10 top tips for food and drink startups
Have you got a fantastic idea that will rock the food and drink world? Launching a product in today’s hyper-competitive market is a tough proposition and young start-ups need all the help they can get. Here are Business Accelerator’s 10 top tips to get food and drinks brands started on the right track…
Luke Sapsed, Business Accelerator Director, explains the challenge food and drink start-ups face:
“As entrepreneurs, we need many skills to take advantage of the opportunities in the ever-widening gap between mass-produced homogenised foods and drinks that populate much of today’s supermarket shelving. Though you may have a great product, you might also find that a little help and advice will get you up to flight speed faster. It’s all about playing to your skills, and knowing where you need extra support.”
Thanks to 20 years experience in the food and drinks industry, he knows a thing or two about helping fledgling food and drinks brands get off the ground. Read on for 10 top tips for food and drink startups. It’s a great place to get you going on the right path– and help you understand if you need a boost of external expertise.
1. Work out your ‘breakeven figure’
Do this before anything else. This will never, ever let you down as the best thing you ever did for your business. It’s the figure around which all other things orbit. Once you have got to it, you know that everything on the other side is profit. And that, as they say, is it. How? There’s a great guide here – or talk to Reach Accelerator.
2. Do your research – who will buy your product?
Don’t jump until you know what you’re going to land on. Ask yourself these three questions, and answer honestly:
- Do you know that your product has a market?
- Know what your customer wants – then ask yourself what need do you satisfy?
- Are there enough people out there with a problem that needs solving?
3. Now do some more research – how many will they buy?
Find how many and how often they buy your lovely creation. We all know how it feels to tempted by a new, shiny and delicious-looking product. But does your product have what it takes to tempt customers to buy it again and turn them into that most fantastic of things, the repeat customer? This can be down to more than great taste…
4. Is your brand going to work hard enough for you?
Once the product is good enough, it’s vital to get your branding 100% right. Fledgling brands sometimes don’t realise that a great product isn’t always enough.
- Does your brand exude personality and emotion?
- What does it make your customer thinks it says about them?
- What does it make them feel?
These emotional qualities make connections, creating both buzz and loyalty that can make the difference between acceptable performance and stand-out success.
To really fly, your product needs a brand that inspires loyalty and can make ambassadors of the customers by making them feel that they are pioneers. By making your consumers feel like they’ve discovered new tastes, styles and ingredients, you make them want to share with the rest of their tribe – lighting the touchpaper for sales success.
5. Get the right team around you
For most entrepreneurs, it’s not ideal to try doing this all at home, alone. Well, leastways, don’t do it on your own. By all means be lean, but most start-ups need all the help and advice they can get, and it solo-entrepreneurship can get very lonely.
There are many sources of great advice out there – some of my top picks include:
- Bread and Jam Fest – this annual event is packed with useful sessions that covers all the ground you would need to know about as a startup food or drink entrepreneur
- The British Business Bank – they have great pages covering Start Up, Scale Up and Stay Ahead
- The UK Business Angels Association – the Angels Association offers guides, services, and routes to funding for young start-ups
6. Keep launching
Have new ideas in your pocket. Don’t wheel out all your great ideas in one go – the buyers at the larger retailers like to see new products in the pipeline, and so do investors.
7. Ensure that you know your competitive set back to front
Show that you understand the market really well, and identify all the threats and opportunities that the marketplace can offer. A good way to do this is to invest the time to put together a short, tight matrix or infographic that shows all the benefits of your brand over your competitive set.
I have encountered all too many businesses plans by authors who haven’t put enough time or thought into how someone might react when faced with a presentation that doesn’t absolutely nail what the advantages are of the product – and that can be a fatal flaw when you’re talking to investors, lenders, manufacturing partners or a potential customers.
List all your benefits clearly and with authority – this works like nothing else. As the great food and drink start-up writer Tessa Stuart says: “Bang on about how you’re different. If you can’t tell me how you’re different and distinctive, there’s a pretty good chance you’re not.”
8. Get all the tax breaks lined up
Look carefully into the benefits of schemes like Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). SEIS was introduced in 2012 by the UK Government. It was designed to boost economic growth in the UK by encouraging investment in small and start-up businesses, whilst offering tax-efficient benefits to individuals who invest.
In essence, EIS and SEIS provide a safety net for investors keen to protect some of their cash. Investors tend to love these schemes, as they mitigate losses in the (highly unlikely) event of anything going wrong!
9. Know your Route to Market
Know how you are going to get your customers is part of the battle. The next stage is getting the product to them. How you choose this aspect of putting your business together is one of the elements that will make a huge impact on your profitability massively in the early days.
Do it yourself? This a time-consuming choice, but you have complete control and get to meet your customers – and you’ll get the chance to do a bit of sampling too
Recruit a wholesaler with a big distribution network? This option can be very expensive and you aren’t in control – but the advantage is that sales can be ramping up while you hunt down the next sales opportunity. But…..keep an eye on how your wholesale partner is doing and ensure that they are clearly listing the benefits of buying your brand to their customers rather than all the other products in their portfolio
10. Sorting out the COGS
Knowing how much each and every constituent item of your product is crucial. This is your ‘Cost of Goods’ or COGS. Be crystal clear and honest with yourself and your supplier – don’t kid yourself that prices might fall, or go for a ‘mates’ rate’. Then ensure that you can carry on buying every item at that price.
