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5 Fatal Mistakes Food Entrepreneurs Make

Becoming successful in the food business on your own is anything but easy. Sure, you know your food, which is why you started a food business in the first place. But do you see the market? Are you aware of the expenses of your enterprise? Do you know how to brand yourself and your products successfully?

It might not be the first thing to come to mind when you have a dream to be a successful food entrepreneur, but you’ll be handling more than the food. You also need to know the business side of running your business — and that’s where most food entrepreneurs make costly mistakes. Here are five fatal errors food entrepreneurs make that you should learn from ahead of time:

  1. They Don’t Brand Effectively

When it comes to branding, many businesses tend to take care of it as they go along. It might work out modestly or could have disastrous results — and neither of those things is what entrepreneurs want. Packaging and labeling a product calls for more than ensuring that the product is wrapped or boxed and customers know what it is.

Presentation counts, and that’s becoming increasingly more important as brands are fighting for attention at every step. Think back to the last time you tried a new food product. What influenced your decision to pick it up? One of the first things you’re likely to say is that it caught your eye sitting on the shelf. Or, you saw an ad for it, and it seemed like something you might like.

Either way, the product’s branding did a lot of the heavy lifting in getting your attention. However, that doesn’t mean it’s best to go for beautiful, creative packaging and forgo practicality to ensure it stands out. You also need to ensure that your product packaging and labeling follows the FDA regulations, which are often pretty strict. There are other things to keep in mind, such as the size of the packaging and ease of stocking.

  • They Don’t Do In-Depth Market Research

Market research is essential for success in any industry, and it’s also true for the food business. Researching the food market in advance can tell you whether your idea is feasible with a high chance of accuracy. Entrepreneurs who have a product in mind first need to research whether similar products exist and how the competition does it, as well as to get to know their target consumers for the product in question.

Researching the target consumer will help you get a clear picture of how you could improve your existing product or idea, tailoring it more to the market. And knowing the market itself by researching things like suggested retail price and what category your product would fall into will protect you from unnecessary financial expenses that could jeopardize the success of your whole business.

  • They Have Unnecessary Financial Expenses

Not enough research easily leads into the mistake of having unnecessary and unexpected expenses that could either have been planned for or avoided altogether. It might be the leading cause of businesses failing — the costs are too high. Their plans didn’t account for all the details that could make a bad financial outcome, and before long there’s no cash left to invest back into the business.

Getting a product on the consumer’s table has plenty of “hidden” expenses, known collectively as Cost of Goods Sold. These include the costs of ingredients, production time, packaging, distribution, and marketing. Most entrepreneurs will have an estimate of how much the production would cost, but there are other things to keep in mind. You need a contingency plan, as many things can go offside. There will be bad batches, broken merchandise, costs of renting a kitchen, and other unexpected costs. You need to understand what your profit margins and breakevens are, to plan your enterprise so that it ends up being profitable.

  • They Fail to Develop Their Product

When creating a recipe for your consumption, anything you develop works. However, the situation changes when you want to release a product on the market. There are FDA regulations to meet for ingredients with different certificates. You have to plan, and budget but many entrepreneurs don’t work on developing the process ahead of time. Your company might start as a whole small-scale enterprise, but the lack of planning and product development may leave you unable to scale up effectively. For example, the ingredients you opted for might cost too much for more massive production.

To avoid finding yourself in this situation, you’ll need to have a pretty good idea of where your product development process will lead you. What’s more, you should evaluate whether you have the resources to handle its growth and the inevitable changes in your plans.

  • They Try to Do Everything Alone

Entrepreneurs often start on their own, with maybe one or two close associates. Even though many are aware from the start that it would be a lot of work, it’s not often clear that there’s more to a successful food business than having a product that tastes great. Entrepreneurs have to learn a lot and deal with many different processes as they develop their product and get it on the shelves.

Their job is not only to make their food product, but also to market it, distribute and sell it. At some point, there comes the time to outsource some of these processes. For example, it’s usually hiring contractors to help distribute the product, which in turn lowers the profits.

Food entrepreneurs have to be aware of the fact that they can’t do everything on their own — at least not for a prolonged period. That’s why it’s a good idea to research contractors to outsource some of the work even before you’re able to afford it. Don’t try to do everything alone, but don’t hire help before your business makes enough profit to allow for it.

Key Takeaways

There are many things to keep in mind when starting a food business. To prevent costly mistakes, make sure you research all of the processes you’ll need to go through beforehand. These include product development, branding, and packaging, as well as market research. Stay on top of industry insights to be aware of the up and coming trends you can capitalize. And, above all else, don’t try to do everything alone!

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5 Most Influential Food Entrepreneurs Today

Entrepreneurship is the buzzword of the new age, as it has evolved to follow our digitally influenced lifestyles. Despite the many opportunities to become a self-made success, cutting through the noise and competition is far from easy. In the food industry, becoming a successful entrepreneur takes great food and a big personality, in addition to perseverance and creativity. Even though it may seem like there are many successful entrepreneurs nowadays, it’s important to remember that every single one of them had to fight and be exceptional to get to where they are.

Such is the case with all of the most influential food entrepreneurs of today. Every single one of them has qualities that make them unique. It’s great to witness them change the industry, beat all odds and even venture outside of their original niche. Here are five most influential food entrepreneurs that have left a mark on the food industry:

1.     José Andrés

José Andrés is a Spanish-American chef and food entrepreneur that has been a significant influence on the industry ever since he started his path in the early ’90s. He received two Michelin stars and credited for bringing small plates dining to popularity in the US. He trained in elBulli under Ferran Adria before he started his first restaurant, Jaleo.

