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Sitting in the room with the CEOs of two multi-billion dollar companies and closing a $5 million round of series B funding for my superfood startup was a surreal experience. Kuli Kuli is a fraction of the size of these companies, and yet, here we are, partnering with a few of the largest food companies in the world.
Why did they do it? What can these leaders in their industries learn from a startup like mine?
Well, over the past decade, there has been a fundamental shift in the way Americans think about food. The definition of health and wellness has changed entirely. Consumers used to want low-calorie, low-fat food that tasted good. Now we want our food to be gluten-free, organic or non-GMO; and free from preservatives, artificial colors, corn syrup and any other ingredients not found in grandma’s kitchen. It should also probably have an Instagram appropriate, feel-good farmer sourcing backstory. Most importantly, we don’t want to pay too much more for it and it has to taste great.
This, understandably, has thrown many of America’s largest food companies for a loop. In their efforts to adapt to this rapid change in consumer preferences, many of them are turning to the organizations that do innovation best: startups.
Suddenly a small, five-year old startup like mine has something to offer a 110-year-old company like Kellogg and a 100-year-old product development company like Griffith Foods: a new type of natural food entrepreneurship. And, in turn, we are able to access the expertise, resources and distribution that you can only get after a century of success.
This win-win partnership has led to the rise of large food company venture capital arms investing in and acquiring food startups. General Mills has 301 Inc., Campbell’s started Acre, Danone launched Manifesto Ventures, Hain Celestial has Cultivate Ventures, Kellogg has eighteen94 capital fund and, now, Griffith Foods is a player in the venture capital business.
As one of very few founders to have received investment from multiple large food companies, I’ve been thinking a lot about the innovation Kuli Kuli can offer. Through our partnership with eighteen94 and Griffith Foods, we’ve been able to access incredible support from on everything from new product development to getting our product into more stores nationwide. However, no good partnership flourishes if its just one-sided. So, what does Kuli Kuli bring to the table? Here are three ideas I’ve come up with:
1.Launch quickly and iterate. Tech companies have made “beta launches” and “rapid iteration” the buzzwords of innovation. The concept of launching a not-quite-perfect product, garnering consumer feedback and then changing it is a much easier thing to implement when you’re talking about lines of code. Manufacturing minimums, packaging costs and all of the other logistics that go into making a physical product, has meant that most new food products spend two years in R&D before launching on a shelf near you. However, the rise of co-manufacturers (factories that make the same type of product for multiple companies) has meant that many small food companies have grown to $10M in revenue with less than a dozen employees. Consumer feedback is easier than ever to come by thanks to the internet. At Kuli Kuli, we work with co-manufacturers to do small manufacturing runs of products that we can test with our online customers and in focus groups before we launch the product into retail. And we can do it all in less than a year, allowing us to be more responsive to rapidly changing consumer preferences.
2.Take to the grassroots. Food has historically been a pay-to-play industry where large ad-buys and huge amounts of trade spend were the only way to be successful on shelf. Now, the same foodies who are demanding healthier products want to feel connected to those products. This has implications for the way that products are developed – most notably with Annie’s Homegrown asking their customers for their opinion on which categories Annie’s should expand its products. It also has huge implications for marketing with more and more consumers Googling brands before purchasing, then wanting to connect on social media. Marketing is no longer just about awareness; it’s about starting a conversation with consumers.
3.Be transparent and authentic. As a member of the millennial “me” generation, I’ll be the first to admit that my idealism didn’t leave me post-college. According to a Nielsen report, over 70 percent of millennials say that they’re willing to pay more for products that create a positive social and environmental impact. We want to know exactly where our food comes from and make sure that no animals or workers were harmed along the way. More food companies are sourcing fair trade ingredients and investing in initiatives to support smallholder farmers. A few, like us, are even re-doing their legal structures to become Benefit Corporations (B-Corps) that put people and planet on the same level as profit.
I know that I have so much to learn. It’s exciting to realize that I also have something to teach.
March 6, 2019 at 10:02PM
Forbes – Entrepreneurs