(There is an updated article that expands on this earlier post. See: 5 Stages of Growing a Food & Beverage Business.)
If you have a new food product you’re looking to develop to sell into supermarkets, convenience stores or other retail outlets, here is the proven path to testing, validation and expansion.
Is this over-simplified? Sure. But it is worth laying out the path that many brands have taken.
I should say now, that there is no cheap way to do this, and that you must have some kind of funding to launch a product. Whether self-funding or from an outside source. To break into retail channels and have enough marketing funds to create demand at the early stages, are critical.
Phase 1
First, there is no point in going to market for a product, unless you have done the necessary work of market testing it. That is because retailers will always simply want to know, ‘does it sell?’ Do people want it? What types of consumers will buy it?
So, the first step to launch a food product is to get some reliable and repeatable market testing done.
This can be something informal such as selling it at a street fair or farmer’s market. Or it could be on consignment in a local retailer. And ideally, you, the founder and product creator, or others close to the origin of the product, should be actually meeting and greeting customers, and seeing their reaction to it, in-person.
Phase 2
Once you are comfortable that there is enough customer interest in your product, the next level of expansion and validation is to get a test inside of a store. To actually have your product placed on store shelves. Because that is a more valid test of a product you might be planning on expanding into retail stores. In other words, the next level of testing, is to test where you’d actually be selling it. From the shelf. That type of in-store, on-shelf testing can still be supported by product sampling in the store and various forms of advertising to drive the sales. After all, you’re not an established brand yet.
Phase 3
After you’ve gotten validation and consistent re-orders of your product after a few stores have agreed to stock it on their shelves, where it’s competing with other products, you’re ready for a significant roll-out.
The time for a roll-out, is when you need to get professional expertise on board (a-hem, someone like me!). Now is the time to enroll professional help to get the attention of store buyers on a larger level and to get your product out into many stores. This could be for the entire chain for a regional retailer or just one region for a national chain. However, virtually all grocery retailers are regional, there are no truly national chains that are in every market.
This world of expansion will usually mean hiring a sales and marketing agency (SMA), also sometimes known as a broker, although SMA is more widely used now. The process of hiring the right broker, with the right connections with store buyers is critical. Read our blog post explaining how food brokers or sales and marketing agencies work, here. There are specialized consultants who can help you find the right broker and negotiate the right kind of contract with them. Part of your consideration for hiring a broker will be their access to sales data. This is because as you develop your product for subsequent phases of your roll-out, you are going to want to know the sales trends of other products in your category. You need to know how you stack up to your competitors, what other products your customers buy. And everything you can possibly know about your customers.
The right team of advisors, including your sales and marketing agency, will allow you to take your product expansion to the next level, and hopefully, establish you as a solid and viable business. Whether you are looking to expand through cash flow, bring on further financing, or sell the company to a larger entity.