Now José owns restaurants in many major cities of the United States. Not only that, but he’s also chair of the advisory board for LA kitchen, doing his best to help those in need. When Hurricane Maria hit Puerto Rico in 2017, Andrés initially put $10,000 out his pocket to assist in relieving the crisis by providing food. His nonprofit World Central Kitchen eventually managed to get 26 kitchens across the country to produce around 150,000 meals every day. After 3.7 million meals prepared and counting, José Andrés makes a substantial positive impact in the world of food.

2.     David Chang

David Chang is an American television personality and restaurateur. He established a successful culinary brand Momofuku in 2004, which has since expanded out of New York to Toronto, Los Angeles, Sydney, Las Vegas and Washington, DC. Momofuku Ko has been exceptionally successful, being awarded two Michelin stars which it has managed to retain every year since 2009.

Chang started as a golfer, but reoriented to the food industry in 2000, when he attended the International Culinary Center. During his time working in the industry, he grew tired of the fine-dining scene that was prevalent in New York, and he eventually started his brand, Momofuku. The first restaurant didn’t take off until about a year later when its innovative take on cuisine influenced by the time Chang spent in Japan started to get more widely recognized. Since then, Chang and Momofuku managed to stay relevant and expand, promoting local and sustainable farmers and food suppliers. Most recently, Chang starred in Ugly Delicious, a Netflix original series which he also created and produced.

3.     Deb Perelman

For all those home cooks who are tired of TV chefs using fancy ingredients, Deb Perelman has provided a sanctuary on her blog, The Smitten Kitchen. And as it seems, there is plenty of them, since Perelman’s blog reportedly had nearly 10 million page views in November 2012, and has continued to score high traffic numbers. The Smitten Kitchen has also been featured on The Martha Stewart show and various high-profile websites. 

The blog which launched in 2006 has provided Perelman with a platform to publish her cookbook in 2012, which went on to make it to the New York Times bestseller list. Perelman is well known for avoiding “fussy foods,” and believes that good food is accessible. Even without a fancy kitchen, she manages to delight her followers with comfort food recipes and tutorials on everything, from the basics to more advanced cooking techniques, tips, and tricks.

4.     Justin Woolverton and Douglas Bouton

Woolverton and Bouton have a typical entrepreneurship story of many hardships that they overcame, eventually landing on a recipe that would change the industry. These two former lawyers started an ice-cream business, both of them broke, thousands of dollars in debt, and so eager to learn the trade that they jumped right into the hot water without paying attention to some crucial details (such as the dangers of driving with toxic dry ice coolant on the back seat).

They invented Halo Top, a low-cal ice-cream packed with flavor that turned the industry upside down. Providing ice-cream lovers a way to enjoy their favorite guilty pleasure while remaining healthy made Woolverton and Bouton into ice-cream business giants. They’ve surpassed the competition with 17 guilt-free flavors that took America by storm and showed why persistence and inventiveness could take you far in the food industry.

5.     Chloe Coscarelli

Chloe Coscarelli made a mark on the industry in many different ways. She is a food entrepreneur in every sense of the word, accomplished as a chef, cookbook author, and a restaurant owner. Coscarelli was the first vegan chef who ever won Food Network’s Cupcake Wars, and her vegan dishes served at CHLOE, her restaurant, are quite popular in the culinary world.

She was named to Forbes’ 2017 Class of 30 over 30. As a vegan chef, she has been one of the influencers that popularized the vegan diet and created many a mouthwatering recipe that made it to the list of Amazon’s best selling cookbooks. Her dishes are rapidly becoming staples of vegan cooking. With recipes like White Wild Mushroom Pizza and Mexicali Sliders, Coscarelli has managed to turn her love for vegan food into a food empire, and she shows no signs of slowing down.

Food industry’s vast embrace has a place for anyone who loves food and is persistent enough to push through the inevitable doubts and failures. To succeed in this growing industry, following fresh industry insights is extremely valuable as they provide the aspiring food entrepreneurs with knowledge while also sparking inspiration in the experienced veterans of the food arena.

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Food Brands That Have Given Back in Big Ways

It’s a great feeling to help a person in need. Charity donors are often told that even a small donation goes a long way, and that’s undoubtedly true. Many small contributions can amount to a massive collective effort to benefit a cause. However, it’s even better when you’re capable of making a big difference in society, which is something many brands have begun striving towards.

Skeptics might call it a PR trend to improve brand reputation in the increasingly demanding spotlight of the public eye. Still, whatever the reason behind this practice may be, there’s no denying that many food brands are turning towards supporting organizations that strive to help those in need. Here’s our list of food brands that have given back in big ways:

Newman’s Own

I was fortunate to work with the folks at Newman’s Own early in my career. The late actor Paul Newman famously stated: “What could be better than to hold your hand out to people who are less fortunate than you are?” Today, Newman’s Own still holds that statement in high regard — and the company acts on it as well. Newman’s Own is a food brand founded by Paul Newman and A.E. Hotchner in 1982. It all started with a simple salad dressing that they prepared themselves and gave it away to friends. With time, the newly founded company began producing other food items, such as pasta sauces, popcorn, salsa, juices, frozen pizza and plenty more.

They give 100% of their after-tax product sales profits to Newman’s Own Foundation, which donates it to nonprofits worldwide. Since 1982, the company has given away over $500 million to charity, still following the vision of its philanthropist founder.

KIND

Another big player amongst the philanthropist food brands, KIND is a snack-food company that takes an actionable approach to improve the world. Every month, the KIND Foundation provides a $10,000 grant to humanitarian, socially impactful charities and organizations. Founded in 2004, its mission is to do the kind thing by driving change in society to create more empathetic and kinder communities.

Over the years, they’ve maintained many different programs all with the same goal of promoting kindness: KIND People, KIND Causes, KIND Schools Challenge and others. They awarded over $1 million through their KIND People program to deserving individuals who have shown their humanitarian side in a big way, and over $450,000 through their KIND Causes program that went to funding ideas that can change society in a good way.

