Question

Topic: Strategy

How Do I Begin To Sell My Food Product

Posted by Anonymous on 8/29/2008 at 9:41 AM ET 250 Points
Actually, I'm not even close to selling my food product... yet. What I do have at this point is an idea for a product. I have a recipe and different variations of the recipe. There are thousands of these types of recipes on the internet. Everyone uses it (or is beginning to use it).

The product is unique to the market and can be used in both commercial (restaurants) and home food preparation. No other manufacturer makes this product and if there are some small mom and pop operations that do make something similar, they are not marketing toward the same cuisine I intend to market toward.

My intended customer base is extraordinarily wide. The commercial application for my product is not limited to any one cuisine. I will be able to market this product to any restaurant regardless of the type of food they serve. It probably will not sell at the local breakfast diner, but I'm okay with that. The product can also be marketed to the mass market for home food preparation. Not only that, but this product will allow the home cook to duplicate (almost exactly) the dish they normally would have to purchase from a restaurant.

Currently, there is no competition. This product, when it is produced, is produced from scratch by both the restaurant chef and the home cook. Time and ingredients are wasted in the process, which make the preparation of this food item expensive.

I have a financial background. Accounting, controls, taxation, entity structure and operation, cash flow management, banking, compliance, human resource management, etc. are my strengths. My partners are restaurant managers. Their strengths are daily employee management, scheduling, menu design, purchasing, etc. Their biggest strength is distributor contacts.

Our weaknesses are many. We're a start up with every intention of being an upstart. We have limited capital. We have a product that can be easily duplicated with a minor variation in formula and are exposed to others (specifically established packers and contract packers) who are producing other products that require the same type of production.

The opportunity this product presents is enormous. It will assist everyone in food preparation as consumers expand their taste into this particular cuisine. The product will be cost effective for restaurants and desired by the home cook for authentic taste.

The strategy is to be the first to the market with one variation of the product, while other variations are tested. If we can't be the first, it will be too difficult to penetrate the market for a small company. We intend to place the product, initially, through local and regional food distributors. We have a great product that will be new for them and allow them to increase sales of other ancillary products that accompany our product.

Right now, the product can only be costed and priced based on home preparation. The various other cost components cannot even be estimated at this point in time. The product must also be developed for the commercial market. The myriad of testing (microbial, shelf life, quantity variation, process variation, etc.) are almost too numerous for a start up to consider. Ingredient procurement, processing, packaging, storage, order taking, shipping and fulfillment, and on and on and on. As you can see, we still have a lot of leg work and research to complete.

Whew! Having said all that, here is (are) my questions...

1. Where do I find a copacker? The product and production of the product is similar to salsa (it's not a salsa). It will require an almost identical process from raw ingredients all the way to the end user.

2. Should I proceed with lab testing before I meet with a copacker or do I look for a manufacturer with an all-in-one approach?

3. Do I wait to "introduce" this product to distributors until I can actually deliver the product? (Like I said , this product can be easily duplicated by someone with the means and the process. )

I'm confident that what I have will be a big demand item. Yet, it's so simple that it's one of those products that you look at and say, "why didn't I think of that?" It's ingredients are every day ingredients, it's preparation is simple, it's storage is simple, it's application is wide spread and in the infant stage of growth, and it's fresh (no hot fill, no hot water bath, all natural preservatives).
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RESPONSES

  • Posted by Peter (henna gaijin) on 8/29/2008 at 1:05 PM Accepted
    1) talk to folks in your area who are starting to package products and see who they know of. Or perhaps go to a foods trade show and see who is there.

    2) talk to the testing lab and see if there is a requirement that would answer this question for you. Wouldn't surprise me if the testing has to be done based on a set production line.

    3) you have to assess the risk when talking to distributors. On the plus side, those who work in distribution often don't have experience with production (though some do - so watch out for those). Downside is that they talk with a lot of people who do have this experience.

    Some additional thoughts:
    - I hear signs of a common entrepreneurial mistake in your question - not targeting. Yes, the product may be bought by everyone and anyone, but you need to decide who is most attractive to sell to first and focus on that. Some more thoughts on this at:
    https://expandabroad.blogspot.com/2005/11/targeting-customers.html

    - to be proactive about fending off competitors, you may need to start positioning your product (even though the competitors aren't there yet). The common way is to aim upmarket right from the start. Use high quality raw materials, brand your product as high quality, etc., and then get a higher price from customers in response.
  • Posted on 8/29/2008 at 4:27 PM Author
    Peter,

    Plan A is to target local and regional distributors. These distributors market to the two primary customers we would like to purchase our product... restaurants and small gourmet markets and delis. Utilizing distributors limits our "sales calls" and "presentations," which we will be limited in performing due to our size. Initially, restaurants are THE main target.

    Plan B is to market our product ourselves to the same customers in the event we cannot retain distributors. In this event, we will be attending food showcases and cold calling. Not optimal, but necessary.

    Under either plan we will need to be able to deliver product. Which leads me back to whether I should line up production before introducing the product. As you can see, plan A is where we want to be.

    Large markets are out of the question at this point in time. It's just not feasible and the mark up we want will be to greatly impacted.
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