Distribution channels in Spain for foreign companies

Two traits define the map.

The first is territoriality. Spain has seventeen autonomous communities and a commercial tradition built on regional branches (delegaciones): Catalonia, Madrid and the center, the Levante (Valencia and Murcia), Andalusia, the North and Galicia work as separate markets with their own distributors and habits. Many industrial and foodservice distributors are strong in one or two regions and marginal everywhere else. The Canary Islands also have their own tax regime, which your advisor should review before you put them in the same contract as the mainland.

The second is specialization. In B2B there are distributors by technical family (electrical supplies, industrial supply, HVAC, professional hardware). In consumer goods the circuits are nearly sealed off from each other: large-scale retail, HORECA (hotels, restaurants and cafés), pharmacy, specialty stores and e-commerce. A partner who excels in one circuit is usually irrelevant in the next.

That is why there is almost never a single channel or a single partner for all of Spain. There is a combination by segment and region, activated in waves. How the buyer decides inside each account is covered in how Spanish companies buy.

In B2B there are five models, and they combine: industrial or technical distributor, wholesaler, commercial agent, integrator or software partner, and direct sales with regional branches. The table shows when each one fits and what it costs you in control.

Three criteria drive the choice.

1. Who the customer needs beside them when they buy. If they need a technician, an installer or an integrator, that is your channel.
2. How much consultative selling your product requires. The more explaining it takes, the less useful a wholesaler is.
3. How much control you need over price and data. If you live on renewals or cross-selling, the intermediary has to sign up to share end-user data.

The sensible setup is usually one primary model per segment plus one supporting model. For example, a technical distributor per region for replenishment and an agent for the accounts you don't want to leave in anyone else's hands. The mistake is building regional branches before you know which segment buys.

In consumer goods, the circuit is chosen by the moment the consumer buys your category.

Large-scale retail and buying offices

The listing decision is made at the buying office of the chain or group, and the stores execute. Getting listed is not selling. It is a commitment that the product will turn on its assigned shelf space, backed by planned promotional investment. If your product is food, the Food Supply Chain Act (Ley 12/2013) requires food contracts above a certain amount to be formalized in writing: your lawyer should review that contract before you negotiate terms.

HORECA through regional distributors

A HORECA distributor delivers what the venue orders, and your brand competes with many other references in its catalog. If nobody creates demand in the venues, the distributor won't push it. The model that works is mixed: the distributor delivers and collects; you, or whoever you hire, open accounts, train staff and activate.

Pharmacy

The Act on guarantees and rational use of medicines reserves dispensing of medicines for human use to authorized pharmacies and limits distance selling to non-prescription medicines, always through a pharmacy. If you sell a medicine, the law sets the channel. If you sell dermocosmetics or supplements, the pharmacy is a commercial choice, and a specialist should confirm your product's regulatory classification before you design anything.

E-commerce and marketplaces

Online serves two purposes that should not be mixed: testing demand at low risk, or being your main channel. If it is a test, decide in advance which data point will make you decide. If it is the main channel, the problem is service and price consistency with your distributors, who will see your online price before they see your price list.

The candidate most eager to sign is rarely the best one. Often it is the one with the emptiest portfolio. We propose five steps, each with its own deliverable, before any negotiation.

1. Define the segment and region of the first wave. Deliverable: one page with the segment, target accounts and priority regions, taken from the winnability matrix.
2. Build the long list of candidates. Deliverable: eight to fifteen candidates per region and circuit, with who recommends them and which accounts they reach. The best source is your target customers: who they buy from today. Then trade fairs and industry associations.
3. Filter with verifiable criteria. Deliverable: the table below, filled in with evidence, not impressions.
4. Interview three finalists with the same script. Deliverable: minutes recording what each promises in accounts, resources and data.
5. Ask their suppliers for references, not just their customers. Deliverable: two calls per finalist with brands it distributes or has stopped distributing.

The weights depend on your model. If you live on recurring revenue, data weighs more than coverage; if you sell projects, technical capacity weighs more. Set the weights before you meet the candidates, not after.

The candidate will ask for exclusivity, almost always over more territory than it can work. Exclusivity is a currency: you grant it in exchange for measurable commitments and take it back if they are not met.

We always recommend a trial period before the exclusivity is consolidated, and minimum targets whose breach lets you shrink the territory or remove the exclusivity.

Regulation (EU) 2022/720 on vertical agreements exempts these agreements when the supplier's and the buyer's market shares each do not exceed 30 % of the relevant market. It allows restricting active sales into an exclusive territory allocated to a maximum of five distributors and, as a general rule, does not cover restrictions on passive sales or non-compete clauses that are indefinite or longer than five years. In practice: you can stop your Catalonia distributor from running campaigns in Andalusia, but not from serving the Andalusian customer who calls it. The drafting belongs to your lawyer; how much territory you grant and in exchange for what is your decision.

The distributor buys your product, resells it at its own margin and carries the collection risk. The commercial agent promotes, and sometimes closes, transactions on your behalf in exchange for a commission: the customer is yours, the invoice is yours and so is the collection risk, unless expressly agreed otherwise.

In Spain the agency contract is governed by Law 12/1992 of 27 May on Agency Contracts. Three points to know before signing, always reviewed by a Spanish commercial lawyer:

• Notice period. For open-ended contracts the law sets one month's notice per year in force, up to a maximum of six months (Article 25).
• Goodwill indemnity. If the agent has brought in customers or significantly increased business with existing ones, on termination it may be entitled to an indemnity that the law caps at the annual average of its remuneration over the last five years, or over the whole period if shorter (Article 28).
• Post-termination non-compete. It can only be agreed in writing and for a maximum of two years, or one year if the contract lasted less than two (Article 20).

