Buying Snacks and Pop: What the Heck???

[MVS]

Hi All-

In talking with the guys over at AVS Companies about a couple used machines, the subject of buying snacks/pop came up: Where in Minneapolis do most guys buy their stuff?

He told me about a company called Vistar, and so I went out there, and they printed me a catalog, and I was shocked:

They had the highest prices I have ever seen, and I was told that as I bought more volume their prices would come down.

We are talking like $10.44 for a 24-pack of 12 oz cans of Coke!

I can go to Walmart and get 24 for $6.00 (and sometimes $5.00).

Can anyone tell me why I should go to Vistar just to pay double what I can get right down the street at Walmart?

I would have thought Vistar's prices would have been considerably LESS than Walmart, not twice the price.

Why would my competitors be getting their stuff there???

PS: Went to Costco, and found their prices were only nominally better, with a bit less selection.

What am I not understanding?

[BlindVending]

Starting out you're Wal-Mart prices will be great. As you grow or if you are big enough to be fulltime most of us don't have the time to chase sales at specific stores. Therefore a wholesale or cash and carry often has most of the products we need all under one roof. 

[AngryChris]

 The first thing to note is that the prices you are seeing are specific to the specific locations you go to.  Your local costco might be one price whereas a different costco is a different price.  Around here, I have 3 local Sam's Clubs (all within 25 miles) and 1 local Costco (about 25 miles away).  The prices are fairly similar with cost hovering around $11.00 per 35 or 36-pack.  Yes, you can go to walmart and pay $6.00 for a 24-pack and save a lot of money, but what you may not realize is that going to walmart to buy soda is not a realistic option when you go through hundreds of cases every week.  For example, I probably go through an average of 12 cases of cans in a day (wild guess).  12 cases would require me to fill an entire shopping cart full at walmart, stand in line for maybe 30 minutes, and STILL have to go somewhere else to buy my snacks.  I don't have the time to go back and forth to walmart.  Furthermore, if I shopped solely at walmart, I could easily wipe their shelves out periodically and that would take a chain of grocery carts to do so.  I don't know if they would do it or not, but I suppose a manager could turn me down if he found out I was selling it.  Maybe not but who knows... it's a HUGE hassle to deal with that.

Another thing you don't realize is that the price they quoted you is the price whether you pick it up or whether it is delivered to you (I don't think they charge for delivery).  Again, when you are large enough to go through hundreds of cases in a week, it is VERY inconvenient to go out and pick it all up at walmart.   Going to Sam's or Costco is much easier because they have flatbeds and I could even have them put it on a skid if I wanted.  That is generally not an option at walmart.  At Vistar (or any other distributor that delivers), I could have that same order delivered to me if I have a place that is zoned for business.  That means I can skip the stores altogether and just focus on loading the truck with what I need for the day and move on.  

Lastly, the cans they send are for resale.  Yes, it's the exact same stuff from walmart but Pepsi/Coke charges more when it's sold for resale, which is an issue when you go to walmart.  I don't have to pay sales taxes when I go to most places because I have a vendor's license, and messing with that at walmart is a pain, so I end up paying sales tax twice when I go to walmart (once at checkout, and again when I pay sales tax to the state UNLESS I keep perfect record keeping on my receipts).

So.. in conclusion.. you are paying for CONVENIENCE.  If you are too small to need something like vistar and you can afford the time to go to walmart for just a few cases, then by all means go do that!!!  You just aren't at a place where you go through enough volume to find something like vistar to be worth your money.  When you have a large route, having your product delivered sounds temping even if the prices are a little higher.  If you keep your prices on par with the rest of the market in your area, you don't have to worry about paying a little more.

[Southeast Treats]

Drink pricing is crazy for sure... the large chains like Wal-Mart get the best pricing from the distributors and they can resell below the normal wholesale prices.  Like Chris points out, when you are a small startup you can deal with taking time to buy your product in small lots; as you grow your time becomes more valuable than the money you save.  Sometimes you can cut a deal with the store manager to order and set aside larger quantities for you, which works well for some people and saves you the shopping cart shuffle.  Almost no one buys major brand drinks thru Vistar or any of the other wholesalers.  When you get established, you can approach Coke, Pepsi, or 7 Up, and get use of their machines at no cost to you.  You then buy their product directly and it is delivered to your warehouse.  Part of the trade off is the cost of the product that you have to pay, and you contract to buy all of their line directly from them.  Vistar is good for snack products that Sam's or Costco don't carry, if you do enough volume to meet their minimum order. 

[AngryChris]

23 minutes ago, Southeast Treats said:

Almost no one buys major brand drinks thru Vistar or any of the other wholesalers.  When you get established, you can approach Coke, Pepsi, or 7 Up, and get use of their machines at no cost to you.  You then buy their product directly and it is delivered to your warehouse.  Part of the trade off is the cost of the product that you have to pay, and you contract to buy all of their line directly from them.  

This is an excellent point.  Last I checked, the bottlers are sometimes cheaper than vistar depending on your volume, but trade-off is getting leased machines.  I do have 7up leases, but I try to stay away from coke and pepsi for 3 reasons.  Number one, I ONLY have to buy what I want to sell and not what the bottlers try to push on me to keep pricing.  Number two, I have full control on where I want to get product from since I have nothing to lose (except profits) by going to Sam's, Vistar, the bottlers, Walmart, etc..  And the last reason is because coke doesn't even offer leased equipment here anymore.  HOWEVER!!!  Some regions are totally different and the bottlers might totally work with you and it can be an EXCELLENT way to grow your business.  There is absolutely NOTHING wrong with getting some leased machines to help you add a few nice locations for long enough until you can afford to replace them with your own machines and move on from their program.  I am large enough that I can avoid that entirely and I don't want to get like a lot of vendors who completely rely on their 3rd party machines to stay afloat.