Insights from a Seasoned President
Fred Coutts shares his expertise in steering business development initiatives, offering valuable insights and strategies for success in the dynamic landscape of the food and beverages industry.
If it’s happened once, it’s happened a million times…a weekend warrior chef or baker shares a handcrafted beverage or some great cookies with their friends and neighbors, who all extoll them to sell them at the local grocer. “You should sell these; you’d make a million!”
Buoyed by positive feedback and the relatively low costs of starting a food business, before you know it, the weekend warrior is renting a commercial kitchen in the middle of the night and cranking out their creation. During the day, while still working their day job, they are contacting stores attempting to get on the shelf.
Starting locally is always the best way to go. If your local stores can’t sell your product using home field advantage, then it’s not likely your product will sell outside your local area. Once you begin introducing transportation and logistics into the mix, the price to the end user goes up quickly, and if you’re not able to counterbalance that with scaling up to drive your cost per unit production lower, it’s a zero-sum game.
Then there’s the matter of selling to retailers. When you walk up and down the aisles, you don’t see many “holes” on the shelf; and the ones you do see are likely just out of stock from the distributor or the manufacturer. Rare is the real estate that’s as valuable is an inch of shelf space at a grocery store. So, the retailer is not just waiting for your invention. Most have what is known as a Review Calendar. In other words, they only take submissions for cookies one time a year, and they may “refresh” the category one other time. That’s how large retailers operate, which is why the general advice is to start with small, local retailers.
IF you’re lucky enough to get to the shelf with large retailers, they can also crush small vendors by charging exorbitant fees to gain shelf space, only to throw them out in six months due to slow sales. Why? Because small ones couldn’t compete with larger manufacturers who have large marketing budgets which they use to pay retailers for ads. The REALLY big manufacturers supplement those dollars with TV, Radio, Newspaper and online advertising direct into millions of households.
Despite the odds, thousands of brands emerge every single year. What separates the winners from the losers? In my humble opinion, there are two traits I look for in founders:
- They have the ability to create unique products. Something the market hasn’t seen before, or it is so much better than what’s out there that it finds its way to the shelf. Think “Gluten Free” a decade ago. The folks who figured out how to make foods that traditionally had gluten, without it, while keeping the taste close to what people expect hit it out of the park.
- Brilliant marketers, who understand their target audience so much that they are able to give them what they want.
The market is forever searching for “the next big thing”. So before you put yourself out there, make sure you really understand the competition and know in your heart of hearts that your product brings a unique selling proposition to the category. Do your research, and understand the real costs associated with getting on the shelf. If you believe you have one of the personality traits listed above, and your product has a USP, then you can cautiously begin to test the markets. Go small, go slow, and if the market tells you that you’re onto something, enlist professional help sooner than later. While some consultants may seem expensive, it’s because they’re worth it! Spending a few thousand dollars to tweak your offering so that it works for a larger audience is much cheaper than investing tens of thousands while going it alone, only to get ambushed by something you couldn’t see coming that the consultant would have warned you about.
If food and beverage is your passion and you’re convinced you have a USP, then by all means go for it. We need you!
