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The Business of Food
by Jennifer Barney
Today's post: 
Get The Fundamentals Right
 

Upcoming posts: 
  • Ag Growth Beyond the Core (3 Part Series)
  • Stop Thinking About Products 
  • Products Are Like Children

Get The Fundamentals Right
2-min read

It seems pretty obvious: to be successful at food you have to make something people want. But the crazy thing is most brands don’t do that essential thing. 

In an analysis of 101 startup postmortems the top reason startups fail is lack of product market fit - not running out of cash or price / cost issues - but market need. 

But I’m not a startup you might be thinking. This is true only in the sense that startups typically aim for a big exit, and you are not looking to sell. But value-added CPG brands must act like startups to succeed. It doesn’t matter that you already ship a commodity product to Kroger. Even if it has your label on it.  

Make sure your product is addressing a real need

CPG has always been crowded and it’s not hard to start a brand. Startups begin scrappy, cash-poor, but with manically passionate founders. They are only able to scale if they get investors, and they can only get investors if they first prove out a market need. This is the first fundamental. What is valid proof?

Consistent repeat sales to a small but significant target audience

This is gospel. It is the essential, and fundamental step. It is what separates the startup, which has now become an emerging brand with a network of industry veteran advisors, from everyone else - including Big Food. 

Ag tends to miss this step because it does not need investors to launch food brands, and I’ll argue, tends to seek the wrong advisors who push for wide distribution too early. To get this fundamental right you have to give up on looking at sales as anything that leaves the warehouse - this is not the proper metric to be concerned with – and start looking at velocity in same store sales.

The difference is a business model that is consumer (end user) focused not buyer (customer) focused. 

More on consumer-focused brands in a future post, but first, a real story:

A great group of farmers launched a brand. They succeeded in getting nationwide distribution right out of the gate. 18 months post launch the brand slowed on growing new doors, velocities did not meet retailer expectations, and the brand began to get discontinued. Last ditch discounting efforts to push old product through and get the new-and-improved versions on shelf proved feeble, and by this time the grower base was no longer enthusiastic. Additionally, someone’s wife saw it at TJMaxx and lost respect. 

Don’t let this be you. 

All my best,
Jennifer
Zoom time limits lifted on Thanksgiving - same with Microsoft - and your fam doesn't need the app to join.
Other news
McDonald’s announcement oops about McPlant 
Keep ordering delivery - (pizza too!) -  corrugated recycling is up
I'd love to hear from you - get it touch at jennifer@3rdandbroadway.com
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