Follow along as Dan and Lalit share their tips and tricks for starting and growing a specialty food company.
While you brainstorm your ideal Grandma’s Famous Sauce branding, you’re hopefully thinking through potential competitors and how your brand is positioned in the market. Maybe you want to go the natural route and compete directly on the Whole Foods shelf, or perhaps you want to be extremely affordable and go against the big boys at Walmart. Both are potential routes for your brand, but you’ll need to focus on one to start. First, choose the sales channel you’ll go after once you’re ready to sell.
#4. But The Sauce Is Awesome. Why Can’t I Just Sell Everywhere Immediately?
It’s possible your brand can quickly resonate with a universal audience, but you’ll have to first appeal to one group before all groups. Facebook first concentrated on college students before it became the most popular social network in the world. The goal for your first stores is to determine product-market fit and if your brand can resonate in your chosen sales channels.
Additionally, you won’t be able to afford to try selling everywhere as soon as you start. There are numerous slotting fees, free fills and marketing programs that need to be paid in order to secure shelf space. We’ll cover these expenses in future weeks. But for now, we are assuming that you do not have millions of dollars at your disposal. The purpose of today’s exercise is to help you think through tweaks to your branding and product differentiation before you start selling.
Where to Sell First?
Before you finalize your branding, research all these channels and think through which is the best fit for your product.
WHAT: Wherever you live, you probably have a fun specialty food store that sells chocolates you don’t recognize. Typically more upscale, these stores often specialize in local, unique foods that no one else carries.
CONSUMER TYPE: The average consumer in these stores typically has plenty of expendable income and favors design and unique flavors. They crave exploration and are looking to find the next interesting experience. Markups are typically high in specialty stores, so the consumer is not as price sensitive as in other channels.
BRANDING THAT WORKS WELL: Packaging should be artfully designed with a unique flavor proposition. Typically these items can be easily given as gifts. “Local” brands do particularly well here as well.
WHAT: There are hundreds of independent natural stores across the country. Sometimes jointly owned as a co-op, these stores are often at the cutting edge of natural, organic and healthy food.
CONSUMER TYPE: The consumers in these stores are often fiercely loyal to their local co-op store and are well-researched on the types of foods they want to bring into their home. They are more likely than the average person to appreciate interesting or exotic flavors. Consumers here may seek unconventional dining experiences.
BRANDING THAT WORKS WELL: The “health food” image has evolved from homeopathic to hip. Still, label transparency, clean ingredients and clear certifications (i.e. Non-GMO, Gluten-Free, Kosher, etc) will help you win the favor of this consumer base.
Local Food Service:
WHAT: Depending upon your product, you might be able to sell it to local restaurants or other food service outlets, who can then sell it to their customers. This works particularly well for beverages, snacks or other “grab-and-go” items that can be sold in local delis.
CONSUMER TYPE: The consumer type entirely depends upon the restaurant, but the types of food service that are most likely to sell an unproven product typically pride themselves on their unique offerings, and therefore cater to an exploratory consumer base. These customers though are still price sensitive and may not be willing to spend $5 for a small bag of chips.
BRANDING THAT WORKS WELL: Local and affordable products. A deli with sandwiches named after the local sports team might be more willing to sell your locally-made snacks. However, you cannot be ridiculously more expensive than the cheaper options, or else you’ll never sell. Additionally, this channel is more challenging for items like pasta sauce which aren’t sold off the shelf. But try pushing the chef to make their meatball sandwich with Grandma’s Famous Sauce.
No matter what, start by selling your own product online. Set up your website using Shopify, or another e-commerce solution, and get your shop up in a few hours. Aside from being easy to set up (you don’t need any buyer’s approval first), you’ll be able to set your own price and keep the most margin. Start here.
Where to Sell Later
Once your brand starts to build a proven customer base, it will be increasingly easier for you to sell into the countless groceries, convenience stores, farmers markets, department stores, big box retailers, cafes, gift shops, airport kiosks, drug stores, specialty baskets, liquor shops, delis, cafeterias and roadside stands across the country. The purpose of today’s exercise is to understand that the very first steps you take will help define your branding and future customer base.
This might sound a little confusing at this early stage, but you’re not alone. There are many people in the industry who will be able to help you find your niche and grow. Next week we will start to dig into all the players in the specialty food game, so you can understand how the whole chain works.