LARABAR

LARABAR makes non-GMO nutrition bars with minimally processed ingredients, and they take this sustainable approach in everything they do. Their commitment to using Fair Trade ingredients and partnering with different organizations that all help make a difference in the community shows a real dedication to being an environmentally aware, sustainable company.

Even though they recently terminated their partnership with TerraCycle, they still work with Feeding America and Denver Urban Gardens to help those in need have access to real food and seeds they might need to grow their sustainable gardens. Their focus is on empowering the individuals to raise awareness of the issue of hunger in America, and giving back to the community is part of their mission.

Justin’s

This nut butter company has made it their mission to give back to the community and pay it forward to organizations and companies who helped it reach the success it now enjoys. Justin Gold, the founder of Justin’s, is a co-creator of the Whole Planet’s Microloan-a-Month program. It focuses on entrepreneurs in developing countries and provides them the microloans they need to start and maintain their business.

Justin’s is a food brand that’s committed to making an impact, whether that’s by supporting environment-focused initiatives, nurturing their company sustainability or educating individuals that can drive change.

The Soulfull Project

The founders of The Soulfull Project started their hot cereal breakfast brand with the idea to give back, after having witnessed the problems caused by poverty and hunger on their trip to Texas. Unlike many other food brands, they focus on donating a physical product rather than money. They believe that food shelters should have quality food available, and it’s their mission to make it happen with their giving model.

For every purchased cup of their hot cereal, The Soulfull Project donates one cup to food shelters in Philadelphia and Camden. They make this possible by spending the funds that would usually go into a marketing budget on the donation aspect of their brand. Of course, that means they mostly rely on word of mouth marketing rather than traditional marketing avenues, but the consumers recognize their philanthropist mission and respond to it positively.

Trader Joe’s

Trader Joe’s is another food brand on a mission to fight hunger with food instead of donations, and they’ve been at it for decades. Their initiative also combats the problem of food waste, which is a massive issue as up to one-third of all the food produced in the world goes to waste before it can be consumed.

Trader Joe’s company takes their not-for-sale food that’s still safe to eat and donates it to food shelters and pantries. In 2017 alone, they gave over $340 million worth of food products to various organizations that provide food to those in need. Their food donation program has grown into an impressive operation over the years, with donation coordinators in charge of the process in every store. Employees share the responsibility for safely storing the food donations until it’s time to get them to the local food banks and shelters.

Key Takeaways

As more and more companies are moving towards maintaining a sustainable, environmentally beneficial and socially responsible business model, it’s likely that we’ll see more positive change in our community. It ultimately benefits all, which is why it’s so encouraging to see food brands giving back in big ways and making sure that the issues affecting the industry are addressed and taken care of.

By fighting hunger and food waste and supporting the brands who are on the frontline of this fight, we’re all doing something good for our world. If you wish to make your food business better for the community, stay on the lookout for more fresh industry insights that can help show the way.

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5 Advantages of Being a Food Entrepreneur

The life of an entrepreneur has plenty of advantages over having a regular office corporate job. Whatever the industry you’ve dedicated yourself to, being your boss can undoubtedly benefit your life. When it comes to the Food industry, it’s attractive because there are so many possible paths to take on the way to building a successful business.

With food, you can start anywhere. Provide catering services, open a small dining establishment or get a food truck going — those are only some of the examples of how food entrepreneurs start their journey. Those who love the business and are passionate about food can get you a long way. Here are five advantages of being a food entrepreneur:

 

  1. You Can Follow Your Passion

The number one reason why so many food entrepreneurs choose this line of work is that they are passionate about it. And while that may be true for any entrepreneurship, there’s something about food that makes it unique. Food is something us humans cannot live without. According to Maslow’s hierarchy of basic needs, food is on the primary level of physical survival needs, along with a drink, shelter, sleep, and oxygen.

But the satisfying, yummy food — that’s a source of pleasure, ensures there will always be people who are passionate about food preparation and consumption. Following your passion for great food is different from following dreams to become a great artist — not everyone enjoys art, but everyone enjoys and needs food. The best part about it is that you don’t need a formal degree in cooking to make a splash in the food entrepreneurship world, only passion, and talent.

 

  1. You Can Unleash Your Creativity

A beautiful dish is a work of art. It feeds your body, but also your sense of aesthetic and your soul. Food entrepreneurs often need a place to channel their creativity, and for many of them, that outlet becomes food. It’s not all about decorating a meal, although that’s extremely important in some of the food business areas such as restaurant cooking. A recipe could be artistic too, combining flavors in a way that makes the taste buds tingle and demand more. It could even resemble the most unappetizing thing in the world, but yet, still be delicious.

 

  1. You Can Listen to Your Customers

In the hospitality industry, catering to your customers is what will keep your business afloat. When it comes to food, entrepreneurs have a unique opportunity to listen to their customers’ wants and needs and incorporate those wishes into their menus. Of course, it would have to blend with the entrepreneur’s tastes and preferences.

Making use of big data analytics in the business can benefit food entrepreneurs, helping them to discern what the customers want and cater to them. For example, one of the trends that have been prevalent for a while has been all about eating healthy. That includes options such as vegan food, non-gluten food, and cutting back on processed sugar. A smart food entrepreneur will pay close attention to the trends in the food industry by analyzing market demands, and structure their business model to reflect it.

 

  1. You Can Provide Convenience to the Customers

The majority of people nowadays have a chaotic lifestyle. Their focus is divided between work and home life and often riddled by many electronic distractions. Those that are so dedicated to their work life, find it hard to cook their meals, but they still want to eat healthily. That’s an excellent opportunity for food entrepreneurs, who can take advantage of it in various ways. There’s an option of becoming a chef for hire and preparing delicious meals for those that don’t have the time to cook.

