Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.
Issue link: https://specialtyfoodmagazine.epubxp.com/i/328566
Practices" in place and will not try to take your product to market for themselves. A location-based strategy would require multiple co- packers and increase the possibility of challenging relationships and inconsistency in the products that go to market coming from differ- ent facilities. Inconsistencies in products—particularly in specialty products where prices are higher—can be detrimental to consumer repurchases. So, there is a significant increase in oversight and rela- tionship management that would come with multiple manufacturers. The value of location-based co-packing would be reduction in shipping costs and quicker turnaround time for delivery. In addition if you have more than one location, you also have less risk of losing your only manufacturer if one goes out of business or decides not to continue with your products. What promotional strategies do you recommend that do not require lots of money? Jeni Britton Bauer: The No. 1 thing you can do to increase sales is to find ways to get your product into the mouths of consumers and let the taste do the work. If you find passionate people who can tell your story as well as you do, you'll see results. At Jeni's, we've hand-curated a group of fans throughout the country who are so effective at spreading the joys of ice cream made with grass-grazed milk that we're now lending them to other pro- ducers through our sister company, Eat Well Distribution, where we help artisanal food companies brand, market, and distribute their products. THE STARTUP Nazqiz Peruvian Snacks Founder: Ronald Flores Product: Qancha air-toasted Peruvian corn snacks Founded: April 2013; product launched at Winter Fancy Food Show 2014 Location: San Francisco No. of employees: 2 How can I work around pricing pressure from large players? Mike Silver: Make sure you know your cost of manufacturing. Then you can establish tier pricing as an incentive for the large players to purchase significant volume. Don't just give them a better price: once you have established tiered pricing based on quantity, stick to it. You are in business to make a profit. If need be, create tiers for each item. Bigger companies will always want the cheapest price, and often it might be best to walk away. Never devote more than 20 percent of your manufacturing to one customer. Why devote the majority of your manufacturing to a single buyer with low mar- gins when they could easily drop your product next quarter? Many companies fail because of this. Use this experience to your advantage. What is the best way to sell online? Jonathan Milo Leal: The best way to sell online varies by com- pany, but keep in mind that for most companies in the specialty food industry, online sales only account for 5 percent to 10 percent of total sales. Unless you're built from the ground up as a consumer-direct company, you'll find more success via wholesale or distribution. Some food companies have their own e-commerce cart and do their own fulfillment and customer service; this is fairly labor-inten- sive, but you do get to charge full retail price. Putting an e-commerce cart in place can be expensive, and takes somewhat regular main- tenance. Alternatively, many companies sell to Amazon, Abe's Market, or igourmet.com, usually at wholesale pricing. At Milo's, we sell our Vino de Milo and JB's Best brands through igourmet, as a convenience to our customers who can't find the product in a store near them. One tip: If your sales strategy is chief ly via wholesale/ distribution, you must be sure that your online retail price is not lower than what customers can buy in stores. If your online price undercuts your retailers, they will notice, and you will lose accounts. Even if e-customers are paying shipping on top of the retail price, that's not a distinction your wholesale customer will care about. I also recommend collecting customer emails, and using a per- mission-based service like Constant Contact to keep them updated on your company's growth, products, and promotions. This goes for social media as well. Should I develop a location-based co-packer strategy? How should I do this? Cara Figgins: The answer depends on the availability of quali- fied and reliable co-packers for your products. We do private label and co-packing for several companies who have worked with prior manufacturers with which they had problems. They've come to us because of our qualifications and our partnership attitude. It is important to screen your co-packing partners to make sure they are properly audited and have excellent "Good Manufacturing Denise Purcell is editor and Susan Segrest is a contributing editor to Specialty Food Magazine. Ronald Flores (center) and staff SUMMER 2014 141 startupSpotlight_nazquiz_summer14.indd 141 6/2/14 2:19 PM