers, mass merchandisers, drug chains, specialty distributors, wholesale candy and tobacco, convenience stores, vend/office coffee service operators, re-baggers and bulk distributors right through to alternative trade channels including video, clothing, party and toy. The Brokerage Division is run by the Bergs. While this selling coverage is an activity common to many other broker organizations across the United States., the E.A. Berg & Sons Retail Services Division is most decidedly unique.
The difference
“What sets us apart from other brokers is our Retail Services Division; it is a unique capability that we offer, not only in New York but in other major markets,” according to Glen D. Brown, vice president/Retail Division. Retail Services started out in the early 1990s as a car trunk stock selling system, but soon grew to the current “Man (or Woman) in the Van” down-the-street selling system, which today involves 50 vans covering more than 20,000 outlets.
“In the New York market, the vast majority of retailers are independents, and buying decisions can only be made face-to-face, at store level. So our van routes concentrate on fast traffic outlets (FTOs), where the decision maker is at store level”, Brown continued.
“Consumer accessibility/distribution and speed to shelf are our goal, and we sometimes produce amazing results, especially with new items or categories where there are multiple competitors. We give our clients a distinct ‘edge’ in the battle for retail space since we go to the retail store and put the item on the shelf,” said Gary D. Epifano, Impulse Division manager. At that point in the conversation, Harry Berg stated: “That’s right, we don’t give weather reports – our system produces a true distribution point gained.”
How does it work?
The E.A. Berg retail system has been carefully developed over the years. First thing to know is that it is an extra cost service above the standard broker compensation arrangement. “When we’re at retail, we watch out for all of our clients and protect their interests. However, the cost of getting the van retail services to the independent retailer/C-Store only permits selling for those specific clients who partner or cost share in the program,” according to VP David Berg. “In fact, clients of the Retail Division do not have to be clients for the Brokerage Division, so that even direct selling organizations with their own sales force can participate in the Berg van program. We give even the largest company a depth of coverage they could otherwise not afford,” David added.
The “Man in the Van” knows his or her particular territory … about 400 outlets … very well. They probably live in the neighborhood or nearby, and have a cultural compatibility with the neighborhood and their customers. Berg has learned over the years that being able to identify with the customer and speak their language is crucial to the success, which depends on relationship-building.
The product in the van is bought and paid for on the spot at a local distributor depending on the item; product obtained directly from the manufacturer is never used, so that Berg supports the distribution system in the market.
Upon entering the store, after saying “Hello” (or “Hola” or whatever greeting is appropriate), the Berg retail rep conducts an inventory of the items which comprise the van program in the particular market, and records information that the clients request. The results of the survey generate a suggested order that could include any new items being introduced on that particular visit. After the order is approved by the “buyer,” the rep goes to the van, which is outside the store door, “picks” the order from van stock, brings it into the store and merchandises the section or sections involved. New items are “cut in” and the section brought compliant with the “Berg planogram.” If there are gaps in items that are Berg Brokerage Division clients, an order through regular suppliers is suggested. At the conclusion of the order and stocking process, the order is paid for in cash and only cash, which certainly minimizes the necessity for a lot of paperwork. No checks, no credit cards, thank you! Then the rep is off to the next “cubbyhole!” (See photo page, “An Hour at 28th and Lexington.”)
“I’ll tell you something about our retail activities,” Glen Brown added, “We are obtaining sales data and information about our over 20 thousand outlets, which is priceless because you can’t get scan data from these outlets.”
Expansion
Once the retail division was developed in the New York market, it was expanded to the neighboring Philadelphia and Baltimore-Washington markets in the early 2000s, and then to Miami (New York City South!) in 2004, and to the Los Angeles market this year. Each market has its own district manager who lives in the market and has a cultural background appropriate to the market. A DM is responsible for all activities in their market, consistent with corporate guidelines. The Berg people like to say their DMs have the ‘Street Smarts’ to make the market work.
The key requisite for Berg to add a market to the Retail Division is that the market consists mainly of independent retailers, and not headquarter-controlled organizations. The retail division’s forté is face-to-face selling in the store.
Since the Berg Retail Division is not dependent on brokerage clients to operate and can be employed by any marketer, expansion into additional markets is a distinct possibility, consistent with the market being mainly independent retailers. David Berg summed it up this way: “Our Retail Division clients want us to expand into other markets, and our goal is to be national in the top independent markets throughout the country. We’re an investment spending company, and we are determined to meet our goals.”
The smart money isn’t betting against the Bergs.
About the Author
James Echeandia is president of American Consulting Corporation, a confectionery product development and marketing company based in Savoy, Texas. Jim is also Publisher of the Candy Information Service, which monitors new products entering the confectionery market. Jim was born in New York City, so he understands what it takes to make it there.

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