Alternatively, you can provide them with convenient pre-prepped meals that don’t take long to put together on the go. The final option which is the more classic one is to open a restaurant. But the customers will have to come to you. Whichever option you choose to provide convenience to your customers, you can make a good business of it as a food entrepreneur.

 

  1. You Can Give Back to the Community

In the food industry, entrepreneurs have many ways of giving back to the community, which usually also brings them some good PR. In recent times, people have become more concerned about the well-being of the planet and everyone inhabiting it, including both people and animals. Millennials especially love it when businesses they support contribute to a cause that aims to make a difference. Food entrepreneurs that wish to tap into this benefit can donate their surplus food to those that need it most.

Other ways of giving back to the community could include providing culinary education. Preparing food at home saves money, and the youth of America is catching on to that. Those who want to learn how to cook can do so through individual courses offered by food entrepreneurs.

 

Key Takeaways

Being a food entrepreneur has many advantages, and it provides you with a lot of options as to where your career is going to go. To summarize, you can:

  • Benefit from following your passion;
  • Satisfy your creative needs;
  • Listen to what your customers need and provide it to them;
  • Provide customers with the convenience they want in their daily lives;
  • Give back to the community by donating food and sharing your knowledge.

It’s a rewarding career where you start small with baby steps, but it can evolve into much more than that. Smart food entrepreneurs take their time, listen to their customers and follow the market trends, adjusting them to their sensibilities. When you’re an entrepreneur, the world is your oyster, and that’s especially true for entrepreneurs in the food industry.

 

To become successful in the food arena, you will need to follow fresh industry insights and come up with ways to capitalize on that knowledge. The industry is continuously growing, which make it an excellent time

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How Technology Changed Sales: Getting the Prospects to Say Yes

New technologies are changing the game of selling to prospects, even though the basics remain the same. What’s been most influenced by technology is the speed of the entire process and the availability of prospect information. However, a salesperson still needs to be smart, insightful, and most of all persistent, if they want to close deals and make sales.

 

Getting the prospects to say yes can be a tricky business in any industry, including the Food and Beverage industry. How do we use new technology to get buyers to say yes, and do persistence and following up play a role in the process? The short answer, at least to the latter question, is “yes.” Let’s have a closer look at the mechanics of the sales process and how persistence can pay off.

 

Preliminary Research of the Prospect

When it comes to technology changing sales, it’s perhaps easiest to see on the example of preliminary research and first contact with the prospect. Where before salespeople only got prospect reports a few times per month and had to dance around the gatekeepers to get in touch with the prospect, now everything is readily available. Whether they’re in B2B or B2C sales, it has never been easier to find the necessary information about the opportunities and contact them.

 

However, nowadays the gatekeeper is a little different — it’s not a person, but our way of life. Noise, inbox clutter, and an infinite number of salespeople vying for the attention of the same prospects are what creates the wall guarding the decision makers. To break through all that, a salesperson has to be persistent.

 

Persistence or Harassment?

We’ve all been on the receiving end of a salesperson’s constant attempts to get our business. The problem of sales in any industry and any nature of sales is the one of persistence — when is the time to call it quits? Are their efforts being seen as harassment? When can they officially give up on a potential prospect, even though they could help the business?

 

Nowadays, when everyone is busy and facing a barrage of content and propositions in the online arena propelled their way, it has become more necessary to keep following up. Especially when written communication is the primary medium of sales, there’s a big chance that the potential buyer liked the offer, but didn’t have the time to respond right away.

 

The Role of Following Up

Nobody wants to bother their prospects, which is why following up with them on occasion is what most salespeople do. Instead of continually badgering them through all channels, sales efforts are focused more on being helpful and there for the potential buyer at every step of the way. More often than not, that includes leading them through their buyer’s journey and reminding them of where they’re at through followup.

 

An essential part of effectively following up is choosing the right channels to do that through. A lot of people prefer email, but using it has a downside — emails are easy to ignore. On the other hand, sending a follow-up email gives the prospect time to consider the offer.

 

Despite the prevalence of new technologies and mediums of communication, sometimes the phone call is the best solution. Alternatively, a combination of phone and email can help salespeople establish themselves as trusted contacts for the prospect sooner.

 

Getting the Buyer to Say Yes

The art of following up and getting the buyer to say yes is not only about persistence. It’s also about making it easy for them to say yes. Whether that’s by giving them a great offer (often heavily discounted) or taking out all the consideration and evaluation out of the process, a salesperson can affect the prospect’s buyer’s journey in ways most buyers aren’t even aware.

 

Another aspect of getting the buyer to say yes is making the entire process about them, rather than what the salesperson is trying to sell. It won’t do them any good to start things off with a sales pitch over the phone or in the email inbox. Sales nowadays are more about what the product can do for the buyer than selling the product itself because “it’s great.” Salespeople understand that the product is only significant for a certain kind of people — and that is where they focus their efforts.

 

Target Audience Research and Importance

For a salesperson, there’s nothing more business-damaging than not knowing the people that the product they’re selling is supposed to cater to. It is a general principle, both for B2B and B2C sales. When you know the target audience, you know what their pain points are. You know which problems to address — those solved by what you’re selling — and what struggles to emphasize to get the right people interested.

 

If you wanted to sell an expensive car with 20% off, there would be two approaches to the sale. You might approach a person randomly on the street and make them an offer, perhaps only to find out that they get around by bicycle because they can’t afford anything else with their salary. Or, you could offer it to a friend of yours, who you know is well-off and also looking to buy a car since his old one broke down. In the first case, you’re never going to make the sale; in the second case, you might.

 

Knowing the target audience inside and out makes that kind of a difference in sales. Technology has affected the efficiency of sales by making it possible for a salesperson to get to know their target prospects much more quickly and with more accuracy. Once salespeople understand what their prospects want, it’s easy to give it to them.

