The odds stacked against any newly-launched brand penetrating the grocery retail trade are probably higher than they have ever been. Shelf space is at a premium, ranges are being rationalised, a handful of big names control virtually all of the market and margins are pitifully slim.
So how much time, effort and cash is really required to come up with the next Innocent smoothies, Kettle Chips or Gü Chocolate Puds, and what are the vital ingredients that will guarantee success?
To find out, we asked FMCG talent spotter and Product Chain managing director Simon Dunn to choose three small suppliers on his books with very different propositions and assess whether they have what it takes to make the big time.
One is starting from scratch, the second is established in Italy but wants a big break in the UK and the third is hoping to make the leap from niche player to the mainstream of grocery retailing.
In this first instalment, all three explain what they hope to achieve. In six months’ time, we’ll revisit each supplier to see whether they are now living out their dream, or are back doing the day job.
So, read on to find out what Simon says...
Charting a course from paradise to the high street
NAME - Ruth Harper
PRODUCT - Cold pressed virgin coconut oil
AMBITION - Get product from concept to something marketable and listed in target retailers
Ruth’s pure white, solid cold-pressed coconut oil is a marketer’s dream: fairly traded, organic, low-calorie, dairy and gluten-free - it ticks all the boxes. It is also without hydrogenated fats, has a great story behind it and above all tastes incredible, says Dunn.
Light on the palate and non-greasy, you can spread it on crackers or toast, stir-fry your vegetables in it, use it for a spot of roasting - and then massage it into your skin.
Produced in the South Pacific, the product is made through cracking open coconuts, grating their flesh, laying this out to dry and crushing it in a hand-operated press. The oil is then stored in drums and sold on to middleman Dan Etherington who designed the production process. He buys drums from the farmers and offers a guaranteed route to market.
Ruth is excited. It’s her first meeting with Dunn and she’s already been told she’s on to a winner. But what margins would the supermarkets expect to take on this, she asks.
“Oh, I’d say about 50%-60%,” says Simon casually. Her jaw drops.
Her first meeting at Product Chain’s Twyford HQ was pretty informative for Ruth, who has experience in sales and marketing but none dealing with supermarkets. She had arrived thinking the fat would be best presented in a slimline glass jar to sit next to olive oil or balsamic vinegar.
Bad idea, says Simon. First, retailers hate glass. Second, put a dirty knife into it and before you know it your pristine white fat has turned a gritty off-white. Third, sell it in a jar containing more than 150ml and you can kiss goodbye to a repeat purchase anytime this year.
Instead Dunn suggests a tube. You get less in it - which will lead to repeat purchases and realistic margins, and you’ll get more facings in a store. It’s also less messy and will end up in the fridge - which means consumers are more likely to use it than they would if it languishes forgotten at the back of the store cupboard.
Next, the price. Ask much above £3 for a small tube and consumers won’t try it, he says. Less than that and Ruth’s margins will disappear.
The name? Something highlighting the paradise provenance without sounding too like a Mills & Boon novel.
And the target customer? First port of call should be the wellbeing section at Waitrose, with lots of PR targeting women’s magazines.
SIMON SAYS: Product has everything going for it but packaging and branding are in need of a rethink.
Why hide in the health stores when cleaning fever strikes?
NAME - Chris Slack
PRODUCT - BioCare green-friendly cleaning range
AMBITION - Increase UK sales
Forget the local health food shop, BioCare belongs on the shelves at Sainsbury and Tesco, says Dunn. There has never been a better time to launch it in the UK given the fuss over links between asthma and chemical-laden domestic cleaning products, plus the interest in natural cleaning solutions generated by the TV show, How Clean is Your House.
The brainchild of Sergio Frigerio and Tony Higson, who developed industrial cleaners derived entirely from plant extracts, BioCare is a 100% natural range of household cleaning products recently launched in Italy.
BioCare’s boss Chris Slack is sure UK consumers will buy into products that use chicory to lift limescale, citrus oil to neutralise grime and plant alcohol to remove streaks on glass.“We could take 10% of the household cleaning market,” he says. “Our USP? It’s natural - and it works.”
