UNFI and KeHE onboarding is the gateway to natural, specialty, and conventional grocery distribution in the United States. These two distributors move product into tens of thousands of retail doors, and most grocery and natural-channel buyers simply will not stock a small brand that ships direct. Understanding how each distributor works, what onboarding actually costs, and where margin quietly disappears is the difference between distribution that grows a brand and distribution that drains it.
Brand Refinery is a CPG consulting firm that helps food, beverage, and personal care brands design U.S. distribution strategy, negotiate distributor programs, and protect margin through the onboarding process. This guide covers both distributors step by step.
What UNFI and KeHE Actually Do
A natural and specialty distributor buys your product wholesale, warehouses it, and delivers it to retailers alongside thousands of other brands. Retailers rely on them to consolidate freight and simplify purchasing; brands rely on them for access, because a single distributor relationship can unlock accounts from independent co-ops to major chains.
UNFI is the larger of the two, supplying tens of thousands of customer locations across natural and conventional grocery, including its long-standing primary-distributor relationship with Whole Foods Market.
KeHE is an employee-owned distributor focused on natural, organic, specialty, and fresh products, and is known for its emerging-brand programs and its trade shows where retail buyers discover new products.
Most scaling brands eventually work with both, because retailer coverage only partially overlaps. Which one comes first should be driven by where your anchor retailers buy.
The Economics: Where Your Margin Goes
The headline number is the distributor margin, which for natural and specialty categories generally lands around 20 to 30 percent off wholesale. That number is real, but it is never the full picture. The true cost of distribution includes a stack of programs and deductions that routinely surprises first-time suppliers.
Free fills. Many new item placements require the first case or the first order per store free of charge. Across hundreds of doors, free fills are a real launch cost that must be budgeted, not a rounding error.
Manufacturer chargebacks (MCBs). When a retailer runs your product on promotion, the discount is funded by you, billed back through the distributor as a chargeback. MCBs are how most natural-channel promotions are executed, and unmanaged MCB programs are a leading source of margin surprise.
Promotional programs. Both distributors sell participation in monthly deal cycles, circulars, trade shows, and new-item publications. Some are worth it; some exist because brands keep paying for them. Each one needs its own ROI case.
Deductions. Payments arrive net of deductions for spoilage allowances, damages, freight adjustments, and promotional accruals. Deductions that are wrong or unsupported can be disputed, but only if you reconcile every remittance against every agreement, every month.
Freight. Terms differ by distributor, region, and deal. Delivered pricing versus FOB at the distributor's warehouse changes your landed economics materially, so model both scenarios before signing.
The discipline that protects you is a complete gross-to-net model: base margin, program fees, free fills, MCB commitments, expected deduction rates, data fees, and freight, all computed per case before you sign. If the per-case contribution is negative at realistic volumes, renegotiate or wait. Our trade marketing playbook covers how to manage the promotional side of this stack once you are live.
UNFI Onboarding, Step by Step
- Secure retail pull first. UNFI takes on brands that retailers are asking for. Land commitments from stores that buy through UNFI before you apply; a distributor pitch without retail pull is a filing cabinet submission.
- Submit through UNFI's new supplier process. Expect to provide company and product data, certifications, and pricing.
- Complete the paperwork. Typical requirements include a supplier agreement, new item forms, a freight form, a W9 (or W8 for international suppliers), a certificate of insurance meeting UNFI's stated coverage requirements, and participation forms for new store opening and reset programs.
- Set up EDI and data. UNFI transacts electronically, and accurate item data matters: errors in EDI documents can trigger chargebacks or rejected shipments.
- Plan your launch programs. New brands are steered toward introductory promotional programs and publications. Choose deliberately rather than buying the full menu.
KeHE Onboarding, Step by Step
- Anchor retail demand. Like UNFI, KeHE responds to retailer pull. Its trade shows are also a genuine discovery venue where buyers walk the floor looking for new items.
- Apply through KeHE's supplier channels. Emerging brands should look at KeHE Elevate, the distributor's program for early-stage brands, which bundles onboarding support, promotional programming, category management guidance, and buyer exposure.