 

Key Takeaways for the Food and Beverage Industry

Getting a prospect to say yes requires a deal of persistence, but you also need to know what they want that you can provide. For example, if you’re catering to Millennials, you’ll need healthy and sustainable dishes on your menu, and beautiful, unique drinks in your offer. And when it comes to dealing with business prospects, remember to be persistent and follow up at least a few times before you give up on them, unless you get a definite “no” early on.

 

Fresh industry insights can elevate your Food and Beverage business to new levels, but knowing the basics is what will set you on the right path. So follow the trends of the industry, but stay aware of what you need to do to be successful sales-wise.

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Retail & Grocery: Amazon.com, Inc.

In only 24 years, Amazon.com Inc. has evolved from a little online bookstore to the most extensive digital retailer in the world. Generating $177.9 billion in net sales from its over 300 million users in 2017, it is a giant in many markets, including retail and groceries.

As the company remains true to its four guiding principles – customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking – its sell-through position strengthened with inroads in new categories. Among other things, it has led Amazon to acquire Whole Foods Market as its subsidiary.

In 2018, the growth trend continues. Despite demanding more dollars for marketing from vendors, Amazon has met planned sales expectations for the second quarter for many categories (14 out of 25), exceeding plans in 9 categories in the changing natural food industry.

Orders from Whole Foods mainly surpassed its planned expectations due to deep discounts for Amazon Prime members, while higher marketing fees discouraged vendors from investing in promotion for their products. As a result, more vendors have opened Seller Central accounts, which allowed them to manage costs better and simplify product launch, and increased direct shipment from Prime Now.

Those are only two critical areas to watch. But if you want to learn more about other changes in 2018, there are other trends to look out for in retail and grocery as the year draws to an end at Amazon.

A Growing Amazon Prime Membership

In May 2018, the cost of Amazon Prime membership rose to $119. And while some vendors viewed it negatively, most don’t expect any significant impact on service use. It comes down to the advanced features included in the membership to its users, including Amazon’s marketing tools and expanded offering on Amazon.com platform. A natural food vendor even said:

“Amazon keeps offering more and more benefits [for Prime members], so I don’t think [the higher annual fee] will have any impact. Prime members value that service so much.”

And payment fees and commissions to Amazon were also raised in most vendor contracts. Because of the 10% increase in rates, all vendor contracts from 2017 are invalid, and sellers need to sign a new 2018 contract.

But it’s important to remember the terms in the new contract are negotiable. And while vendors do encounter additional fees, like fulfillment fees, inventory fees for storage, out-of-stock penalties, and accrual fees, it’s important to accept Amazon’s demands and negotiate a 2018 contract.

Amazon Competition Is Low

Amazon’s main competitors are Walmart.com and The Kroger Co., closely followed by Walmart’s Jet.com, Walmart brick-and-mortar stores, Target Corp. and Thrive Market Inc. However, most vendors agree that no e-commerce platform or store chain can compete with the retail giant when it comes to grocery retail.

However, Kroger and Target are making breakthroughs in grocery assortments and improving the shopping experience for their consumers. It seems to be generating interest among some vendors, as Kroger, for example, is placing standard category managers in charge of specific category managers and buyers. But it is yet to generate the amount of attention required to disrupt Amazon’s large-scale operation.

Amazon Prime Is Helping Whole Foods

Amazon’s Prime benefits (10% discount on all items and steep “Prime Member Deals”) helped increase sales during the second quarter in 2018 at Whole Foods Markets. The Amazon subsidiary saw an initial redemption rate between 60%-70% in June, but the figure is likely to reach 80% by year-end.

Prime Deals and promotion also aided vendors in their efforts. Many natural and organic vendors stated their Whole Food orders exceeded expectations, with almost all of them meeting their planned goals.

Despite this, vendors will bear the cost of those mandatory 10% discounts, which may result in several sellers reducing budgets allocated for promotion. However, for most of them, the price will be worth the effort if Amazon can deliver the right sales volume with Prime discounts. And according to the amount of sales Amazon made – it can.

Grocery Sales on Amazon.com and Fresh

In 2018, Amazon has made a lot of efforts to increase its foothold into groceries. It has led natural and organic food vendors to a very successful quarter with their sale of non-perishables on Amazon.com, than of perishable items sold on AmazonFresh. Also, over 65% of vendors exceeded planned order figures, which led some of them to improve their use of Amazon Marketing Services (AMS).

More and more vendors are turning to e-commerce SEO and search terms with AMS for marketing, than, for example, offering customer incentive programs such as coupons. On the other hand, vendor spending on ads has also increased but not significantly. Still, the combined efforts of both marketing tactics resulted in a higher revenue stream than in previous years.

In contrast, vendors who used AmazonFresh did not meet expectations. Their sales quotas fell below plan. They attribute this to significant reorganizations within the company, as AmazonFresh and Prime Now are hiring more staff in Seattle and distribution networks get realigned to handle perishable goods.

New Expansion Plans

Another critical factor influencing all of these changes is Amazon’s plan for rapid expansion. In short order, AmazonFresh is planned to move from the current eight-hour delivery format to a new two-hour delivery, which will make it stand out even more from the competition.

A new app is also set to be launched shortly, as Amazon wants to consolidate all of its grocery platforms in one place. But, until now, there is yet to be an integration of all purchases into one system, as Amazon.com, AmazonFresh, Prime Now, and Amazon Go remain separate from Whole Foods.

Finally, Amazon is moving towards direct shipments to reduce the reliance on United Natural Foods Inc. The plan is to allow room for rapid expansion of Prime Now with a hub-and-spoke system that will revamp warehouses and transportation logistics for perishables.

