Why do new food businesses fail? In this post, I’ll explain the traps to avoid, but will also share examples of food brands that do it right.
I teach at Foodstarter
and get a lot of calls and questions from new entrepreneurs starting their food and beverage company journey.
It’s a wonderful industry going through a lot of disruption right now. There has never been a better time for a small company with a big idea to break into the food industry.
As food marketers, our goal is to make all the food brands we work with a success. Over the years, we have learned to be on the lookout for the following top five reasons why new food businesses fail - but we have also learned how you can maximize your chance to succeed.
Problem: Your food product has no real point of difference.
Let's face it; the world doesn’t need another chocolate chip cookie. That's true, even if your friends and family say that your recipe is the best there is. Remember - shelf space in a grocery store is a precious commodity, and for your product to be listed and sold, something else has to be kicked out to make room. For you to be successful, another food product has to be unsuccessful. It's a cookie eats cookie world out there.
You need a compelling point of difference to get that listing and ultimately get a shopper to care about you.
Seedlip is the world's first non-alcoholic spirit distilled in a copper still. The company has grown from one to 85 employees within 18 months.
Problem: Your food product is “beige”.
Everyone is okay with the colour beige. Nobody hates it, but nobody loves it either.
To be loved, you will also have some people that hate your product, your concept, your flavour. You have to accept the fact that that’s just fine. Don’t water down your proposition so that everyone is “okay” with it. Doing do will leave you stranded in a nondescript no-mans-land where you have no differentiator, no identity and ultimately, no business.
As long as enough people love your product, you have a business. Ignore the haters.
Marmite. Sold since 1902, the brand's slogan is "love it or hate it".
Problem: You didn’t hire experts.
I cannot tell you the number of times I meet with a start-up that has a great food product - but it isn’t selling up to expectations.
Very often the problem is with their packaging. It's “pretty”, often courtesy of a friend who is a graphic designer who was kind enough to support the budding entrepreneur.
But designing for food and beverage retail is very different than designing a business card. Category conventions need to be respected (and occasionally broken), shelf space needs to be maximized, colours need to block, legal, language and cultural requirements need to be understood, the list goes on and on and on.
Hire an expert who lives and breathes food packaging design. Yes, it will cost you more initially, but it will save you time and money in the long run and may well make the difference between success and failure.
An example of colour blocking in retail
Problem: You use research as a crutch, rather than for insight and illumination.
I’m a big believer in research (both primary and secondary), but be aware of what it can and cannot do for you. Research can’t give you “the answer”. Consumers can’t predict the future. Remember the old Henry Ford quote - “If I had asked people what they wanted, they would have said faster horses.”
By all means, do everything you can to inform and educate your gut feel. But ultimately, if you want to bring a new food product to market, it's you who needs to make the final decision. At some point, you will need to be brave and trust yourself.
Here's a brave product: One Hop Kitchen pasta sauces with insect protein. They're delicious, we tried them.
Problem: You are undercapitalized.
Yes - it will take you more time and more money than you thought. Don’t spend money getting onto the retail shelf (real or virtual) and then don’t have enough money to let consumers know that you exist.
Be money wise and money aware from the get-go.
Can we help?
Now that we have discussed the main reasons why new food businesses fail, are there any questions or comments? Can we help? Get in touch.