True “Disruption” of Food Is Difficult
Infographic by CB Insights
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Your insights this week…
Consumer tastes, preferences and expectations around food are changing. People are demanding more healthy food while also sometimes making the foray into purchasing food items online, mostly non-perishable, potentially hollowing out the center of grocery stores. Many companies are also entering the marketplace in meal ordering and meal kit delivery. While these companies have been able to raise lots of investor money, they often fail because they can’t find a sustainable business model.
There is a lot of interest in using technology to “disrupt” food. However, we do have a hard-wired relationship with food and like to forage for it, and those instincts are difficult if not impossible to change. The fundamentals of food business management, like managing cash flow, financial planning, brand management, understanding your customers and investor relations remain of paramount importance in food business success, regardless of the channel used to reach the customer. While there is a place for technology to enhance customers’ relationships with food, true “disruption” of the fundamental dynamics of that relationship is likely a difficult goal to realize.
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- Cash could be more critical to financial success than the P&L (New Hope Media) – “The number one reason that your business can fail is running out of money. You don’t get paid when your P&L says you get paid, and working capital requirements are often underestimated by a factor of 2 or 3. It costs you more to grow than you think it does. P&Ls are nice, but cash is king.”
- Why One Founder Says It’s Crucial to Question Assumptions and Constantly Improve (Entrepreneur)
- ‘Get cozy’ with financial planning and clear the path to growth (New Hope Media)
- How Olomomo raised $2 million in Angel Capital and became a nationally recognized brand (New Hope Media) – “5 key questions to raise the capital you need: Are you ready to commit the next 10 years of your life to working relentlessly i.e. do you have the right mindset? Does your brand have a unique value in the marketplace? Have you demonstrated momentum and proof of concept? Is there a big enough opportunity in your category to grow? Do you have a seasoned team?”
- VCs Hunt for a Food Delivery Business That’s Sustainable (Bloomberg)
- Are you making the right moves to attract investors? (New Hope Media)
- What’s New in the Supermarket? A Lot, and Not All of It Good (New York Times) – “Shoppers are increasingly shunning the processed, packaged products that fill most of the shelves in the center of the store. Instead, they are hunting the perimeter for fresh fruits and vegetables, yogurts and cheeses, and prepared foods that go way beyond the traditional rotisserie chicken. Nielsen, a research and consulting firm, said last month that for the first time in a decade, shoppers were making more trips to stores, but coming out with less in their baskets.”
- How a Packaging Overhaul Rescued This Protein Bar Company From Obscurity (Inc.)
- How to Define Your Product Category (And Why It Might Be Harder Than You Think) (CPG Data Tip Sheet)
- Time to Address the ‘Omnichannel Disconnect’ (Progressive Grocer) – “Omnichannel is a new norm in retail. Consumers today expect to be able to find and get the products they need when, where and however they want — and have a satisfying experience, regardless of the platform. Keasby, N.J.-based retailer cooperative Wakefern Food Corp., which has operated an ecommerce program since 2002 and brick-and-mortar stores under the ShopRite banner for much longer, acknowledges that its omnichannel success largely comes from the fact that it’s category-agnostic with its customers.”
- Competing on the ‘endless shelves’: Nielsen highlights how shopping behavior differs online and in-store (Food Navigator)
- Shoppers Value Both Digital, Human Engagement (Progressive Grocer)
- An Uncertain Future: New Entrants In The Food Delivery Space Decline As Existing Startups Struggle (CB Insights) – “Food delivery startups originally became popular among VC investors in the early 2010s, with many large players such as Blue Apron ($2B valuation) quickly reaching high valuations, thus encouraging more new competitors to enter the market. However, as competition has increased and startups have struggled to find a financially viable business model, the challenges of food delivery have become more apparent to investors and activity in the space has begun to cool.”
- Report: M&A will increase in 2017, but most deals likely to be domestic (Food Dive)
- Big Food Bets Small: Leading Food Corporates Amp Up Startup Bets (CB Insights)
- The Power of Private Brands Webinar Series (StoreBrands) – Free, Multiple dates in May/June online
- Creating a Food Safety Mindset (Wisconsin FaB) – $, 6/13/2017 9am – 11am in Milwaukee, WI
- Connecting with the Shopper to Crack Omnichannel Retailing (Food Marketing Institute) – $, 6/13 and 6/14 2017 in Chicago, IL