FMCG stands for Fast-Moving Consumer Goods. These are products with relatively short lifecycles, low prices, high consumption frequency, and frequent repeat purchases. They typically include everyday products that consumers buy and use regularly.
F&B stands for Food and Beverage. The F&B industry covers businesses involved in the production, processing, distribution, and sale of food and beverage products.
Distributing FMCG and F&B products requires a clear understanding of the industry's distribution channels, or channel map. This allows businesses to develop appropriate distribution strategies, business strategies, and marketing plans to reach customers, strengthen product and brand visibility, and ultimately increase sales. Despite the importance of channel mapping, many agencies providing marketing services for F&B and FMCG businesses don't fully understand these distribution structures, which can result in overlooked customer segments and missing marketing activities.
So how do major FMCG and F&B companies actually distribute their products? This article provides an overview of the key distribution channels used across these two industries.
I. On-Trade
On-trade refers to channels where customers consume the product directly at the point of sale. Examples include restaurants, hotels, food outlets, cinemas, bus stations, airports, bars, and other venues where products are purchased for immediate consumption.
On-trade channels often provide a specific customer experience depending on the venue. Customers may visit a bar, restaurant, or pub not only to consume a product, but also to enjoy the atmosphere, socialize, and relax. For this reason, the environment and how well the product fits that environment are important factors businesses need to consider.
For example, products sold at an airport need to meet customers' expectations for speed, convenience, and easy access.
Products sold through on-trade channels are also usually more expensive than those sold through other channels. This comes from the nature of the channel itself, including operating costs, location, environment, and how customers perceive the venue. People generally expect a bottle of water at a bar or airport to cost significantly more than the same bottle purchased elsewhere.
Common On-Trade Channels
1. Restaurants & Food Outlets
- Fine dining restaurants
- Casual and family restaurants
- Restaurant chains and franchises
- Specialty restaurants such as Japanese, Korean, European, vegetarian, BBQ, and hotpot restaurants
2. Pubs & Beer Venues
- Local pubs and casual drinking venues
- Beer clubs and draft beer venues
- Craft beer bars
3. Coffee Shops, Bubble Tea & Beverage Outlets
- Traditional coffee shops and specialty coffee shops
- Branded coffee chains such as Highlands, Starbucks, and The Coffee House
- Bubble tea, smoothie, and juice shops
4. Bars, Clubs & Lounges
- Cocktail bars and premium lounges
- Nightclubs and pubs
- Karaoke venues serving beverages
5. Hotels & Resorts
- Hotel restaurants
- Sky bars, rooftop bars, and pool bars
- Room service
6. Stadiums & Events
- Stadiums and indoor arenas
- Food areas at fairs and festivals
- Catering at large events
7. Specialty Venues & Entertainment Locations
- Golf courses and casinos
- Cinemas and entertainment centers
- Tourist attractions and amusement parks
II. Off-Trade Channels in FMCG and F&B
Unlike on-trade, off-trade refers to channels where customers purchase products to consume later rather than using them immediately at the point of sale.
For example, when you're thirsty and buy a bottle of water to drink immediately, that's different from going to a supermarket and buying ten bottles to keep at home for the week. In this case, the supermarket is an off-trade channel.
Off-trade can generally be divided into two major categories: General Trade (GT) and Modern Trade (MT).
A. GT – General Trade
General Trade, or traditional trade, distributes products through independent grocery stores, small retailers, traditional markets, and other individual points of sale that aren't part of modern retail chains. This remains an important distribution channel for FMCG and F&B products in many developing markets, including Vietnam.
GT is typically characterized by small and relatively simple points of sale, fewer standardized operating requirements, flexible pricing, frequent purchasing, and smaller transaction values.
Common General Trade Channels
1. Traditional Retail Stores
Grocery stores: One of the most common GT channels, especially in residential and rural areas.
General stores: Retailers selling a variety of products, from food and household goods to personal care products.