Waitrose is convinced and the other multiples are in his sights, says Slack. “We’re hoping everything will come together in the spring with a campaign highlighting the difference between natural products and those full of chemicals.” An AIM listing should generate the cash needed to move forward.
SIMON SAYS: Timing is perfect to bring product into the mainstream.
Supermarket listings bring rewards but need careful handling
NAME - Steve Jones
PRODUCT - 9 Bar hemp seed bar
AMBITION- Build annual sales to £2m
This humble 50g hemp seed bar, packed with nine amino acids, is the creation of health food nut Steve Jones. He runs a small company in Corwen, north Wales, selling flapjacks and slices to the health food trade.
Fantastic though Jones’ 9 Bar was, Dunn knew it wasn’t going to take off without a serious image overhaul. So he called in former Jordans marketing director Graham Lee to give it an MOT. Off came the white wrapper and label and on went a new carob coating, cellophane and graphics.
And the listings came rushing in - first Holland & Barrett, then Sainsbury and Waitrose - pushing annual sales up from £5,000 to £300,000. But it could do £2m, says Dunn. “The approach is to create new flavours, new pack sizes and talk to Tesco and Asda.”
Steve is optimistic, but wary of the big supermarkets, which Dunn deals with on his behalf. “I’d say to someone starting up, don’t forget your existing customer base, and don’t base your strategy on the supermarkets - they should be the icing on the cake. They only give you three to six months to prove yourself. Having said that, my turnover is up by a third since going into the big chains.”
SIMON SAYS: Broaden the range.
After 32 years in the trade discovering brands from Copella and Grove Fresh juices to Ecover green-friendly detergents, Product Chain boss Simon Dunn knows more than a thing or two about what sells and what doesn’t.
Passion is a hackneyed word when it comes to brands, says Dunn, but you won’t break into one of the most competitive food retail markets in the world without it. Having deep pockets is also handy, he adds, but with the right product you don’t have to bankrupt yourself to get on the shelf.
It might sound obvious, he says, but given that you will never have the clout of a Unilever or a P&G, don’t waste your time with me-too products that happen to be better than the big brands. “They always taste better,” he says. “What else can you offer?”
So how much time, effort and cash is really required to come up with the next Innocent smoothies, Kettle Chips or Gü Chocolate Puds, and what are the vital ingredients that will guarantee success?
To find out, we asked FMCG talent spotter and Product Chain managing director Simon Dunn to choose three small suppliers on his books with very different propositions and assess whether they have what it takes to make the big time.
One is starting from scratch, the second is established in Italy but wants a big break in the UK and the third is hoping to make the leap from niche player to the mainstream of grocery retailing.
In this first instalment, all three explain what they hope to achieve. In six months’ time, we’ll revisit each supplier to see whether they are now living out their dream, or are back doing the day job.
So, read on to find out what Simon says...
Charting a course from paradise to the high street
NAME - Ruth Harper
PRODUCT - Cold pressed virgin coconut oil
AMBITION - Get product from concept to something marketable and listed in target retailers
Ruth’s pure white, solid cold-pressed coconut oil is a marketer’s dream: fairly traded, organic, low-calorie, dairy and gluten-free - it ticks all the boxes. It is also without hydrogenated fats, has a great story behind it and above all tastes incredible, says Dunn.
Light on the palate and non-greasy, you can spread it on crackers or toast, stir-fry your vegetables in it, use it for a spot of roasting - and then massage it into your skin.
Produced in the South Pacific, the product is made through cracking open coconuts, grating their flesh, laying this out to dry and crushing it in a hand-operated press. The oil is then stored in drums and sold on to middleman Dan Etherington who designed the production process. He buys drums from the farmers and offers a guaranteed route to market.
Ruth is excited. It’s her first meeting with Dunn and she’s already been told she’s on to a winner. But what margins would the supermarkets expect to take on this, she asks.
“Oh, I’d say about 50%-60%,” says Simon casually. Her jaw drops.
Her first meeting at Product Chain’s Twyford HQ was pretty informative for Ruth, who has experience in sales and marketing but none dealing with supermarkets. She had arrived thinking the fat would be best presented in a slimline glass jar to sit next to olive oil or balsamic vinegar.
