How To Get Your Food Product On A Supermarket ShelfOct 31, 2018,
by Deanna O'Connor - Category: Retail Ready
The Top Five Mistakes For New Food Producers To Avoid
According to leading food consultant and retail advisor James Burke, a new food producer needs to come to the market with a very compelling proposition. “Go down to your local supermarket now,” he advises. “There isn’t shelving with a sign on it that says ‘Waiting for new product next week’. There is no space. So, to persuade a buyer at head office, or a store owner or manager to take any product, you have to have a very compelling argument—because to take you in they have to throw somebody else out. That’s a big thing.”
Go down to your local supermarket now. There isn’t shelving with a sign on it that says ‘Waiting for new product next week’.
James, with an impressive track record in retail, knows the sector inside out. He has worked on the Food Academy programme aimed at supporting and nurturing start-up food businesses since its very inception.
The Food Academy programme’s most recent intake encompassed 49 food producing companies, and James states that there are two or three intakes per year. That’s a lot of new food businesses coming on-stream, and for those that are looking to get stocked in supermarkets, a lot of competition for shelf space. If you’re serious about growing your food business, then James has plenty of advice for those who want to make sure to avoid some common mistakes.
Nobody Has An Ugly Baby
One of the first mistakes James notices start-ups making, is neglecting to do adequate research. Everyone is excited about and believes in their own product—as James notes, “It’s a bit like the saying, ‘Nobody has an ugly baby!’” However, he continues, “Everybody sees the beauty and the good stuff in their own product and forgets to look at the category.”
His advice is, no matter how proud of your product you are, don’t be overconfident without some research to back it up: “Look at the research and talk to people on the ground—store owners, store managers. Is it a crowded space you are getting into?” The retailers can see what sells, what flies off the shelves and what ends up in the discount bin. The information they can provide is invaluable.
“Look at the research and talk to people on the ground—store owners, store managers. Is it a crowded space you are getting into?”
Set Your Objective
Never mind the product for a minute. Where do you see yourself? Is it on the cover of a business magazine, or standing behind a market stall on a Saturday morning? James reveals that, “The most important thing I would say to people all the time is: ‘What’s your objective?’” He encourages people to think in advance about whether they want to operate at a hobby level—“the local market and maybe supply one or two shops”—or if they are thinking, “I’m leaving full-time work and it needs to pay me a salary, and it needs to put the kids through college.” He cites “a mismatch between the objective and the product” as something he sees in a lot of cases. If your goal is to build a thriving food business, the first product you came up with may not make the most business sense when you run the numbers.
False Positive Signals
Market research is a theme James keeps returning to, underlining its importance. He cites the example of someone making brown soda bread at home, selling it at a local farmers’ market and perhaps a local shop. Their friends and family are being supportive and forming a ready-made customer base. They become confident that there is a market for their product—but this can be a false positive signal. If they travel to the next village to sell their bread to the local shop there and they will most likely find there is no market for it because someone in that locality is doing the same thing. “It’s a crowded space,” underlines James. If they had done their market research (rang the shop in the neighbouring town to see if they had a supplier already) they could have saved themselves the trip, or perhaps expanded their product offering and made scones or apple tarts to bring as a sample product instead.
“When we interview producers two years into their journey about the blockages and obstacles that are most common around that stage, distribution will have become a major issue for the producer,” James reveals. “Trying to get national coverage or regional coverage…that becomes very challenging and it’s costly.” For those that start small and grow, it’s a common pitfall; supplying local shops and restaurants, producers often don’t add in a transport and distribution loading to the costings for their product. It is affordable to produce when delivering locally, but then many run into problems as their customer base expands and it is not economically viable to deliver nationally. The cost of distribution, or working with a distributor needs to be factored into the pricing equation from the get-go.
It is affordable to produce when delivering locally, but then many run into problems as their customer base expands and it is not economically viable to deliver nationally.
In any new business, cash flow is a prime concern. For a food producer, every additional shop listing their product is an exciting achievement, but James warns, “What you’re not thinking about is that nobody is going to pay you for five or six weeks. All the money is going out. The more shops you take on, the more money that goes out.” In a couple of months this can quickly run into thousands of euro, and while your business looks as if it is growing successfully on the outside, inside it is haemorrhaging cash. “If you don’t legislate for that and build a buffer in on your cash flow, and be extraordinarily good at chasing payments, it can run you aground actually,” James warns. “Very often, that will bite you when you are growing and it all looks good.”
Paying attention to crucial factors such as market research, cash flow and distribution at the early stages of the business will pay dividends as it begins to grow. Local Enterprise Offices, Food Academy, Bord Bia, and Enterprise Ireland all offer superb supports and mentoring for food businesses. GS1 Ireland can also help with far more than the bar code that is the essential identifier for your product; speak to them today to see how their consultancy services can benefit your business.Tags: Food Producer, Food Academy, James Burke, Advice