One fundamental decision for a company which wants to serve an international market, so a company that wants to go global is distribution. Actually, if there is a distance, a physical, geographical distance between the country where the company's located and the countries the company wants to serve, by definition, there is a need for distribution of the product, what is usually called, the go to market decision. Distribution has to do with channels of distribution. What is a channel of distribution? A channel of distribution is a number of steps, that basically means a number of potential intermediaries between the producer and the consumer. The producer has to design the channel, this is usually said as channel design, that is to say to decide how many steps the producer wants to have between itself and the consumer and that basically means how many intermediaries it wants to have involved. This is channel design. According to the design, a company can have a direct channel. That is to say, it serves directly, its computers, with online channels or offline channels, or it can have an indirect channel. That is to say, it serves intermediaries, which in turn serve other intermediaries or directly, the consumers. We can distinguish direct channels and indirect channels. Direct channels can be online and offline. So through the online direct channel, you basically sell through an e-commerce through your website, for example. Or you can have your own shop, so you open your own shops in the country or in the market you want to serve. In the indirect channel you can have two different steps, the short one and the long one. With the short one, you basically use some retailers, that is to say the producer sells to retailers and the retailers sell to consumers. Or you can use the long channel, that is to say, the producers sell to wholesalers or distributors. The distributor will serve, in turn, retailers and retailers will serve consumers. The decisions to be taken are basically how many steps, how many intermediaries do I want to use as the producer, and what kinds of intermediaries? If I decide to have a direct channel, it means that I have to bear all the investments. If I want to open my shops, obviously the investment of my shops is on me. On the other side, if I want to use an indirect channel, I can share these investments with all the other partners in the distribution network. The distribution network is basically a network of partners: partners offering services. There is a financial investment, there is also a competence investment, because the more I go down stream, the more I go to the consumers, the more the competences are retaining competences. A producer which wants to serve, directly, its consumers through its own shops must also have competencies in retailing, and this is called retail management, which is a different job. I have to take into consideration the financial investment and the competence investment. Should we classify the different channels of the distribution and the different formats at the different levels, wholesaling or retailing, we should go into the specificity of each different country. In fact, many countries have very specific formats of retailing or from wholesaling. But the most important thing to understand is that distribution partners offer services. So the point for a producer is do I want to have these services in home, or do I want to buy these services from distribution partners? And what are the services offered by distribution partners? Basically, the most important one is the assortment. A distribution partner builds an assortment by combining different products and different brands. Obviously, if a producer has a direct channel of distribution, he has no competitors because in its shops, basically, only the products of the brands it owns will be sold. If you sell through intermediaries, these intermediaries will put together your products and brands with your competitors’ ones. Basically, the longer the channel is, the more limited the investment would be, but also the more limited the control will be. The real choice is a trade-off between control over the market, over the positioning, and investments. So, we can try to figure out what are the different classes of distributors according to the assortment. And the real big difference is between specialized distributors and generalized distributors. For example, if you sell your product through supermarkets and hypermarkets, which usually in the assortment combine very different product categories, you are using a generalized distributor. If you sell through specialized shops, usually specialized shops are very restricted to very few product categories, so the services you can expect by these distributors could be completely different, because specialized shops are able to provide consumers with knowledge, information, and competence, whereas generalized shop are less able to provide competence, but they are more able to provide a full assortment. The real choice is what kind of service do I want to get out of the distributors want to use. Do I want more competence and usually more image or do I want more availability of the product? This is very important when you want to serve a completely different market. The point is, what are the criteria that distributors use to include my products and my brands in their assortments? These are called listing decisions. So listing decisions are the decisions that distributors, at different levels, wholesalers, retailers, take when they have to decide if to include a brand or a product into their assortment. Obviously the decisions are very different, and the criteria they use are very different. One is for sure financial. The distributor would include my brand or my product in to its assortment, if the distributor perceived there could be profitability out of it. There is a potential profitability in selling that product and that brand. So it depends in the potential sales, in the potential market, in the image the product and the brand have. So how the product and the brand is able to build its own position in the market. Then there are other decisions, for example, image decision: the distributor will consider if the inclusion of the brand or the product in its assortment would improve the image, or would contribute to make a specific image. Another consideration that usually distributors make is how the product or the brand is able to build new market for the distributor. If I include that brand or that product in my assortment, it will make a broader market for the distributor. So again it means how strong is the positioning of the brand or the product in the market the distributor want to serve? Another point is the competition across distributors. Some distributors pretend they have the exclusivity in selling the product or the brand. So basically, if I decide to sell to one distributor, I cannot, by agreement with that distributor, serve other distributors. So in this case, it means the distributor would put an effort on distributing the product or the brand, and so partnering with the producer in order to build the market for the brand or the product. In food and beverage businesses where there is passion and commitment, very often, distributors choose products because they like them. Because they see that the producer shares the same values, the same commitments, the same idea of the quality of the product as of the distributor, and so it makes space for very strong personal relations, for very strong long lasting relations, which are usually based on their affinity, on intimacy between the distributor and the producer regarding an idea of how the product should be made, and how it should be sold in the market.