Specialty stores: Retailers focusing on particular product categories, such as:
- Mother and baby stores selling formula and diapers
- Beverage, beer, and liquor stores
- Tobacco shops and mobile accessory stores
2. Traditional Markets
Traditional markets include individual stalls selling products such as fresh food, dry food, spices, beverages, and household goods. They remain a familiar shopping channel for middle-aged consumers and people living in rural areas.
3. Local Restaurants & Drinking Venues
- Small restaurants and local food stalls
- Casual drinking venues, beer shops, seafood restaurants, and hotpot or BBQ restaurants
- Street coffee shops, tea stalls, and street vendors
4. Pharmacies & Drugstores
Large and small pharmacies sell over-the-counter medicines, supplements, nutritional products, and related items. Some also carry FMCG products such as bottled water, vitamins, and face masks.
5. Specialty Stores
- Pet stores selling pet food, accessories, and grooming products
- School supply stores selling stationery, books, snacks, and confectionery
- Agricultural product stores selling rice, grains, and dried nuts
6. Mobile & Street Vendors
- Coffee, bubble tea, juice, and snack carts
- Temporary stalls at fairs, festivals, and tourist destinations
B. MT – Modern Trade
Modern Trade operates on a much larger and more structured scale than General Trade, often through national or international retail networks. Orders are typically handled at the corporate level, with dedicated teams or retail headquarters managing purchasing and inventory requirements.
Modern Trade channels usually carry a wide range of product categories and are professionally managed through standardized retail systems.
Common MT channels include:
Hypermarkets: Large retail stores combining characteristics of supermarkets and department stores. Examples include Big C, Emart, and MM Mega Market.
Supermarkets: Organized retail stores offering a broad range of food, beverages, household products, and other consumer goods.
Convenience stores: Circle K, FamilyMart, Ministop, GS25, and 7-Eleven.
E-commerce marketplaces: Shopee, Lazada, Amazon, eBay, and Alibaba.
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III. How Distribution Channel Mapping Can Be Applied in FMCG and F&B
1. Avoid Missing Potential Distribution Channels
A clear understanding of the industry's distribution channel system or channel map helps businesses—and especially senior managers in FMCG and F&B companies—identify potential channels that might otherwise be overlooked.
As a result, business planning, operations, marketing, and distribution activities can be organized more systematically.
2. Research and Build Customer Profiles for Each Channel
Understanding each distribution channel also helps FMCG and F&B businesses build clearer profiles of their distribution customers: what they want, what they need, how to reach them, and what commercial policies should be applied to each group.
A supermarket chain, a small grocery store, and a restaurant may all sell the same product, but they don't necessarily have the same needs or buying behavior. Each channel therefore needs to be understood separately.
3. Develop Marketing Content and Campaigns for Each Channel
Every channel in an FMCG or F&B channel map has its own characteristics. Understanding these differences allows businesses to develop marketing activities, content, and channel strategies that are more appropriate for each customer group.
MT Marketing Strategy: Focus on prominent product displays, sales promotions, product sampling, and integration with digital marketing.
GT Marketing Strategy: Increase distribution coverage, offer attractive discounts, improve point-of-sale displays, run direct promotions, and build relationships with store owners.
On-Trade Marketing Strategy: Sponsor venues, create promotional combos, organize events at the point of sale, offer upselling incentives to staff, and run check-in promotions or giveaways.
4. Develop Appropriate Business Plans and Commercial Policies
Each distribution channel has its own characteristics, which means businesses need different plans and policies for each one. These differences may include selling prices, discounts, gifts, promotions, dealer policies, and distribution terms.
For this reason, FMCG and F&B businesses need to take distribution channel management seriously rather than applying the same commercial approach across every channel.
5. Coordinate Effectively Across Departments
Businesses also need strong coordination between sales and marketing teams, particularly when managing distribution systems and end-to-end customer relationships.
This includes maintaining customer relationships across different distribution channels and ensuring a consistent level of service, from restaurants in the on-trade channel to grocery stores in the off-trade channel. Effective coordination between departments helps improve professionalism and creates a better overall customer experience.
