By GREGORY ZELLER //
A new partnership with an Illinois-based distributor is sending Jake Schmigelski’s snacks into all-new out-of-state markets – and strengthening his unique bonds with customers closer to home.
Gale International Trading LLC, Schmigelski’s Deer Park-based snack-food distributor, has entered into a distribution agreement with Michigan manufacturer Nick’s Chips LLC, through which the Long Island company will carry Nick’s Chips’ flagship Hot Sauce Corn Chips and customers in cities including Detroit and Chicago will munch on Gale International’s product line.
The deal strengthens a unique vertical for Schmigelski’s 2013 snack-brokering startup, according to its founder. Nick’s Chips is an “inner-city-focused company,” the entrepreneur told Innovate LI, describing a food-wholesaling specialty not always grasped by larger convenience-store distributors.
“The big players like [Harold Levinson Associates] and [McLane Company] do not do a good job serving some of the lower-income markets in Brooklyn, Queens and the Bronx,” Schmigelski said. “It’s not their focus. They don’t have the right product line for these markets.
“I do,” he added. “I specialize in underserved inner-city markets. I have firsthand experience building these markets and finding out, intimately, what children and folks in these convenience stories like to eat.”
Customers in inner-city Detroit and Chicago neighborhoods are going to like the beef jerky, cotton candy and other wholesale items Gale International Trading sends west, according to Schmigelski, who predicts a similarly warm reception in the Northeast for the Hot Sauce Corn Chips.
The distributor has already “disseminated” a half-trailer’s worth of corn chips, dealing skews of 4-ounce bags to urban convenience stores in New Jersey, Pennsylvania and “every borough,” Schmigelski said.
“This is their flagship item,” he noted. “I’m going to be bringing on their full line, but this is a way to enter their market and get people in markets like Newark, Jersey City and Philadelphia familiar with the Nick’s Chips brand.”
There are markets on Long Island – he referenced Brentwood and Hempstead, among others – suffering the same “void” on local convenience-store shelves, Schmigelski added.
“We’re working to fill that void,” he said. “HLA and some of those players might service Bola Market, which is a fabulous market, and I applaud them for doing that, but they do not have the right product mix.”
Gale International Trading’s business model can actually bring the right product mix to a larger spread of smaller stores. Markets on the distributor’s delivery routes – including independent mom-and-pop shops and smaller chains – benefit from Gale International’s big-league buying power, as do third-party wholesalers supplied by Schmigelski’s 2,000-square-foot warehouse and private driver network.
“We consolidate shipments,” the CEO said. “If a small or medium-sized wholesaler went to Kellogg’s, for instance, they’d have to order three or four or five full pallets as a minimum order.
“Working through us lowers their minimum order,” he added. “And they still get the same cost as going direct to the manufacturer, because we buy in bulk.”
With the startup entering its fourth year and new manufacturers like Nick’s Chips coming aboard, the model is firming up. Last summer, Gale International Trading formed an alliance with Farmingdale-based shipper MO Trucking, which now handles “about 75 percent of our logistics,” including bill-paying, real-time delivery confirmations and “some collections,” Schmigelski said.
And with the Hot Sauce Corn Chips setting mouths aflame from Philly to Jamaica, and Grace International’s products shipping farther from Deer Park than ever, the startup has “found a very profitable niche,” according to its founder.
“And it’s not just that we make money,” Schmigelski added. “It’s that customers get the services they deserve.”