Is it now harder to run a food and drink startup?

Is it now harder to run a food and drink startup?

Is it now harder to run a food and drink startup?

Pop into your local supermarket and you’ll see a whole host of different food and drinks products on the shelves. They’re all vying for your attention. Gaining brand recognition in this market, however, is a lot more challenging than it used to be.

Build a relationship with one of the major supermarkets, however, and you can expect to find your profile rising – you may even get a little free advertising by the supermarket itself.

The challenge for entrepreneurs who want to get into the food and drinks sector is that a vast majority of the market is actually concentrated in the hands of just a few main distributors such as Tesco’s, Morrisons and Asda.

New opportunities online, however, now also mean that many businesses are not just looking at supermarkets for distribution but are willing to market directly to the customer themselves.

It’s all about putting the right strategy in place, from which products you choose to market and how you build a rapport with your customers.

Finding a Distributor

If you are a small fish in a large pond, building a relationship with one of the big grocery stores is vital. That means putting a lot of work into convincing executives that your product is good enough to be placed on their shelves.

While the big supermarkets want value for money for themselves and their customers, they’re also looking for variety.

Competition and the rise of low price options such as Aldi and Lidl mean that supermarkets across the board are fighting for the right balance between sales and profits and it’s not always beneficial to smaller producers. The better news is that major supermarket chains like Sainsbury’s have introduced future brand initiatives that are based on finding the next new food and drinks products.

If you have a food or drinks brand that is likely to catch the eye of customers, then it’s a great first step in building a good relationship with a major distributor.

Of course, you have to also maintain that relationship. Supermarkets can be quick to delist products if they don’t sell or capture the public imagination. That means having a clear plan for the sale of any product and a strategy that maintains sales throughout the year.

Finding Marketing Opportunities

While settled products have access to better advertising and may even be promoted by the supermarket themselves, new brands and products generally have to hit the ground running.

Newer brands need to be confident of their marketing and have a strong strategy in place in order to build sales volume and reputation. This can be helped if your business is able to get in at the early stage of any food or drink trends that are emerging. Our eating and drinking habits change constantly. One example in recent times is the rise of vegan or gluten-free products, low sugar or healthier drinks and the like.

Supply Logistics

Another challenge that food and drinks suppliers have is distribution. Getting their products out to individual supermarkets has an increasing impact on margins. In fact, this is an area that has improved over the last decade – for food and drink suppliers it’s all about building relationships with specialist delivery companies that have a wide reach.

Going It Alone

One solution for new food and drink businesses, particularly those that have a niche appeal is to move away from dependence on supermarkets completely and start their own online distribution service. It’s worked well with exclusive products such as cheese and wines as well as unusual types of meat and poultry.

Buying food online has become easier for customers in recent years and there are many smaller businesses that have decided to take this route. Success not only means building a strong customer base but can make it easier to get recognised by the large supermarket chains and build a relationship once a customer base has been established.

While the sector remains challenging, there are opportunities out there for new businesses coming onto the market. Certainly, as consumers, we’re always looking for something different so it’s important how businesses differentiate themselves from the competition.

 

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