Follow Trends and News

Keep up to date with the latest innovations, trends, news, and so much more in the retail and food and beverage. Stay on top of best practices when it comes to marketing and sales, and gain insight from inside the industry.

With new developments each week, a piece of news, a new strategy or business model might catch your eye and lead you to apply it to your business to –

Seize the opportunity! Grow to scale! Realize the potential of your business! Become a leading influence on the market!

For more information about Cascadia Managing Brands, please go to www.cascadiamanagingbrands.com

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Creating North America’s Premier Food Wholesaler

 

In June 2018, United Natural Foods (UNFI) and Supervalu decided to uproot North America’s wholesale distribution by combining their efforts to create a premier wholesale distributor. UNFI is the largest distributor of natural organic products in the United States and Canada, while Supervalu is the largest publicly traded wholesaler in the U.S.

Their joint enterprise indicates a rapidly changing infrastructure landscape in which consolidation among stakeholders in the supply chain is fast-becoming the new norm. And this has become a prime example of how manufacturers, suppliers, distributors, and retailers are pushing for change in Canada and the United States.

Based on this recent industry development, here are the most significant benefits of creating a premier food wholesaler in North America.

Adding Value to Customers and Stakeholders

Transforming into North America’s top wholesale food distributor is beneficial for all parties involved in the supply chain, including consumers and shareholders.

First off, it allows distributors to create a diversified consumer base. As they merge to form a common front, it automatically expands the consumer base to open up new opportunities to different stakeholders and increase distribution across all fronts. Delivering an extensive and comprehensive product offer to UNFI’s existing natural and organic products has allowed Supervalu to create a genuinely “better for you” offer.

As high-value products like organic meat and products become available to a broader audience, it enables cross-selling opportunities for different stakeholders on a much larger scale. A much more significant market across the United States and Canada gives wholesalers a much broader geographical location to work with and increase their market reach. The much more extensive scale has not only enabled growth but has improved their efficiency and effectiveness across the board.

The increase in capacity relies heavily on leveraging scalable systems. Focusing attention on streamlining larger operations has enabled different stakeholders to optimize their processes. Combined with the increased use of technology to achieve this goal has equipped all involved parties to meet customer expectations and reduce future expenses at the same time.

And in the case of UNFI and Supervalu, it also delivers significant synergy, which by the third year can create a run rate cost opportunity of more than $175 million.

Advanced Build-Out-The-Store Growth Strategy

With UNFI and Supervalu heading the enterprise, many smaller brands have joined the food super-wholesaler. Both giants contributed in equal measure in securing brands which create the supply chain. UNFI brought Blue Marble Brands, Woodstock Farms, Tumaro’s, Rising Moon, and Field Day to the fold, while Supervalu contributed with Essential Everyday, Culinary Circle, Market Centre, and Wild Harvest, among others.

Handing each brand a seat at the table has enabled them to have a united market presence, and create an advanced build-out-the-store growth model. The strategy is relatively simple and relies on increasing the product range to bring in attractive products to the store, and build a comprehensive and diversified product portfolio.

With each brand specializing in a specific food group, everyone is specializing in premier products. It expands the offer to the consumer, who is treated to a variety of quality, natural, organic, free-range, and specialty food items.

Complementary Contribution

Combining the two wholesalers into one has also merged their capabilities. It works because both UNFI and Supervalu share certain features. However, their most significant advantage is in the different and unique abilities, which essentially compliment one another.

UNFI’s revenue contribution is divided among Independent Natural Retailers (26%), Supermarkets (30%), Supernatural Retailers (33%), and other revenue (11%) such as e-commerce retailers and foodservice customers.

Supervalu’s revenue contribution is divided among Independent Regional Supermarkets (61%), Unified Groceries (29%), SVU FL (5%; regional chains, multi-stores, and single stores), and other (5%) which includes military and corporate revenue.

The combined revenue of UNFI and Supervalu is therefore divided among Independent Regional Supermarkets (48%), Unified Groceries (17%), Supernatural Retailers (14%), Independent Natural Retailers (11%), other revenue (8%), and revenue from SVU FL (3%).

It diversifies the consumer base for both wholesale retailers, as well as their revenue streams. In doing so, both UNFI and Supervalu can adapt to the fast growth of retailers and supply their demand for products.

A Compelling Opportunity

The opportunity for the premier food wholesaler will be to unlock the potential value across the business using synergy. Synergetic cooperation between the two organizations will improve the business process and inside operations, but also create a unified presence when dealing with outside services.

A combined effort has a more significant effect than individually either UNFI or Supervalu would have ever been able to achieve, and will benefit multiple aspects of the premier food wholesaler:

  • Revenue – a diversified revenue stream from cross-selling, offering high-growth products in stores and expanding the private label offering (net sales expected to reach over $21 billion);
  • Capital expenditure – increasing optimization of the supply chain and more effective capacities in distribution centers minimizes costs and expenditure (strong cash flow can reduce leverage and improve the credit profile);
  • Systems and technology – combining IT systems and cyberinfrastructure of both companies will enhance automation and use of technology to streamline the business process;
  • Operations – joint operations, increased capacity and a united strategy all increase efficiency inside the business model and stood to benefit everyone across the supply chain;
  • SG&A (selling, general & administrative expenses) – increased capacity minimizes expenses especially by optimizing lease contracts and reducing fleet-related costs;
  • Expanding Gross Margin – aligning strategies and methods of inbound logistics and adopting a professional service unit to monitor the process will help with larger capacity.

Ready to Learn More About the Food and Beverage Industry?

Stay up to date with the latest news and innovations in the food and beverage industry, and use what you learn to grow your business. It’s the best thing you can do for your brand, and all you have to do is realize the opportunity right in front of you to use its potential. Contact me or connect on twitter if you want to share with me your industry experience.

