Success in this industry - SKUFood
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Success in this industry

Success in this industry

If you have heard me speak at any conference or event I hope you remember me saying…

"Success in this industry is not just about making great products to sell; it is about selling the great products you make”.

There are so many great food and beverage products out there, but they do not all maximize the opportunity they have. This is a very competitive industry and most conventional stores can offer consumers over 35,000 SKUS. You need more than a great product if you want to succeed.

We admire the commitment small to medium sized food businesses have to their products. So much time, energy and resources go into developing great products. It is exciting to see an idea become reality and then see it on the shelf for the first time.

Unfortunately, we see it can be a real challenge to ensure the resources and commitment are there to focus on selling the product.

Resources required-people

The most important resources you need to sell the great product you make are people and money.

Finding the right people for sales and marketing is a challenge. You do have options. You can have the people working in your business or you can choose to outsource these functions.

If you decide to maintain your own sales and marketing, you need to ensure the people are qualified and that they can do a lot of different things. They need to have the qualifications to manage your customers. This is not just getting a listing; it is the ongoing relationship that needs work 52 weeks of the year. They need to have the autonomy to make decisions and work with your customers. They also need to be available when the customer needs them, not when it is convenient for your business.

Internal resources also need to have the ability to do consumer marketing. This is not just a person who can do a few posts on Facebook or Instagram. Creating demand with consumers in a very crowded marketplace is a huge challenge. These people need to have the skills to build an online community and use more traditional forms of marketing like mass media and public relations. They do not have to be an expert at everything but they do need to understand what should be done and hold people accountable if you decide to use some specialists in each field.

If you choose to outsource the sales and marketing functions, you have many options and likely need a group of specialists. Brokers can manage the customers for you and distributors can get your product into smaller accounts. You should investigate a resource for retail coverage as well. It is one thing to get your product listed and to the store, it is another thing to get it on the shelf, where it should be and when it should be.

Many people will outsource the marketing functions as there are a lot of options for you to choose from. If possible, find people who understand the food and beverage space. There are firms who do it all and some smaller that specialize. Find the best fit for your business and your budget.

Regardless of which route you choose to follow; you own your sales and marketing. You will have to hold employees or outside resources accountable. So often we see people find a broker or distributor and believe all of their problems are solved. They can play an integral role but you still need to own it and make sure it is going in the right direction.

Resources required-money

It is one thing to discuss the resources required, it is another thing to figure out how to pay for them.

Again, there are so many great products out there but very few, if any, sell themselves. You need a percentage built into your selling price to pay for the resources and the other investments you need to make. These ‘other investments’ include item and price ads, marketing materials, media and sampling. This can all add up very quickly.

It is such a challenge to have enough built into your selling price to pay for sales and marketing. We estimate the big brands will invest 30% of their selling price into sales and marketing. For example, if a product is delivered to the Sobeys warehouse for $9.00, they will invest $3.00 back into sales and marketing. The large companies have to pay listing fees and they probably invest in more item and price than smaller companies. Retailers expect it from them.

For small to medium sized businesses 30% it is probably not realistic, given the costs to produce, package and deliver a product. You should explore your selling price to understand what you can reinvest. It is tough but it is also necessary. It is best to do this early on as the economies of scale do not always materialize as other expenses come into play as your business grows.

Commitment to selling

Retailers usually see themselves as sales focused businesses. Producers and processors usually see themselves as production focused businesses. We would suggest producers and processors need to adopt more commitment to selling. This does not mean more money in this area but more focus.

Sales targets that are measured each week or month are a good place to start. It is tough to measure sales sometimes, but it is possible. This is how retailers will measure the success of your products. You should know what they expect and determine if you are meeting or exceeding expectations.

You should also measure the return on your investments each time you do any trade spend (investing with your customers for ads, in store specials, signage etc etc). Forecast the sales lift and the investment. Compare actual results and determine if you get the performance you need to generate a return. Make sure there is discipline to repeat what works and move on from programs that do not work.

Commitment to sales and marketing is not about spending more. It is about spending it right.

I will keep saying this because we believe it is so important to your success.

“Success in this industry is not just about making great products to sell; it is about selling the great products you make”.

If you are looking for someone to speak at an event or conference just let us know!

Peter

SKUFood Recipes for Success Podcast

We are super excited to announce we have launched our SKUFood Recipes for Success podcast. We have been working on this project for a while and it is finally ready to share with all of you. Our intention is to share the stories of food businesses and others in the value chain while also providing insights that are interesting and helpful to people in the food and beverage industry.

In this episode, we sit down with Shivani Dhamija, the founder of Shivani's Kitchen, a company that's been making waves in the world of ethnic food products. Join us as we explore Shivani's entrepreneurial journey, from establishing her CFIA (Canadian Food Inspection Agency) certified facility in 2020 to the remarkable progress she's made since.

Discover the secrets behind Shivani's success in manufacturing authentic and delicious ethnic products for grocery stores. Learn about the challenges she faced, the milestones she achieved, and the passion that drives her to bring the flavors of her culture to a broader audience.

Get ready for a conversation that delves into the art and business of creating ethnic products, with Shivani as our guide through the aromatic and flavorful world of Shivani's Kitchen on SKUFood Recipes for Success podcast, presented by FCC.

Listen and subscribe where ever you get your podcasts.

Where is Peter Speaking?

More discount stores coming

This should not come as a big surprise, but retailers are investing in more discount stores. It does impact suppliers because discount formats merchandise products differently and put more focus on price. Some products are not included in the listing base for discount. These changes mean the products are exposed to a smaller proportion of consumers.

We are really excited to partner with Food and Beverage Manitoba on this program for food and beverage businesses. The objective is to help companies take advantage of the opportunity in retailer’s local programs and take the next step. We are delivering the first 3 sessions virtually then I will be in Winnipeg for the last session in person.

Excited to collaborate with FCC to create this workbook for food and beverage entrepreneurs. Managing your costs in this environment is so important.

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