This is as vital an element as anything in your launch strategy. Get it right, and you’ve got increasingly predictable profits. Get it wrong, and you might end up wasting time to get costs of materials and ingredients down when you should be ramping up sales. It’s a vital asset to your product to set out with the best and most premium ingredients you can, but if you can’t sell the manufactured product for a decent margin, your trajectory will cease to be upward all too quickly.
Luke’s last word…
“The brands that tend to really get ahead are the ones who have more to prove and more to give, and the ones who pay as much attention to purpose as to profit. If you need some help and guidance to get started on the right track, let’s talk.”
FEATURED CASE STUDY
Savour Beer - beating the Belgians at their own game?
A young entrepreneur, Sandy Kirkpatrick, weary of the corporate life (and recognising that the recession was about to bite), headed off for a weekend break to Belgium back in 2008. There, he discovered Belgian farmhouse beers. It was an opportunity to combine two of his greatest passions – farming and beer – so he set out to rival the Belgians at their own game. But how did Savour accelerate from bright idea to success story?
- Route To Market (RTM) – getting on enough shelves in a crowded market place
- Logistics – balancing the books when it came to bottling and production
- Focus – knowing which steps to take, when, to maximise results
- Listing in Waitrose
- 50% growth in the first year
- Incremental sales in existing stockists
- Development a strong business strategy for next 5 years
“Luke was instrumental in delivering a revitalising business plan for Savour Beer for the next five years.
He has helped give us the platform that we will need to attract investment and scale up effectively in the increasingly competitive craft beer world.”
Our story starts when Sandy entered his beers into the Great Taste Awards programme – and all four won awards. One, the ‘Super Saison’ champagne style, even garnered the coveted Great Taste 2015 Top 50 Food Awards accolade.
The Guild of Fine Food – the people behind the Great Taste Awards – connected Savour with Reach Accelerator’s Luke Sapsed. The judges were impressed with Sandy’s product, they wanted to help him make the step from artisan producer to household name.
Standing out in the progressively busy sector of craft beer was going to be essential to Savour’s success – no small challenge for a solo entrepreneur. Sandy had naturally focused on production of the drinks, leaving less time and energy for developing sales, distribution and route to market side of the business. And that’s where Reach Accelerator came in…
Savour is a great product with a clear USP. It’s priced competitively, with sustainable margins. It has good shelf stand out. The only trouble was that it wasn’t on enough shelves – so job number one was developing a strong Route To Market (RTM) strategy.
The second challenge lay in bottling and production costs. Finding a reliable packing and manufacturing partner is the most fundamental building block of getting a brand airborne. Doing this at a cost that means you have the confidence to go and sell, work on new product development, or any other of the myriad of jobs that a young brand faces daily, is the trick.
Time to accelerate
Our experience in helping large and small brands in developing an effective RTM spans clients from the Scottish & Newcastle owned Foster’s in Germany and the Carlsberg owned Russian beer Baltika in the UK – so we knew what to do to help Savour soar.
But what were the key elements of the Savour RTM plan?
- Defining a powerful proposition
- Identifying the consumer that you feel responds to that proposition most strongly
- Researching – in minute detail – where these consumers purchase
- Targeting those outlets and selling into them by the most effective means
Working together, Reach Accelerator’s Luke Sapsed and Savour developed a strategy that would bear fruit over a period of time. Luke explains why taking the long view is so important:
“The danger is as a one person outfit you become distracted by anyone who might want to buy your product. How exciting it is that someone actually wants to buy your drink or your food? How flattering and pleasing? Ah, but is it profitable? Probably not, even in the short term, so definitely not in the long term.”
Getting repeat purchase in a group of outlets and showing consistent volume increase is the grail of building the product. By all means, go for ‘low hanging fruit’ in the early days after launch, but it’s also important to concentrate sales activity in the outlets and sectors where you’ll see growth across a group.
Strategy meets reality
The Savour brand itself was strong, with great visual cues on pack, clear differentiation between the variants and a distinctive typeface and logo. However, in-market knowledge about Farmhouse Saison beers wasn’t great. So training the bar staff in the pubs and restaurants about the Savour range of products was vital – and this was something that we really focused on alongside our work on targeting the ideal outlet.
Farmhouse Saison beers are particularly successful with food, so we set out to look for on trade groups that had a strong food business at their heart and were open to food pairing.
Savour also needed to find a brewer that was reliable, offered consistent pricing and good terms. Ensuring that Sandy got these terms was an essential part of the mentoring process – we backed him to the hilt, so he felt assured and confident as he negotiated with brewers.
Empowering Sandy to focus on his strengths was crucial too. Luke explains:
“Helping entrepreneurs and brand owners find their forte is the single most enjoyable thing that I do at Reach Accelerator – setting them free to concentrate on those areas that bear most reward for them really helps the brand flourish.”
We gained several new stockists – including Waitrose – and achieved 50% growth in the first year. There’s been incremental sales in existing stockists, and Savour is set to flourish in the future thanks to a strong business strategy for next 5 years. We’ve also forged a fantastic new relationship with a contract brewer.
Luke’s last word…
“Getting to the heart of the problem, focusing on a brand’s challenges and offering a range of remedies is what gets me up in the morning. I appreciate nothing more than being given the chance to work with highly motivated and enthusiastic makers of great products – and that’s exactly what I found with Savour. The best bit? I can pop down to Waitrose to buy a nice cold Savour and toast Sandy as I watch a great brand grow and grow!”