- Complete vendor setup. Expect documentation broadly similar to UNFI's: agreements, item forms, insurance, and tax documents, plus EDI onboarding.
- Confirm freight terms. KeHE commonly operates on an FOB basis in many programs, with brands managing freight to the distribution center, so quote your inbound lanes early.
- Budget the promotional calendar. KeHE's deal cycles and show participation carry fees. Tie every dollar to a retailer commitment or a measurable discovery outcome.
Are You Actually Ready for National Distribution?
Distributors amplify whatever you already are. If your velocity is strong, they scale it; if your margin is broken, they scale that too. Before onboarding with either distributor, you should be able to answer yes to all four:
- Do retailers that buy through this distributor want the product now? Named accounts, not intentions.
- Does the per-case contribution stay positive after the full program stack? Modeled, not hoped.
- Can operations hit fill-rate expectations? Co-packer capacity confirmed, safety stock held, EDI live.
- Is there budget for sell-through after onboarding costs? Getting into the warehouse is not the goal; getting out of it repeatedly is.
Brands that cannot answer yes to all four are usually better served by regional distributors or direct programs for another two to four quarters. Distribution readiness is a stage, not a status symbol, and reaching it early is one of the highest-ROI conversations to have with an advisor. Read more about our team and how we sequence distribution for clients.
Managing the Relationship After Launch
Onboarding is the start of the work, not the end. The suppliers who thrive with UNFI and KeHE run three disciplines relentlessly. They reconcile deductions monthly, disputing unsupported chargebacks while they are still fresh. They watch their items' velocity in distributor reporting and act before a slow item becomes a discontinued item. And they treat distributor reps and category managers as an extension of their sales team, showing up to reviews with data and a plan rather than waiting for news.
Build a Distribution Model That Survives Contact
Brand Refinery designs distribution strategy for CPG brands entering U.S. natural and conventional retail: distributor selection and sequencing, gross-to-net modeling, program negotiation, and deduction management. See our full services for how we support brands from first distributor to national scale.
Evaluating UNFI or KeHE? Schedule a consultation or call (424) 397-3047 before you sign.
Frequently Asked Questions
What is the difference between UNFI and KeHE?
UNFI is the largest natural and conventional grocery distributor in the United States and serves tens of thousands of customer locations, including its long-standing role as primary distributor for Whole Foods Market. KeHE is an employee-owned distributor focused on natural, organic, specialty, and fresh products, known for emerging-brand support through its Elevate program and for trade shows where retail buyers discover new products. Most scaling brands eventually work with both because their retailer coverage differs.
How much margin do UNFI and KeHE take?
Distributor margin for natural and specialty categories generally falls around 20 to 30 percent off wholesale, varying by category, volume, and program. The base margin is only part of the cost: free fills, manufacturer chargebacks, promotional program fees, spoilage allowances, data fees, and freight terms all reduce net proceeds, which is why brands should model the complete gross-to-net stack per case before signing.
What is a free fill in CPG distribution?
A free fill is a common new-item requirement in which a brand provides the first case or first order of a new product to each store free of charge. It functions as the retailer's risk reduction on unproven items. Across a few hundred stores, free fills amount to a meaningful launch cost that brands should budget explicitly as part of distributor onboarding.
What are MCBs (manufacturer chargebacks)?
A manufacturer chargeback is the mechanism by which retailer promotions are funded in distributor channels: the retailer sells your product at a discount, and the distributor bills the discount back to you. MCBs are the standard way natural-channel promotions execute, and because they arrive as deductions from payments, brands need monthly reconciliation to catch errors and track true promotional spend.
Do I need retail commitments before approaching UNFI or KeHE?
In practice, yes. Both distributors prioritize brands that retailers are already asking for, because a distributor's business is fulfilling retail demand rather than creating it. The strongest onboarding path is to secure commitments from target retailers that buy through the distributor, then use those commitments as the anchor for your supplier application and launch programs.