The CPG retail glossary

The terms buyers, brokers, and distributors use as if everyone was born knowing them - in plain English, with the numbers that matter. Deeper treatment of most of these lives in the guides.

Velocity

Units sold per store per week per SKU - the number that decides whether you keep your shelf slot. Thresholds are category- and retailer-specific: a common grocery survival zone is roughly 2-3 units/store/week, while crowded refrigerated sets at major retailers can require 5-7.

ACV (All-Commodity Volume)

A measure of distribution weighted by store sales volume. '40% ACV' means your product is in stores representing 40% of the market's total retail sales - not 40% of stores.

Slotting fee

A payment a retailer charges for new-product shelf placement. In conventional grocery, typically $250-$1,000 per SKU per store - roughly $5,000-$75,000 per SKU for a chain-wide authorization, higher in frozen/refrigerated. Walmart, Costco, and most natural-channel retailers charge little or none; the natural channel uses free fills instead.

Free fill

Free product a supplier provides to fill a new distribution point's first order - the natural channel's common alternative to slotting fees. Budget one free case per new door.

Scan-back

A promotion where the retailer is reimbursed per unit actually scanned at the discounted price during the promo window, rather than on cases purchased.

Off-invoice

A promotional discount deducted directly from the distributor or retailer invoice for orders placed in the promo window - simple, but funds forward-buying if unmanaged.

Deduction (chargeback)

Money a distributor or retailer subtracts from your invoice payment for promotions, spoilage, freight claims, or fees - often arriving with minimal documentation. Reconciling deductions is a core finance discipline in CPG.

Trade spend

Everything you pay retailers and distributors to sell your product: slotting, promotions, scan-backs, demos, free fills, deductions. Commonly 15-25% of gross sales in distributed retail.

Broker

An outsourced sales representative who pitches your product to retail buyers and manages accounts. Established brands in conventional channels typically pay 3-5% of net sales; emerging natural/specialty brands commonly pay 5-10%, sometimes a retainer plus commission.

Distributor

The middle layer that warehouses your product and delivers it to retailers (UNFI and KeHE dominate natural/conventional). Takes a 20-30% margin on its selling price and becomes your actual customer of record.

DSD (Direct Store Delivery)

A distribution model where the supplier or its distributor delivers directly to individual stores and often stocks the shelf - common in beverages, bread, and chips - versus shipping to a retailer's warehouse.

Warehouse distribution

The default model for most center-store products: you ship pallets to the retailer's or distributor's distribution center, and their logistics move product to stores.

Planogram

The retailer's diagram specifying exactly which products occupy which shelf positions and how many facings each gets. Your placement in the planogram is decided at the category reset.

Category reset (review)

The scheduled window - typically once or twice a year per category - when a retailer re-evaluates the shelf, adds new items, and delists underperformers. The moment your pitch has to be timed to.

Facing

One visible unit-width of your product on the shelf. More facings mean more visibility and fewer out-of-stocks; buyers cut facings before they cut products.

SKU (Stock Keeping Unit)

One distinct sellable item - each flavor-size combination is its own SKU. Buyers evaluate, and delist, at the SKU level.

UPC / GTIN

The barcode identity of your product, issued through GS1. Retailers and distributors require GS1-licensed UPCs; reused or uncertified codes create chargebacks and listing problems.

SRP / MSRP

Suggested retail price - what you propose the shopper pays. Retailers set their own final price; your wholesale price and their target margin determine whether your SRP is achievable.

Margin vs. markup

Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. A 50% markup is a 33% margin - confusing the two misprices products.

Gross margin

Selling price minus cost of goods, expressed as a percentage of the selling price. Distributed retail generally requires 35-50% for a brand to survive its trade spend.

Contribution margin

What's left per unit after variable costs (COGS, freight, broker, trade) to cover fixed costs and profit. The number that tells you whether growth helps or hurts.

COGS (Cost of Goods Sold)

The fully loaded cost to produce one sellable unit: ingredients, packaging, co-packer tolling, inbound freight. The denominator of every viability question.

Landed cost

COGS plus everything required to get product to the buyer's dock - freight, duties, warehousing. The cost figure that belongs in channel math.

MOQ (Minimum Order Quantity)

The smallest run a supplier or co-packer will produce - quoted per run and per SKU. Low-sounding MOQs often hide changeover fees across flavors.

Co-packer (contract manufacturer)

A facility that produces your product under your brand. Vet food-safety certifications (SQF/BRCGS), allergen programs, capacity, and formula ownership before the first run.

Tolling

A co-packing arrangement where you supply ingredients and packaging and pay the facility a per-unit fee to run them - keeping cost visibility and supplier control.

Turnkey

A co-packing arrangement where the facility sources everything and sells you finished goods - simpler to manage, with their markup embedded in every input.

Private label

Retailer-owned brands (Kirkland, Good & Gather, Simple Truth) that compete directly with national brands, typically priced 20-30% lower with guaranteed shelf placement.

Category captain

The leading supplier a retailer designates to advise on category strategy and shelf layout - influence that tends to favor the captain's own distribution.

End cap

The display at the end of an aisle - premium promotional real estate, usually purchased through trade spend rather than earned.

Shipper display

A pre-packed corrugate display unit that ships ready for the floor - a way to get incremental placement outside your planogram slot, common in club and promo programs.

Case pack

The number of sellable units in one case (and cases per pallet layer). Wrong case packs for a channel create broken-case fees and stocking friction.

TPR (Temporary Price Reduction)

A time-boxed everyday-shelf discount funded by the supplier, usually via scan-back or off-invoice - the workhorse promotion of grocery.

EDLP (Everyday Low Price)

A pricing strategy of constant low prices with minimal promotion (Walmart's model), demanding a lower everyday cost from suppliers instead of promo funds.

Hi-Lo pricing

The alternative to EDLP: higher everyday prices punctuated by deep promotions - which makes your promo calendar and trade budget decisive.

Shrink / spoils

Product lost to damage, theft, or expiration. Perishable categories carry explicit spoils allowances - often deducted from your invoices whether you planned for them or not.