Build The Brand, Build The Food Business Ecosystem
For the last Insights newsletter, we talked about how entrepreneurs should make efforts to understand the food entrepreneur ecosystem and whether grants, loans, investments or a combination of capital sources makes sense to fund their growth.
Natural ecosystems and entrepreneurial ecosystems are fundamentally about relationships. While all the entrepreneurial actors above are important, all food businesses need strong relationships with their customers in order to be financially sustainable. And, because brands help tell the business’ story in a concise, relatable way for consumers, brands help build relationships between consumers and the food business.
This relationship to the customer and understanding where the customer is at is sometimes overlooked. For example, recently we have noticed heightened interest to support regenerative farming practices. Perennials like currants and aronia berries often top the list of nutritious crops that regenerative farming advocates say could provide a win-win-win for farmers, consumers and the planet. Some then point to the lack of infrastructure for processing these crops as one of the biggest barriers to their taking off. However, even if the infrastructure was there, someone needs to build a brand that resonates with consumers’ perceived needs and solves their problems. Similar to the philosophy of regenerative agriculture, all aspects of the ecosystem need to be considered to properly respond.
As Cullen Gilchrist talks about on our podcast this week, Union Kitchen is helping lower the barrier to success for growing food brands by getting their feet wet in Union Kitchen’s ecosystem, including infrastructure like its shared-use kitchens, distribution and retail outlets. All of these things (as well as their technical assistance) lower the barriers for new food businesses to be successful, but they don’t replace the hard work of building relationships with customers. And, as Cullen points out, one of the best things their retail stores give their member businesses is actionable data about how their products are resonating with real customers in a real environment. And, Cullen has found that the financial community is more willing to provide capital to their member businesses because their ecosystem has allowed their members to prove that their products have traction in the marketplace with real consumers.
Good brand building is built on an understanding of your target customer and what problems you are solving for them. While it is not the only thing that is needed to build a successful business, those consumer relationships are the lifeblood of all food businesses. Brand building takes hard work. However, once that work is done, food businesses often find that the other actors in the ecosystem want to build better business relationships with them because they built those key relationships with customers to sustain their business. And, with customers in the driver’s seat, audacious goals like regenerating the planet become more possible.
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- How This Former Lawyer and Investor Built a Multimillion-Dollar Health Food Company That Now Sells to 10,000 Stores (Entrepreneur) – “Everybody always wants to know how you do it, and there is no secret. You just have to get up every day and keep pounding the pavement. I don’t spend a lot of time in my office. I’m on the road constantly pushing, selling and meeting people. If you don’t do that, nobody’s ever going to come to you. Grocery stores have a bunch of shelf space. They want to generate as much revenue as they can on that shelf space. Your job is to make sure that they generate as much revenue as they can.”
- The Business Plan Is Dead (Pilotworks)
- What to look for when hiring a sales VP (New Hope Media)
- Cash in natural foods: Experts weigh in on how to get it and prepare to sell (New Hope Media) – “Financial discipline is critical. Companies often underestimate the amount of money they should raise, resulting in too-frequent raises. At times, this can put companies in a compromised position with reduced leverage. Many successful companies in this space raise money three to five times. Very rarely does a company raise money less than that, so it’s important to think long-term about your financial needs and strategy.”
- MobCraft Beer’s Creative Sourcing of Recipes and Financing (Edible-Alpha® Podcast)
- Beyond the supply chain: Looking for sustainability in financing, too (New Hope Media)
- How To Build A Consumer Brand (Collaborative Fund) – “Brand has become a catch-all term. We use it interchangeably to refer to brand image (packaging and logos), brand ethos (mission and messaging), and brand-building (community). And while most aspects of building a business – supply chain, logistics, manufacturing, etc. – are becoming commoditized, brand is an increasingly important differentiator for emerging consumer startups.”
- How CPG Brands Can Grow Distribution in Major Grocery Chains (GoSpotCheck)
- Does Branding Really Matter? (New Hope Media)
- Omnichannel dynamics in natural products industry (New Hope Media) – “While internet sales are growing twice as fast as the industry as a whole, at 12.6 percent, the channel only makes up 4 percent of the industry. When you exclude supplements and narrow it down to just the natural, organic and functional food and beverage market, this share shrinks to 2 percent. With growth rates like this, e-commerce is sure to play a larger role in the future of natural products, but at a combined 86 percent market share, brick and mortar still accounts for the bulk of sales.”
- Nielsen: Private-label sales grew three times faster than national brands (FoodDive)
- What online (and Amazon) buyers want (New Hope Media)
Farming and AgTech
- Study projects future of dairy industry for next 50 years (Refrigerated & Frozen Foods) – “Global population is expected to increase from 7.6 to 10.5 billion people by 2067, while arable land per capita will decrease by 25%. It is also expected that climate change will force changes in the location of dairy production. In the Northern Hemisphere, where 86% of the world’s milk is produced, the effects of climate change are less tempered by oceanic effects. Dairy production will shift to areas with more sustainable water supplies and adequate growing seasons in response to changes in climate.”
- USDA and SBA Join Forces to Help Businesses in Rural America (USDA)
- Making the Case for Regenerative Agriculture (Modern Farmer)
- Food and beverage M&A will heat up this year, report says (FoodDive) – “The value of global mergers and acquisitions this year is likely to rise above last year’s $392 billion because political events such as Brexit and the French elections are in the past, companies are sitting on large cash reserves, and legacy and other firms are actively exploring M&A for growth and innovation.”
- This Week in Food Industry M&A (The Food Institute)
- NCN Recent Transactions in the Nutrition and Health & Wellness Industry (NCN)
- Fearless Farm Finances Workshop (MOSES) – $, 4/27 in Wisconsin Dells, WI
- Farm Law Focus Session: Land, Events, and Value-Added Production (Farm Commons) – Free, 4/28 online
- Start Smart: Food Based Business Bootcamp (WWBIC) – $, 5/5 in Milwaukee, WI
- Perfecting Your Pitch (WWBIC) – Free, 5/15 in Milwaukee, WI
- Nutrition Capital Network Spring Investor Meeting (NCN) – $, 5/9 – 5/10 in New York, NY
- Thought Leaders in Food & Agriculture Speaker Series (Grow North MN) – Free, 5/17 in Minneapolis, MN
- Food Funded (Slow Money California) – $, 5/24 in San Francisco, CA
- Furthering Food Safety Workshop (UW-Stout) – $, 5/24 – 5/26 in Menomonie, WI
- Project Nosh Pitch Slam (Project Nosh) – $, 6/4 – 6/5 in New York, NY
- BevNet Live (BevNet) – $, 6/6 – 6/7 in New York, NY
- Good Food Pitch Slam (FamilyFarmed) – Free to Apply, 6/19 in Chicago, IL
- Smart Food Expo (Various Orgs) – $, 6/25 – 6/27 in Chicago, IL
- Expo East (New Hope Media) – $, 9/12 – 9/15 in Baltimore, MD
- Esca Bona (New Hope Media) – $, 10/22 – 10/23 in Austin, TX