An agent is cheap to keep and expensive to let go if it has done its job well, and that is fair: it has built you a customer portfolio that belongs to you. What makes no sense is hiring an agent with no targets or reporting and discovering years later an accumulated exit cost without knowing what it contributed. The agent is governed with the same system as the distributor.

We won't give you a reference margin per channel. It varies by sector, category and the partner's role, and a generic percentage would have you negotiating against someone else's number. What we can give you is the structure: the partner's margin is the sum of several terms, and each one should be tied to something the partner does.

On payment terms, the Late Payment Act (Ley 3/2004 de lucha contra la morosidad) sets a default of thirty calendar days for business-to-business transactions when no other term is agreed, and prohibits agreeing more than sixty. Your advisor will tell you how it applies to your case.

Always measure net realized price: list price minus discounts, rebates, contributions, returns and cost to serve. And sort out your price list before handing out terms: if the product is on a marketplace, with distributors and in direct sales, final prices have to be consistent. Price tiers and lists are developed in our B2B pricing strategy guide and on pricing and packaging.

The contract sets the frame; the governance system decides the result. It is designed before signing so the partner knows what it is getting into. It has three parts.

1. A joint plan per period

A short document, signed by both parties, with the target accounts for the period, end-customer sales targets, planned actions and the resources each side commits. It is not a business plan. It is what both of you commit to doing in the period.

2. Action sheets

Every relevant action is written up on an action sheet. The sheet turns a promotional contribution into an investment with an owner.

3. Period committee

A meeting with a fixed agenda and an agreed frequency, where the scorecard is reviewed, sheets are closed or reworked, and decisions are made. It is our period committee tool, and its rule is that it decides: every meeting ends with written decisions, owners and dates.

Alocallao is a strategic marketing and commercial planning consultancy that directs companies' entry into Spain, the Dominican Republic and the United States. At this stage our role is specific: we design the joint plan, write the sheets, prepare and chair the committee remotely, and say no when an action has no indicator. The partner sells; we direct the system. The client decides. We direct. Third parties execute. It is the piece almost no foreign company has covered, because its leadership sits several time zones away and a distributor does not govern itself.

The channel scorecard answers three questions: whether the product gets in, whether it sells through, and whether it makes you money. Every indicator is measured against a signed baseline set at the start, not against each party's intuition.

Don't start with all eight. Pick three or four per partner, the ones tied to a decision you can make, and require the data to arrive at the agreed cadence. If a partner cannot give you sell-out data, that is a risk for the first committee, not a footnote.

Both cases are hypothetical.

A US manufacturer of industrial sensors

Take a United States company that makes sensors for predictive maintenance and sells through its own sales team. In Spain its customer is the maintenance manager at mid-sized plants, who buys from a usual technical distributor and wants help with installation. The first wave: food and chemicals in Catalonia and the Levante.

The reasonable move is not to replicate its field reps. It is one technical distributor per region with exclusivity conditional on targets and a trial period, an integrator for full-plant projects, and a list of reserved large accounts. The scorecard starts with new accounts, target-list coverage and net price. The rest of the method is in adapting a US sales playbook to Spain and in the US to Spain corridor.

A Dominican brand of sauces and seasonings

Now take a company from the Dominican Republic with a line of sauces. The temptation is large-scale retail, but without proven demand a listing requires in-store investment that is hard to sustain.

The prudent move is to start with HORECA in two cities, with a regional distributor in each, an agent who opens Caribbean-cuisine restaurants, and an online channel to measure repeat purchase. If turnover and repeat purchase support the thesis, the second wave goes to specialty stores and then to a chain. The Dominican Republic to Spain corridor covers the rest of the entry.

• Granting national exclusivity to the first eager partner. The cause is the rush to have someone in the market; the effect is a territory locked for years.
• Choosing the partner by size. The cause is confusing capacity with priority. Ask where you would rank in its portfolio.
• Signing with your home country's contract template. The cause is treating the contract as paperwork, when the rules on agency, competition, payment and your sector are Spanish and European.
• Not agreeing on data. The cause is fear of asking during the negotiation, exactly when it is easiest to get.
• Paying contributions without an action sheet. The cause is having no governance system. No sheet, no contribution.
• Translating material instead of adapting it. The Spanish buyer asks for cases, data sheets and references in their own context. The cause is assuming the message works unchanged in a new market. You need a local layer in the playbook.
• Measuring only sell-in. Sell-in rises with the first order and misleads you for a year. The cause is that it is the only number you get without asking for anything. Measure sell-out and net price.

1. Write one page on where your customer buys in Spain today. Circuit, partner type and, if you can, the names of who three target accounts buy from. If you don't know, that is the first task.
2. Choose the segment and region of the first wave. One combination, not all of Spain. Write down why that one and not another.
3. Set your partner evaluation criteria and their weights before speaking to any candidate, using the table in this guide as a base.
4. Draft your non-negotiable minimum terms: sales data by customer, targets tied to exclusivity, reserved accounts and committee cadence.
5. Ask a Spanish commercial lawyer for an upfront review of the contract model you plan to use, agency or distribution, before sending it to anyone.