The best food entrepreneurs know which markets they should be in and optimize for. If they have a niche product, they should only be in markets and channels where their product will get traction and will be supported by the store and the store’s customers. But, in the absence of all the data entrepreneurs need to fully understand their customer (including sales data), it may not be clear where is the best market for their products.
Food entrepreneurs, like all entrepreneurs, are scrappy and resourceful. In-keeping with these traits, we encourage food entrepreneurs to explore different markets and channels as they are building up their sales and learning about what their customers think and want. So, we might encourage entrepreneurs to start trialing their products at farmers markets, even if we think they can’t get to scale with farmers markets alone. And, sometimes certain products or certain classes of products make more sense in certain markets than others. For example, heavy or perishable food items make less sense to sell online due to the shipping costs and logistics involved.
One frequently overlooked marketplace that is important in many rural areas is the auction. Our podcast this week is about the Chesterhill Produce Auction, a social enterprise of the Appalachian Ohio based nonprofit organization Rural Action. The produce auction provides a market for produce where the farmer has a minimal time commitment to deliver the product while still making some sales. And, the auction’s seasonal averages show that prices hold strong despite this structure, even in comparison to farmers’ market prices, providing a needed channel for produce that would otherwise go to waste.
Most shoppers still get the bulk of their food from brick and mortar grocery stores. But, we encourage food entrepreneurs to think outside the box in terms of how they reach customers, including unconventional markets if their location or customer data suggests it is a good idea.
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- 8 key business learnings from growing Stonyfield Farm to what it is today (New Hope Media) – “When it comes to building your business, you must have some kind of unique selling proposition. Especially in today’s marketplace, product or service superiority is an absolutely prerequisite to success. Any existing competitors will have existing customers, a following and probably more capital than you. You absolutely must take risks and be willing to put yourself on the line for your business and, therefore, you must become comfortable asking for things—whether asking for a bank loan, negotiating with your landlord on rent or your suppliers for cost breaks, or asking your investors for more money.”
- Do You Have a Real Growth Hypothesis? (Intertwine Group)
- Why you need an attorney as soon as you start your company (New Hope Network)
- Learning the investment community’s lingo will increase entrepreneurs’ funding success (Food Navigator USA) – “When pitching a company or a product to investors, startups should brace to hear ‘no’ – a lot – but they can increase their chances of hearing yes by learning everything they can about the investment community at large and individual investors before they reach out. Entrepreneurs should look at who else investors have supported, including the type and size of the companies, what their track record is and how the deals were structured.”
- Top 10 Business Credit Terms Small Business Owners Should Know (SBA Blog)
- 4 things investors want to see in your food tech startup (New Hope Media)
- 75% of CPG companies plan to spend more on packaging (FoodDive) – A survey of 250 brand owners in the CPG industry found 75% expect to increase their spending on packaging during the next year. That’s up from the past two years, as 65% in 2018 and 40% in 2017 said they would be increasing spending. Almost one-third of them plan to hike their packaging budget by more than 10%. The survey also found 90% believe packaging is crucial to their brand’s success.
- How to get into Kroger in 2019 (New Hope Network)
- CPG brands: Here’s how you get the right data for retailers (New Hope Network)
- Veggies lead the way as value-added produce sales climb – (GroceryDive) – “Today’s value-added produce section is taking up more real estate in produce departments as shoppers seek quick solutions for healthy eating and exciting twists on their fruits and veggies. From simplifying dinner prep to providing healthy snacks on the go, the category has seen significant growth and is reshaping the way produce departments operate.”
- How Americans Will Shop: What Products Do Consumers Care About When Buying Local? (Nielsen)
- Shoppers want more premium private label products (FoodDive)
Farming and AgTech
- Hit the Farm Financials, Before Hitting the Fields (Compeer Financial) – “A common misconception is that a yearly financial statement only needs to be completed for the lending partner’s benefit. In reality, it can serve as one of the most powerful tools in your arsenal for measuring performance. The balance sheet helps paint a picture of the operation’s financial health. It also helps in structuring capital purchases, understanding year-over-year trends of earned net worth and recognizing what farm earnings are reflected in the bottom line. A best practice, for any operation, is to ensure all financials are up to date and complete on a regular basis. This should be done annually, at a minimum.”
- The Changing Face of Farms: Women Step In as U.S. Growers Age (Bloomberg)
- Promote a value-added supply chain, change the world (New Hope Network)
- From lab-grown meat to fermented fungus, here’s what corporate food VCs are serving up (Tech Crunch) – “Like their corporate backers, startups funded by “Big Food” are a diverse bunch. Recent funding recipients are pursuing endeavors ranging from alternative protein to biospectral imaging to fermented fungus. But if one were to pinpoint an overarching trend, it might be a shift away from cost savings to consumer-friendliness.”
- Nutrition Capital Network Deal Download: April 2019
- Food and Beverage M&A Landscape (Duff & Phelps)
- American Food Fair (National Restaurant Association) – $, 5/18- 5/21 in Chicago, IL
- Food Funded 2019 (Slow Money Northern California) – $, 6/6 in San Francisco, CA
- Hirshberg Entrepreneurship Institute 2019 (Hirshberg Entrepreneurship Institute) – $, 6/6 – 6/7 in Boulder, CO
- Nosh Live Summer 2019 (Project Nosh) – $, 6/10 – 6/11 in New York, NY
- Summer Fancy Food Show – $, 6/23 – 6/25 in New York, NY
- Expo East 2019 (New Hope Network) – $, 9/11 – 9/14 in Baltimore, MD
- Food Culture Forecast (Hartman Group) – $, 9/29 in Chicago, IL
- Food and Ag Ideas Week (Grow North MN) – $, 10/15 – 10/20 in Minneapolis, MN
- National Farm Viability Conference 2019 (Multiple Hosts) – $, 10/22 – 10/24 in Redwing, MN
- Annual Farmer Cooperatives Conference (University of Wisconsin Center For Cooperatives) – $, 11/6 – 11/8 in Minneapolis, MN
- Good Food Financing and Innovation Conference (FamilyFarmed) – $, 11/3 in Chicago, IL
- Business Tax Basics (UW-Madison SBDC) – $, 11/19 in Madison, WI