Historically, getting products into brick-and-mortar grocery stores was the best way to for food entrepreneurs and farmers to reach consumers. This is still a popular and potentially profitable path. Shoppers are there to buy food, after all, so their attention is piqued, and they can feel, smell and sometimes sample new products.
But retail has its challenges too: tough to get on shelf, inventory tie-ups, retailer and distributor margins, to name a few. This is why FFI tells all of our clients that whether or not they go the retail route, it’s critical to have an e-commerce strategy.
Now, in 2020, selling online may not sound like a revolutionary idea. But it’s worth emphasizing because it can be an especially effective model for artisan food makers and specialty agriculture producers, particularly those just starting out. People increasingly want to know where their food comes from, thus making handmade, local and unique products in hot demand. Therefore, these kinds of companies have a hungry market to cater to, and by selling on Amazon, their own website or another e-commerce site, they can get their products to the people without jumping through the traditional retail hoops.
Our most recent podcast guest is a big proponent of the direct-to-consumer online route—especially for food producers located far from big cities. Paul Scharfman, president of Specialty Cheese Company in Reeseville, Wisconsin, discusses how the internet has opened up major entrepreneurial opportunities for artisan food brands and specialty farmers all across rural America. He says they can now develop a quality product, “disintermediate the difficult distributors and major retailers, sell through Amazon or another e-commerce site, get their products to consumers and build a multimillion-dollar business based in rural nowheresville.” In fact, Paul’s son and daughter-in-law did exactly that with their business, Just the Cheese, in under two years.
Certainly, there are countless benefits of brick-and-mortar that e-commerce can’t match, so it’s up to each entrepreneur to weigh the pros and cons of each. But for food and farming startups in rural areas, online is definitely worth exploring—at least in the beginning to kick-start their venture.
And now, our roundup of the best food and beverage finance news, events and resources from around the web…
Business Model Insights
- How you can drive discovery through alternative channels (New Hope Network)
Your product solves a problem or fills an unmet need for consumers. Yet rarely do they experience this problem or need in the grocery store. To drive discovery in a capital efficient and effective manner, think beyond retail to alternative channel strategies.
- KeHe looks to cultivate emerging brands (Supermarket News)
- Focus on ‘we’ not ‘me’ to build the strongest team (FoodNavigator-USA)
- The Fallacy of Friends & Family (Intertwine Group)
“No one should feel compelled to raise money from someone close to them to prove to future investors that they are in it to win it.”
- Steward is helping small diversified farms access financing one crowdfunded dollar at a time (AgFunder News)
- Small Business Crowdfunding: Best Crowdfunding Platforms in 2020 (Nav)
- Compliance: Updated nutrition labeling requirements (Natural Products INSIDER)
Small manufacturers should actively be taking steps to meet the new nutrition labeling requirements by Jan. 1, 2021.
- How 360-degree visuals can help boost digital food and beverage sales (New Hope Network)
- Nut-based Brands May Adjust Calorie Counts After USDA Research (NOSH)
- GALLERY: Trendspotting at the Winter Fancy Food Show 2020, from avocado leaf tea to chickpea butter (FoodNavigator-USA)
From a flurry of new plant-based products to a surge of brands tapping into the high-fat, moderate protein and ultra-low-carb keto trend, the Winter Fancy Food Show—organized by the Specialty Food Association—showcased a wide range of innovations.
- Fresh produce shoppers look to reduce carbon footprint by buying local (Supermarket News)
- Protein alone is not enough: ADM highlights plant-based trends expected to raise the stakes in 2020 (Food Ingredients First)
Farming and AgTech
- 5G made waves at CES but has long road to relevance on-farm (AgFunder News)
“Because high-frequency waves have a harder time traveling over distance and through objects, the 5G network will be built on small cell site technology with antennas as close as 500 feet apart. Does that sound like it would work for farmers? No.”
- 4 financial tools to keep you afloat (Successful Farming)
- The future of hydroponic farming in 2020 (Refrigerated & Frozen Foods)
- Go Inside the Deal with ONE Brands and Perfect Snacks (NOSH)
Fueling a future in the snack bar set—or any food or beverage category—requires an innovative product, a solid strategy and great timing. Bill Keith of Perfect Snacks, Peter Burns of ONE Brands and Janica Lane of investment bank Piper Jaffray discuss the art of deal making.
- Ingredients sector tops food and drink M&A (FoodNavigator)
- Nestlé and Merit Functional Foods enter joint development agreement to scale pea and canola proteins supply (FoodNavigator-USA)
- Refrigerated Foods Association Exhibition & Conference – $, 2/23 – 2/26 in Orlando, FL
- MOSES Conference 2020 (MOSES) – $, 2/27 – 2/29 in La Crosse, WI
- American Food Sure Summit – $, 3/2 – 3/3 in Chicago, IL
- PACK EXPO East – $, 3/3 – 3/5 in Philadelphia, PA
- Expo West 2020 (New Hope Network) – $, 3/3-3/7 in Anaheim, CA
- National Good Food Network Conference 2020 (Wallace Center) – $, 3/10 – 3/13 in New Orleans, LA
- Edible-Alpha® Live! – $, 04/01 in Madison, WI
- SupplySide East – $, 4/21 – 4/22 in Secaucus, NJ
- Food Safety Summit – $, 5/4 – 5/7 in Rosemont, IL
- SAVOR™: An American Craft Beer & Food Experience – $, 5/15 in Washington, DC