How do I get started?
I get asked
this question a lot; I have a great barbecue sauce. All my friends like it. I
make small batches and sell. What do I do next?
If having a
food business is your dream you are in very good company. Believe it or not
most of the great food companies in America were started by an entrepreneur
making small beatches and selling to their friends and neighbors. Look at the company
history of Campbell’s Soup, General Foods, H.J. Heinz, and most every product
in the frozen food case. They were all started by people with a dream and the
drive and determination to make it happen.
Can it
happen today?
The short answer is “yes”, but there are some major things that
have changed that make it a lot harder to get a food company off the launch pad
today. The first thing that is different today is the grocery store business. One
Hundred years ago there was only one chain grocery store. The rest were small “mom
and pop” type locally owned grocery stores. There were not as many products and
the new products generally were innovative and stayed on the shelf long enough
for “word of mouth” advertising to build the brand. Not as true today with most
new products being line extensions to existing products or just “me too” type
products with little or no real point of difference. That is not to say all
products introduced today are not innovative—yes some are but not many.
When I
started in the grocery business working for a major national manufacturer way
back in 1976 the business had started a major change in direction. All
the power in the grocery business was in the hands of the major manufacturers.
Companies like Proctor and Gamble, referred to as Proctor and God in those days,
told the retailers what to do. All the P&G sales reps looked, dressed, talked,
and acted the same. P&G had the best training program in the business. They
could change a person’s personality through their training. Most if not all
grocery buyers hated them because they told the buyers what to do. Why? Because
P&G controlled consumer behavior through their TV advertising. If P&G
ran a TV ad the grocery store “HAD” to have the product on the shelf. There were
only three TV stations in most markets and TV advertising was very powerful
especially when skillfully done. My favorite story about P&G was when Lever
Brothers came out with Surf Laundry detergent. All the grocery buyers were
singing a little jingle that said “Surf’s in Tide’s out” because they thought
Surf laundry detergent was going to knock a big hole in Tide laundry detergents
market share and they were going to do everything they could to help. See if
you can find Surf detergent today.
P&G was
not the only company that used the power of TV. The corporation I worked for
took a simple aspirin pill and turned it into a mercurial pain reliever called Anacin.
They took a high grade soap and turned it into “dry cleaning” in a bottle –Woolite.
They solved a very distasteful problem
with a product named Preparation H. It was all done using TV advertising and a
lot of money was made in the process. My company was named American Home
Products but Wall Street called it American Home Profits.
The shift in
power from brands (manufacturers) to stores (chain stores) was helped because
of cable TV. Remember when cable TV came out? People said why pay for something
that I get for free now? Now if you do
not have cable with over one hundred channels you are living in the dark ages.
At the same time grocery stores turned into be big chains that built stores as
fast as they could lay brick. Result? Manufactures no longer had the control
over consumer behavior due to the many channel options and chain grocery stores
started springing up like weeds.
I remember
the day I called on a buyer to present a new item (Woolite Upholstery Cleaner)
and he said “Tom, you got a great product BUT to get it in my 126 stores you
are going to have to give me 1 free case per store”. I was shocked! He wanted
me to “Pay” to get on his shelf??? Fast forward thirty years…….. The going rate
for distribution in the barbecue sauce category (in the South) in a medium size
grocery chain is $10,000 per item IF the buyer likes the rest of the marketing
plan. That marketing plan better have a lot of ways designed to get the
consumer to try your new product or $10,000 will not buy you six inches of
shelf space (on the bottom shelf).
Can a new
consumer products company get started today? I like to say to make a small
fortune in the food business today start
with a large one! Stay tuned for some things I have learned that will not cost
you a dime.
Please make
comments. Comments help me understand if I am helping people and they also help
me understand what people need help with.
