Richard Horwell

Interest in starting a food and beverage brand has increased during lockdown and 2021 is already set to be a bumper year for new releases. Richard Horwell of Brand Relations.

When I was at school my classmates mostly wanted to work for a bank or the public service as it was a safe secure job; these days everyone heading into the workforce wants to be their own boss. Creativity is at its best in the UK and since COVID-19, with many employed people having decided to change their career path and go into a recession-proof industry such as food and drink.

You may have an exciting idea for a new product, however, starting a food or drink company isn’t easy.

If you see a mass of products in a category such as kombucha or energy drinks, then chances are you have missed the boat and the only way to get into this category is by being cheaper or throwing more money at your brand than the competition - neither of which I recommend. 

Instead, you need to have a point of difference (POD); something that others aren’t doing and is clearly a direction for the market. The trend now is very much ‘health, taste and low or no sugar’ - even more so since COVID19 as everyone wants to get healthy and fight off potential viruses or illness.

So, here are the steps you need to follow before investing any money in your new food or drink idea:

1. Market research

When clients come to us we often discover that they know very little about the competition in the category they are planning to enter. The more established a category is - such as energy drinks - the harder and more expensive it will be to make any inroads.

Don’t just look in the UK, research the rest of the world. You can learn a lot from other brands' mistakes and get some great ideas from the flavours they used. You can understand their messaging to their audience, how well they are selling in their market, and their retail price. 

I once heard a conference speaker talking about ‘ways to fail’. His basic message was don’t take money from a successful business and invest in something you know nothing about. That’s a sure way to fail. So, do your research!

2. Point of difference (POD)

Think hard about your offering and why it will stand out. There‘s been a lot of innovation in the drinks category over recent years. Many small brands have become big brands and even taken on the likes of Coca Cola - so much so, that the big players have spent millions to acquire them.

But to stand out from the crowd you must have a POD so that your target audience will cross the road to buy your drink. Creating a following is what makes your brand attractive to the big players to buy in the long term; they want your audience. 

A point of difference is not just a funky flavour or more eye-catching packaging. It is being unique. Blending ingredients that others have not thought of before and making sure it tastes great.

3. Money

This isn’t a cheap industry to get into. One issue is the minimum runs for production. You can develop a production recipe (as opposed to one made in the kitchen), get a brand name and branding, and then try raising the money after that in order to pay for a production run. However, it’s virtually impossible to raise money just on a basic idea. If you have no seed funding to get started, then you may have to rely on family and friends to invest or donate, but this can be high risk and can potentially hurt relationships.

Think very seriously about where the money will come from. It can be up to two years before you make any. So, make sure you can survive and have enough money available to pay for adverts in wholesalers’ catalogues, sending out samples and possibly attending exhibitions. 

It’s essential to have a clear financial budget for your business, whether you are self-funding or going to investors. The taste, the name, the branding, the distribution, the samples, the presentation pack for buyers all need to be spot-on from day one. That requires money.

4. Recipe development

Succeeding in making your drink at home doesn’t mean that it can be exactly replicated in mass-production. We work with several recipe development experts to help us source the ingredients at a competitive price and ensure they work together – resulting in a drink that tastes like the one you created in your kitchen but will suit your co-packer.

Some ingredients just don’t blend. This is a very specialised area and the recipe needs to be perfect. So, you will definitely need expert help. Any contract manufacturer will expect an exact recipe. And, for the packaging, you will need to know all the nutritional information for labelling.

One area that many entrepreneurs overlook is ‘Novel Foods’. The regulation on Novel Foods applies within the UK and the EU. If your ingredient falls under Novel Foods you will probably need to pay for research to prove it is safe for human consumption

Not all ingredients are allowed to be used in drinks and this is protected by Novel Foods, so you need to be sure that all your ingredients are allowed to be used. This will save you time in the future as you won't have to overcome obstacles you could have tackled in the initial stages.

5: Packaging

This can make a huge difference to your cost outlay.

For example, glass is the cheapest option as you can do the smallest production run. But wholesalers dislike it due to the weight, and retailers because it may break. This makes it the hardest to sell.

Second cheapest is Hot Fill PET (plastic) which is small volume as the PET bottles can be filled with high temperatures. The negatives are that the bottles are ugly with solid ridges down them and with the backlash of PET polluting the oceans - these bottles have a lot of PET in them – consumers are turning away from this type of packaging.

Next is Aseptic Fill where the PET bottles are blown on-the-line, then filled in aseptic conditions to keep all the bugs out. After this the contents are pasteurised in the bottle, locking in all the nutrients. However, the minimum runs are massive as the factory needs to completely clean the entire line in between flavours.

Fourth is cans. These are very popular now, but minimum runs are high. For example, minimum runs for printed cans are 150,000 and minimum filling runs are 75,000. There are options to fill blank cans from as low as 12,000 volume and then sleeve them afterwards. It is a more expensive option but a far better way to test the market.

Fifth is Tetra Pak, but the printed runs of the cardboard are around 100,000 and need to be used up within a year. It’s a difficult option until you have the volume to justify it.

Last but not least is High-Pressure Processing (HPP). This is great for juices as the temperature is only 4C so it preserves all the goodness, antioxidants and flavour. The runs are small, but the cost is 10-15p per bottle just to put them in the machine as they use pressure instead of heat to pasteurise. The distribution must, of course, be chilled.

Understanding the best type of packaging for your drink and your target market is important – it’s a large part of your initial outlay so you want to get it right.

6. Co-packers (contract manufacturers)

The people who fill your drink in bulk are a very important part of the process so choose with whom you work wisely. Research and ensure that the company you select has a good reputation - maybe speak to other brands they have filled? Also make sure they have the right certification as once you start to get listings, that question will be asked by wholesalers and retailers.   

Food and drink is a hard sector to succeed in without support and expert advice. Mistakes can be costly. So, make sure you give yourself the best chance of success by researching your competition early on and identifying the team you need to help you take your brand from the kitchen table to the supermarket shelf.

Richard Horwell is the owner of Brand Relations, a specialist food and drink marketing and branding company based in London. Over the last 10 years, Brand Relations has been behind the launch and development of over 80 brands in the UK. Richard has also built up and sold companies of his own in the food and beverage sector. He has over 30 years’ experience in marketing FMCG brands around the world, having lived and worked in the US, Australia and the Middle East.

Contributed by Richard Horwell
Neina Sheldon
Article by Neina Sheldon
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