This post presents a small CPG food startup-up brand that I recently met. What follows are the facts I know about the company, its current state and my recommendations.
Company
This company is 6 months old with four founders who serve as the sole employees. They work for other companies and are growing this opportunity in their spare time.
Product Innovation
There are two consumer retail products that the company has developed and is selling. The products are sold in the bakery section. They are gluten-free and Paleo friendly.
Production
The company outsources its production to a commercial co-packer.
Logistics
Given that sales result only from a local farmers market, the owners currently handle warehousing and logistics.
Marketing
The product appears to be unique in the marketplace and has no direct competitors, although substitute products are numerous. The company has so far relied on customer word-of-mouth and sales at a local farmers market as its marketing vehicles. I have not seen its packaging and it does not have an operational website.
Sales/Retail
The company has been approved to sell its products through a local natural products retailer and expects to be on shelf in the near future in one location.
Finance
The founders have supplied all capital to date. Net income is negligible.
Founders
The owners wish to increase retail distribution and are considering hiring a production manager to oversee the co-packer so that they have time to spend on sales and marketing.
Pros:
- The founders work for an existing natural food products conglomerate and are leveraging their experience and connections to help grow their business.
- There is funding available among the founders to help grow the company.
- The products are currently unique in flavors/ingredients.
Cons:
- The products have limited proven sales track record.
My recommendations to the founder’s are as follows:
- Use the initial retail location to test every aspect of the product, including product taste and performance, packaging appeal and if possible, different areas in the store for shelf placement. Use in-store marketing methods to test ways that help drive product sales. They can include, but are not limited to, product sampling, shelf-tags, in-store posters, and endcaps. Optimize the packaging size and price to maximize profitability and product turn.
- Launch a website with company and product information. Setup e-commerce capabilities through Amazon so that customers can make purchases (but the company fulfills). Amazon does an amazing job optimizing SEO of its products. In addition, the ability for customers to submit product reviews on Amazon, if they are positive, will help sales.
- Develop a set of attributes that the company can own to help identify and differentiate its brand. Be mindful of the future, especially technology trends, and position the brand so that it can evolve and stay relevant into the future.
- Develop a product innovation strategy and timeline that enables you to quickly develop and launch flavor variations or new product lines to capitalize on customer interest.
- Take full advantage of current employer in learning about how to develop, market and grow your products.
- Gather research to help you understand your category. Organizations that can provide good information include the National Association for the Specialty Food Trade and Mintel.
This small company is pretty early out the gate. But the founder’s have experience in the food industry and are positioning themselves to capitalize on the growing interest in the Paleo friendly foods, which excites me because I am on this diet. I look forward to seeing them in retail.
