Ecommerce, ghost kitchens, and technological advancements have opened doors for specialty food makers to create innovative strategies for the sales and distribution of their products, offering alternatives to the traditional route of finding distributors to put products onto store shelves. Ian Keller, co-founder of Peeled Snacks, food mentor, and entrepreneur will speak about these opportunities at the upcoming Summer Fancy Food Show 2022 in a Maker Space session titled, New Models for Sales and Distribution on Monday, June 13.
This and other Maker Space sessions at the Show are available as part of the Maker Pass, a one-price ticket of $99 for SFA members, $199 for non-members that allows entry to all six sessions.
SFA News Daily recently spoke with Kelleher about his views on the specialty food industry landscape, as it relates to food commerce.
What do you feel is the largest challenge presented by the traditional distribution method of getting products on shelves? How can other methods streamline the process?
COVID-19 has changed the landscape of food distribution tremendously. Given the supply chain challenges, retail buyers that once took chances on emerging brands now will simply take whatever products can be consistently delivered. So, for the short-term, the paramount concern of service is, “Can you deliver the product, as ordered, on time?” If you can, great, but if not, distributors and retailers can take punitive steps against manufacturers that usually take the form of chargebacks and fees. Smaller manufacturers rarely have the resources or focus to ensure good service in the COVID era and avoid such retribution.
Alternative distribution methods still require reliable fulfillment and service, but the relative immaturity of emerging alternative distribution methods at least means that smaller brands are less likely to get punished for service mistakes. Newer methods are more forgiving (or too busy to “take revenge”). They’ll take what they can get and move on. Eventually, however, alternative distributors will find ways to monetize failures in service.
What knowledge do you hope attendees will gain from your session?
My class covers, in part, the lifecycle of a distributor (alternative or not), how a new distribution model arrives in the marketplace, how it matures, and how it inevitably comes to squeeze more dollars out of its manufacturers. Attendees will walk away with an understanding of where in those lifecycles their brands are intersecting alternative distributors, have clearer expectations of what’s to come, and be armed with tactics to handle the hustle. Hopefully, attendees will find some opportunities that they’ve yet to tap. They’re likely, though, to learn that some of their current distribution channels are not all that they seem.
What shifts would you like to see specialty food makers implement in their sales and distribution models?
Although COVID has challenged every aspect of the food industry, many facets of our industry needed some thorough scrutiny. Some business models that once attracted buyers and investor dollars no longer work, and many companies have had to innovate in ways hitherto unimagined. I hope that has inspired a “back to basics” mentality for business leaders: it’s not enough anymore to strike when a trend is hot—food businesses need other foundational strengths, such as solid manufacturing, an affordable financing model, or a strong marketing angle (preferably all the above).
Those pillars prop up the sales and distribution of emerging businesses. With all of today’s challenges, business leaders can no longer afford to outsource all their operations to a co-packer or trust that the investment will magically show up. Management teams that are really in it to win will engage all aspects of their businesses, not only the ones that initially inspired the business or just the ones that come easy to them. Teams that don’t take all their business pillars seriously won’t be around for the next boom.
Where do you believe the future of specialty food commerce is heading?
Ecommerce is all the rage and has been a lifeline for businesses throughout the last two years. Many businesses have pivoted towards D2C, and some have reaped great rewards through that focus. Surely, we all have a future in ecommerce, and any business ignoring that space is likely to leave money on the table.
Despite ecommerce’s growth, most people still buy their food in person at a store, so D2C businesses are likewise ignoring opportunity as well. As we continue to navigate COVID, I expect to see retail models that innovate on the shopping experience, at once taking advantage of consumers’ desires for new food experiences and flavors, but also creating un-dreamt of ways to engage consumers where ecommerce just can’t compete. Browsing on a computer will simply never be like browsing in a brick-and-mortar store, and I cannot wait to see what retailers and manufacturers do to innovate the physical storefront space.
What methods and metrics do you consider when evaluating a potential distribution opportunity?
My first assessment of a distribution channel is “time to profitability.” We’ll go over this in detail in my session, but everywhere we food entrepreneurs sell begins as a drain on the business. But knowing that, when taking on a new channel I’m always looking for whatever information I can get that can clue me into when the revenue of this channel surpasses those initial “sunk costs.” The “cost of sale” to an account is only ever positive over time. Accounting for a food business is, to me, trying to glean when that negative becomes a positive. Sometimes it’s only weeks. Sometimes months. Alas, it’s too often measurable in years.
Do you feel your experience as co-founder of Peeled Snacks has shaped your forward-thinking outlook toward the food industry?
Peeled was a great ride, and I’m proud of the work we did there. And yet, the company went bankrupt this year. It offered its branding and distribution innovation in conjunction with a roster of peer brands, some of which soared to new heights, but most of which shuttered long ago. I measure Peeled Snacks’ strengths against the failures and successes of parallel companies, arriving at a list of business attributes that Peeled could have had but didn’t, and am always on the lookout for companies that have strengths comparable to Peeled, plus some extra strengths.
Peeled has taught me some hard lessons: based on what we were trying to do, and when we were trying to do it, there were some business qualities that, no matter how we structured the business, we were simply never going to achieve. When I look at businesses today, I’m always on the lookout for inspiring missions and innovations. But today, unlike when we founded Peeled, I’m mindful of what advantages our competitors and peers have that simply weren’t an option. Every food entrepreneur needs to be a bit of a dreamer, but some skepticism and critical thinking could have saved us a lot of headaches. Even so, I’m glad to have had those years. We, along with our friends and partners in the industry, laid down roads driven by today’s innovators and thinkers.
Related: Summer Fancy Food Show Education Preview: Q&A With Ted Ning; Spill & Dish Podcast: Bitter Sips, Sweet Journeys with Jomaree Pinkard, Hella Cocktail Co.