Growth is crucial to ensure the success of a specialty food business, and there are different paths for success to consider that can affect every food business differently.
During SFA's In the Know webinar, “Is Your Food Brand Ready to Scale?”, Georgiana Dearing, principal and brand strategist at Water Street, a marketing company for manufacturers, will discuss the paths to the consumer, how to set goals and choose channels that can boost sales, and organically grow a business to serve high-volume customers.
The webinar will take place tomorrow, September 21 at 1 p.m. EDT and is free for members and $19 for non-members. Register now.
SFA News Daily spoke with Dearing about the topic.
What should brands consider before attempting to scale?
Scaling is a term better suited for the tech industry because scaling is about rapid growth with minimal investment. Margins in the food and beverage industry are so slight that “scaling” is more likely to happen incrementally.
The top three things to consider before attempting to sell at scale are:
• A deep financial review of your current business with a qualified advisor.
• Creating a strategic plan for growth that includes funding new equipment or co-packing agreements, as well as identifies the best-fit markets and channels for your business.
• A marketing strategy that will help you get from where you are to your future state.
Food is often a family business at the outset, which means a lot of personal investment in the company–much of that shows up as free or dramatically reduced labor. To have the production capacity in place to fulfill multiple pallet orders, a food brand will need to hire staff at competitive wages. That means not only salaries but benefits and training, paid holidays, and time off, and all the myriad tasks associated with managing a workforce.
What are you most excited to share during the education session?
I’ve heard so many horror stories about brands flaming out after landing a Walmart or Whole Foods contract, so I’m most excited to share some alternate channels that allow brands to get their “feet wet” with large orders before they take on national deals. There are so many moving parts in the food industry, these alternate routes are a great way to work out the kinks and maintain a profitable business.
In which alternate channels do specialty foods have a better opportunity to succeed?
It depends upon the category, but there are some very interesting niche markets that can be profitable and successful for food brands. Subscription services like Mouth.com and YumDay are a great way to reach a broader audience through one channel. Lifestyle magazines like The Local Palate can be very lucrative for food brands. Food52 has also been making investments in ecommerce. Many national grocery chains will add boutique brands only on their online shopping portals, which can be a great way to test the relationship with that chain. Then, very niche retail markets like hospital gift shops and airports are great for snack and on-the-go brands.
What mistakes do you see specialty food brands make when trying to scale their business?
Most startup brands, those in their first 5 years or so, often look at acquiring big grocery accounts too early and are unprepared for the financial burdens associated with servicing those accounts. As with many consulting firms focused on emerging brands, I talk about focusing on incremental growth before scaling into national accounts.
One mistake is thinking that you need to be everywhere all at once. It’s very hard to serve multiple channels and multiple types of channels while you are trying to grow those channels at the same time. It’s better to focus on growing one type of sales channel at a time.
The same goes for marketing. Focus on learning and perfecting one marketing channel at a time, then build out an SOP and get it running effectively so you can focus on the next tool in your kit. Because when your brand really takes off, you are going to need all of them working for you: your website, your packaging, your sales tools, social media, and the most overlooked but most profitable marketing channel: email marketing.
How can a brand determine its success when considering both in-store and online sales?
For in-store success, brands should monitor their velocity at every store. Too often, brands will sell into a retail chain and then move on to capture a new account. There is a misconception that most of the work is done once you make it into Whole Foods (or wherever). Brands should be nurturing their new store accounts to help build fans and have a steady stream of repeat sales, and that takes time and energy.
For online sales, velocity looks a little different. You’ll want to nurture repeat sales with email marketing and automated flows that help move buyers along. Paying attention to abandoned browse and abandoned cart metrics can tell you a lot about your site design, product descriptions, and offers.
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