For more information about Cascadia Managing Brands go to www.cascadiamanagingbrands.com

 

 

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The Current State of the Specialty Food Industry in 2018

 

Specialty foods are unique and highly valuable food items. Typically, this type of food is produced from small amounts of high-quality ingredients, which is the reason behind their above-average price tag, but also their overall quality and health benefits.

In 2018, The Specialty Food Association released a two-year study titled The State of the Specialty Food Industry. Author and researcher, Denise Purcell discovered significant changes in the food industry, with a focus on specialty foods. The study highlights the impact specialty foods have on sales and consumer decisions. Here is a brief overview of her findings and the current state of the specialty food industry.

Reasons Behind the Rise of Specialty Foods

Specialty foods might seem like a trend, but its roots span much deeper. Thanks to FDA regulations on labels and nutrition guidelines, more people are aware of the health risks involved with food and beverages. Ingredient labels help people to understand what they eat and drink, and watch out for ingredients like sugar, artificial flavoring, or chemical food dies, to improve health.

Consumer demand for higher quality food is another major contributor to the rise of specialty foods. It is affecting everyone in the supply chain. Food manufacturers are taking more care when sourcing raw food, while distributors and suppliers, like UNFI and Whole Foods, are changing the landscape of the natural food industry.

All of these changes are contributing to much higher demand and supply of specialized food, and choice remains the main reason behind The State of the Specialty Food Industry study.

The Rise of the Specialty Food Industry

As of this year, 65% of consumers purchase specialty food. Specialty food dominates sales revenue as well, with a peak income of $140.3 billion in both retail (78.4%) and foodservice (21.6%), an 11% increase from 2015.

Sales from specialty food and beverage have a share total of 15.8%, with plant-based foods dominating the first four spots. Due to the increased interest in organic produce, their input is expected to rise over the next five years.

When it comes to consumer retail purchase, mainstream channels hold an 82% share of total retail sales. However, the biggest winners are both the physical and online versions of the food service. Their sales have doubled in size over the two year period from 2015 and outgrew regular retail options.

On the other hand, retail makers are increasing their offer of specialty foods, which is raising their sales input, but it is growing at a much slower pace. Major chain supplies have only seen significant growth potential in the convenience, drug and vending channels.

When it comes to consumers and who is purchasing specialty foods, demographics reveal that the most significant number of consumers belong to the iGeneration (18-23).

Other Millenials are also significant consumers because generally, these groups have the highest awareness of what they consume. They also make the decision to buy specialty foods based on many different non-traditional factors, like benefits to health, environmental impact, and even trendiness.

Top Ten Selling Specialty Food Groups in Retail

In 2017, the top-selling retail products reached a combined total of almost $29 billion out of around $1.4 trillion of total food spending. It included fresh, refrigerated, frozen, plant-based, and health-focused food, which also had the most notable growth in retail sales.

What’s interesting, on the other hand, is the growth rate of specialty foods which peaked at a combined 12.9%. That’s 11.5% more when compared to all other food, which only achieved a 1.4% growth.

Seven groups in the top ten are chilled or frozen foods, which indicates the demand for other specialty foods will have to increase to create a genuinely diversified offer on the market. Here is a brief overview of the top ten specialty food groups and their performance on the market in 2017:

Cheese and Plant-Based Cheese – cheese achieved the highest sales total, reaching little over four billion in sales. But it’s growth was relatively insignificant with an average of just 6.6% from 2015, which indicates a stable demand for cheese.

Frozen or Refrigerated Meat, Poultry and Seafood –  frozen meat in all its forms reached $3.8 billion in sales over the period. What’s most interesting is that it had the lowest change over the two year period between 2015 and 2017, with an average growth of just 3.3%.

Chips, Pretzels, and Snacks – this group is characterized by a top three spot when it comes to sales in 2017 with $3.8 billion (little less than the previous group). However, it had a below-average growth rate for the observed period with 11.8%.

Non-RTD Coffee and Hot Cocoa – owing to the love of coffee in the United States, it is not surprising that this specialty food group earned $3.3 billion in retail sales. Still, the traditionally loyal consumer base also means it had a low growth rate of only 5.4% over a two-year period.

Bread and Baked Goods – bread is a staple food group and earned an expected $3 billion in retail. What’s surprising though is the above-average growth of 18.1% from 2015 to 2017, meaning demand and consumption has risen significantly.

Chocolate and Other Confectionery – chocolate and confectionaries brought in a combined sum of $2.3 billion in sales last year. And according to the data collected from the previous two years, they exhibited a slightly below average growth of 10.8%.

Yogurt and Kefir – healthier dairy-based products like yogurt and kefir massed a total sum of $2.2 billion in retail sales last year. However, the market growth was excellent in the previous two years, and the specialized food group saw an increase of 20.6%, which is the third best value among the top ten groups.

Frozen Deserts – the frozen deserts group has a strong eight position in retail sales, earning a total sum of 2.2 million. More importantly, frozen deserts achieved the highest growth rate out of all the groups in the top 10 with 41.6% between 2015-2017.

Refrigerated Entrees – ready-to-eat refrigerated entrees gained a combined amount of $2.1 billion from retail sales, which was enough to secure them ninth place. But the good news for suppliers and distributors is that this group of specialty foods takes second place when it comes to exponential market growth with 27.2% change from 2015.

Frozen Lunch or Dinner Entrees – frozen lunches and dinner entrees performed similarly to refrigerated dinner entrees taking $2.1 billion from sales, which is a 13.1% of growth during a two-year period. But if you combined the two similar last entrees, they would top the list with $4.2 billion in revenue and 40.3% change.

The Bottom Line

Observing the changes in the specialty food market Denise Purcell remarked on future growth: “We see the future growth of the [specialty] category being driven more by foodservice, convenience, and vending. We’ve seen a lot of growth in drug (CVS, Walgreens, etc.) as well. You’ve got all these different players now that want to carry some of these products.”