Bad idea, says Simon. First, retailers hate glass. Second, put a dirty knife into it and before you know it your pristine white fat has turned a gritty off-white. Third, sell it in a jar containing more than 150ml and you can kiss goodbye to a repeat purchase anytime this year.
Instead Dunn suggests a tube. You get less in it - which will lead to repeat purchases and realistic margins, and you’ll get more facings in a store. It’s also less messy and will end up in the fridge - which means consumers are more likely to use it than they would if it languishes forgotten at the back of the store cupboard.
Next, the price. Ask much above £3 for a small tube and consumers won’t try it, he says. Less than that and Ruth’s margins will disappear.
The name? Something highlighting the paradise provenance without sounding too like a Mills & Boon novel.
And the target customer? First port of call should be the wellbeing section at Waitrose, with lots of PR targeting women’s magazines.
SIMON SAYS: Product has everything going for it but packaging and branding are in need of a rethink.
Why hide in the health stores when cleaning fever strikes?
NAME - Chris Slack
PRODUCT - BioCare green-friendly cleaning range
AMBITION - Increase UK sales
Forget the local health food shop, BioCare belongs on the shelves at Sainsbury and Tesco, says Dunn. There has never been a better time to launch it in the UK given the fuss over links between asthma and chemical-laden domestic cleaning products, plus the interest in natural cleaning solutions generated by the TV show, How Clean is Your House.
The brainchild of Sergio Frigerio and Tony Higson, who developed industrial cleaners derived entirely from plant extracts, BioCare is a 100% natural range of household cleaning products recently launched in Italy.
BioCare’s boss Chris Slack is sure UK consumers will buy into products that use chicory to lift limescale, citrus oil to neutralise grime and plant alcohol to remove streaks on glass.“We could take 10% of the household cleaning market,” he says. “Our USP? It’s natural - and it works.”
Waitrose is convinced and the other multiples are in his sights, says Slack. “We’re hoping everything will come together in the spring with a campaign highlighting the difference between natural products and those full of chemicals.” An AIM listing should generate the cash needed to move forward.
SIMON SAYS: Timing is perfect to bring product into the mainstream.
Supermarket listings bring rewards but need careful handling
NAME - Steve Jones
PRODUCT - 9 Bar hemp seed bar
AMBITION- Build annual sales to £2m
This humble 50g hemp seed bar, packed with nine amino acids, is the creation of health food nut Steve Jones. He runs a small company in Corwen, north Wales, selling flapjacks and slices to the health food trade.
Fantastic though Jones’ 9 Bar was, Dunn knew it wasn’t going to take off without a serious image overhaul. So he called in former Jordans marketing director Graham Lee to give it an MOT. Off came the white wrapper and label and on went a new carob coating, cellophane and graphics.
And the listings came rushing in - first Holland & Barrett, then Sainsbury and Waitrose - pushing annual sales up from £5,000 to £300,000. But it could do £2m, says Dunn. “The approach is to create new flavours, new pack sizes and talk to Tesco and Asda.”
Steve is optimistic, but wary of the big supermarkets, which Dunn deals with on his behalf. “I’d say to someone starting up, don’t forget your existing customer base, and don’t base your strategy on the supermarkets - they should be the icing on the cake. They only give you three to six months to prove yourself. Having said that, my turnover is up by a third since going into the big chains.”
SIMON SAYS: Broaden the range.
After 32 years in the trade discovering brands from Copella and Grove Fresh juices to Ecover green-friendly detergents, Product Chain boss Simon Dunn knows more than a thing or two about what sells and what doesn’t.
Passion is a hackneyed word when it comes to brands, says Dunn, but you won’t break into one of the most competitive food retail markets in the world without it. Having deep pockets is also handy, he adds, but with the right product you don’t have to bankrupt yourself to get on the shelf.
It might sound obvious, he says, but given that you will never have the clout of a Unilever or a P&G, don’t waste your time with me-too products that happen to be better than the big brands. “They always taste better,” he says. “What else can you offer?”
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