Innovation pays in the food business. Specialty food and beverages increased to $75 billion in 2011, a 6.9% increase over 2010 sales, according to the 2012 report from the National Association for the Specialty Trade (NASFT). So how do you innovate and get those innovative products out of your kitchen and on to the grocery shelves? You should be looking at food trends to see market opportunities. Also looking at other successful entrepreneurs can help you create a successful road map for your food business… so this is why I called Doug Forman for advice.
Doug Formman is the CEO of Beanitos with vast experience in the snack food industry. His prior venture was Guiltless Gourmet, a line of low-fat, baked tortilla chips in founded 1990s. Doug started Guiltless Gourmet with only $200, growing the entire category to $500 Million and selling a successful brand to Barq's Root Beer in 1994.
Doug made Beanitos Bean Chips the US's Fastest-Growing Natural Chip Company and is a great example of a "foodpreneur" (food entrepreneur). According to SPINS, Nielsen Data, Beanitos are: #1 Growth Brand of Natural Chips in the U.S this $2.7 billion category. Additionally Beanitos sales have increased 203.5% in the past 52 weeks, ending 4/14/12.
The Best Sales Pitch Starts with an Innovative Food Product
Sell products to supermarkets begins with presenting to buyers (1) an innovative product, something different and (2) and avoiding products that they already have enough of. You don't want to be the 10th person presenting another BBQ sauce or marinade!
Getting your brand on to the Shelf can be costly and slotting allowances are prevalent in the supermarket industry. Slotting is the one-time fee many supermarkets charge for the shelf space you obtain. It can add up and is the single largest barrier for small specialty foods companies to overcome in getting retail distribution. There is no standard slotting allowance so it is something that varier according to each supermarket and each category.
"All of the shelves in the store are like realestate and it is worth something. So this is where slotting allowance come into play. In our startup and early stage phases we were able to avoid slotting allowances because we were so different" according to Doug. Because they met a clear and immediate market need, Beanitos would drive more customers into the snack category generating incremental sales for the retail grocer.
Doug told me that "In most cases and in what I have been successful in, I look at the market and see a need. Not a me-too item but something very different. Let's say you are developing what you believe to be the greatest potato chip or corn chip. A retailer buyer probably will look at these chips and say why do I need another potato or corn chip!"
Know the Market Need and Your Brand Differentiators
Great Product Positioning means presenting a real and clear market need (also called solving the consumer problem) the supermarket buyer will see this immediately and be more likely to get your product on the shelf. What was the need Doug saw? A healthier chip that was very different (not corn OR potato based) AND had great taste.
Doug always focuses on product differentiators and at his former company Guiltless Gourmet, he recognized the differentiators. "We were baked and not fried and the market at that time was all about "low fat". "The market did not exist… we created the category." The truly innovative and successful products start as products AND create categories.
When he started Beanitos he realized that "there was nothing bean-based when we were developing our brand. Corn represents 75% of products sold in a supermarket and from a protein standpoint, corn is empty calories. So for example, 10 chips of Beanitos has 140 calories and 10 grams of fiber. When compared to a typical corn chip, one would have to consume 850 calories for the same 10 grams of fiber!" Another differentiator is Beans are great for diabetics… they don't raise the consumers blood sugar levels.
In part 2 of 4 Steps to Launching a Profitable New Food Product Doug gives you 3 Steps in a Sales Pitch, Scaling up from Your Kitchen and great Packaging.