If you want to know more about the general state of the food and beverage industry, stay up to date with the latest news. Use the most recent information as an opportunity to improve your offer, and boost your bottom line.

Please visit our website at www.cascadiamanagingbrands.com

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Why User-Generated Content is What Consumers Crave

Beverage Marketing post by Bill Sipper

Beverage Marketing: Why User-Generated Content is What Consumers Crave

Fans create brands. And when it comes to brand marketing, there is nothing stronger than peer-to-peer promotion. Brand ambassadors and fans motivate other people to choose and use your products and services, like your beverages. In marketing, this is called user-generated content (UGC), and it’s what beverage companies need to offer their consumers because it’s how they want to be marketed and what they crave. Beverage Marketing is strong in peer-to-peer promotion.

UGC Increases Engagement

User-generated content relies on a successful content strategy.  In turn, follows the latest industry news and allows for such marketing efforts to be included. It also relies heavily on the technology behind promotional channels beverage business use.  There are a lot of different types of UGC content:

  • Blogs – relieves some of the pressure from the marketing team and gives consumers a highly personal perspective on the brand;
  • Comments – increase engagement on websites and social media and promote the brand through peer-to-peer communication about the brand;
  • Reviews – impact consumers psychologically by increasing trust and credibility, and have the potential to affect 46% of consumer decisions.
  • Images – establish visual contact between consumers and the brand through the direct use of the product and its promotion of personal and official online channels;
  • Videos – increase brand awareness and brand perception through different interpretations of the brand and the direct use of the product.

Content like this requires promotion, so consumers become aware of its existence. Targeting different channels, allows more users to take part in and generate content.

Additionally, beverage companies should consider including consumer incentives for consumers to create content. Campaigns can include prizes, like discounts, special offers, a free supply of drinks, or branded material like flash drives, T-shirts, and even concert tickets. Just remember to make them useful.

UGC Builds Valuable Relationships

Brand identity relies a lot on the relationship a company has with its audience. Brands have to look towards aligning their value proposition with their brand message – core beliefs, mission statements, and goals. This type of communication is customer-centric and focuses on establishing a shared system of value on which a brand can build a relationship with its audience.

User-generated content can make this happen for beverage companies. It essentially allows consumers to take part in the development of the brand. For example, if your company wants to develop a new drink, it issues a campaign that gives an opportunity for customers to come up with a name for it. It empowers consumers, and they are more likely to consume the drink regularly (interact with the brand.)

UGC Inspires Loyalty and Creates Fans

According to marketing professional Kevin Kelly, a brand only needs 1000 true fans to succeed. In that sense, beverage companies need to focus their attention on returning customers and allow them to create user-generated content as a reward. In turn, this creates a loyal following of faithful fans, who know the company values their efforts.

It also creates trust – an essential element of loyalty. And with mutual trust coming from both sides, fans will become brand ambassadors of your company promoting the company to other consumers (what you want,) while you continue rewarding their loyalty (what they want.)

Conclusion on Beverage Marketing

A brand is only active if it has a strong following. And for a beverage company, beverage marketing is following the latest trends in the industry and creating user-generated content campaigns can be a great way to create a loyal backing. After all, it gives consumers the type of promotion they want and crave – created by them and created for them.

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How the Trump Tariffs Are Set to Drive Food and Beverage Prices Higher

Trump Tariffs post by Bill Sipper

Imposed Tariffs Under Trump

Like any tariff, the Trump Tariffs are a collective series of government-issued duties on imported goods. In 2018, President Donald Trump imposed the first tariffs in January.  In turn, affected the import of solar panels and washing machines into the US. Later, in June another series increased the tariffs of imported steel (25%) and aluminum (10%). According to Morgan Stanley, this covers 4.1% of all US imports.

These government measures sparked were intended at China.  However, also managed to anger US trading partners, most notably Canada, the European Union, Mexico, and India. In July, all of the countries most affected by Trump Tariffs hit back and issued their tariffs on US imports. And a trade war began.

What Can We Expect?

According to former deputy assistant Matt Gold, of the US Trade Representative under Obama, these measures will drive higher prices of all consumer goods. The tariffs imposed on the US affect raw materials, the first prices that will rise will be in the manufacturing sector.  Where many rely either on steel parts for their machines or aluminum for packaging. Beverages in aluminum cans will need to increase in price only because of the cost of raw material. Coca-Cola has already stated that it will have to raise prices because of the cost of production.

The most significant effect to small and medium-sized is the trade tariffs imposed by Canada. In 2017, total trade with Canada was 673.9 billion dollars and included everything from goods to services. Most major chain stores and suppliers import products from Canada.  Which can have an effect on smaller and medium businesses across the board. Importers will need to charge more, to account both for their import fees and the export fees of their suppliers.

The tariffs against the US also mean there will be changes in agriculture due to import-export fees farmers have to pay for their farming equipment and resources. USDA proposed a 12 billion dollar aid to US farmers who are impacted by the tariffs. However, this will not stop the rise in prices of food since vital raw foods have been impacted including corn, wheat, dairy and pork products.

What Prices Will Go Up Under Trump Tariffs? 

Currently, there is still food, and beverage surplus all across the US.  Prices will remain the same until the goods imported after the tariffs have been issued hit the stores.

You might expect to see the first prices go up when it comes to raw foods.  Examples like meat, bread, vegetables, fruit and dairy products, especially in small stores. Big stores like Walmart will hold on to their current prices longer, but not too long.

It will also impact the food and beverage service industry since they rely on fresh produce to prepare meals. Eventually, businesses will need to find solutions, and they might be forced to resort to firings, and people will start losing jobs.

Stay informed about all the latest industry news and find out how this story develops the way it will affect your business.