With more startups appearing on the horizon of the food and beverage landscape, incubator schemes are offering educational programmes in order for entrepreneurs to equip themselves for success. Theadora Alexander and Chris Green offer Young Foodies, an incubator based on community and connectivity within the startup sphere.
When was Young Foodies set up?
Green: Our communities have been around since May 2017 so we are only about 18 months old now.
We now know over 250 brands very well now as they are in our communities. We identified a need for someone to support all of these startup and scaleup food and beverage brands. There were more of them entering the industry because there have been macro changes across the retail space that have allowed these guys opportunities they ever had before. Our community gives them a network to help out one another to ensure that they all succeed.
What was the defining moment in setting up Young Foodies?
Alexander: We both came from challenger brands in food and drink. I came from a brand called Proper Corn and Chris had had experiences with brands including Ella’s Kitchen, and Metcalfe which makes popcorn.
We were both consulting after we left our roles for these challenger brands, exactly like VitHit and Mr Lees, and there came a point where we were having a coffee and realised that everyone’s asking exactly the same questions; whether they make a drink or noodles or peanut butter or popcorn, 90% of it is the same, it is just the product that differentiates you.
Challenges can arise when there’s a very small team of just four in Bermondsey trying to work out Wi-Fi or negotiate prices, just these real problems that small businesses face.
The macro trends around consumers wanting different foods, agile innovation, supermarkets wanting differentiation and different ranges from one another – these aren’t going away and small businesses are the future of the food and beverage industry.
We wanted to change the way the industry runs, and to bring those brands together to collaborate with and empower one another to make their businesses run more smoothly. The industry then will change in response to small brands rather than small brands being the outliers.
Do consumer demands cloud perceptions of what small startups face on a daily basis?
A: Consumers wants are is the reason for startups’ success.
When you think about the modern, millennial consumer, they want things to be more transparent, healthy, better-for-you, novel, innovative, and they want their lifestyle to come through what they eat.
These new consumers are asking for a lot, and our brands can certainly deliver on those ten times better and faster – with better products at the end of the day – than bigger companies can because small teams can react quickly to a great tasting product; in Mars that might take five years to go through the ranks.
The vast majority of our founders have never worked in food or drink before, and as a result the majority of them are not operational- or business-minded. They are very entrepreneurial and make delicious tasting products and are very brand led, but they don’t necessarily know the ins and outs of building a supply chain, or negotiating the best pricing for their bottles.
Where we see the gaps is in the nuts and bolts of running the business, which leaves a lot of challenges and anxiety for those businesses who spend way too long trying to work out barcodes for example, and end up being late to a meeting because they’re stuck in an office somewhere trying to work something else out. That’s where we try and step in to give access to great teams to support them in all these areas of weakness.
What are the most common obstacles that startups face and how do you help them overcome them?
G: If you were working at Unilever and needed something answered, or a response to a challenge you’ve come across that day, there are people around you. In bigger businesses, there is a ready-made, ‘watercooler’ network essentially to help you solve that problem.
You don’t have this in a startup – as Thea said, you sometimes have only one founder at a kitchen table, or you might have a small office of five to six people. For this reason we wanted to create a network of like-minded peers – the watercooler network of the startup world. So where Unilever have their colleagues, we have one another.
A: When they become a member of our community and have access to our online portal where they can pose questions for other people in that message community to answer. We also run weekly events for them to get together and share their opinions on a range of topics, and upskill one another.
G: We have a talent solution within our business which rivals what a lot of these big brands do which is to have an available resource at the drop of a hat. We aren’t only looking for people with the right skills and knowledge, but with the right mind-set to be in a startup business, which is a very particular kind of person.
Another obstacle would be scale – as a small brand you just don’t have the scale or resources, or very powerful voice, so you can’t take much to the negotiating table, and we’re out to change that.
Because we have over 250 brands in our communities we can negotiate on behalf of them and we can get them some pricing and access to services that they would not be able to gain themselves, which is really powerful. Our brands are growing 70% year-on-year because of this.
What category would you say is the most opportune for startups right now?
G: This may not come as a surprise, but the snacking space. It’s got low barrier to entry, so we see a lot of startups in that area. Some are bringing fantastic products to market and this category has been receptive to change for some time.
There are some categories there that are there to be challenged and yet they are much harder to disrupt, usually due to a challenging supply chain, high cost to entry, or very complex product that cannot necessarily be manufactured with another 3rd party.
If you do persist, passion can make anything happen. This is driving the manufacturing space to also open their eyes to the future of food. This won’t be mass production, but instead consumers will want something new, changing fixtures more regularly, and this is making manufacturers change the way they operate.
What are you doing with barcodes?
A: We set out six months ago and planned to have a touchpoint for every brand so we can support every small brand. We figured out that every single product in the UK needs a barcode; if you want to trade, you need one. There’s one global, not-for-profit barcoding body called GS1. There are also a lot of unreliable outfits where you can get barcodes from that cause various problems down the line.
Buying from GS1, you have to buy in bulk per 1,000. This isn’t built for a small business, who may need perhaps 10 at a time. This is why a lot of brands we work with do go to the more unreliable methods to get three barcodes at a time which end up impacting negatively on their future operations, and brands have had to repackage and so on in order to fix these issues.
We went to GS1 with these problems and asked that they use their expertise and platform to advocate for a better way of going about this. They were highly supportive, acknowledged the problems, and were really progressive.
We’ve been working with them and brands to understand what the right number is and we have launched an exclusive deal that brands can get 10 barcodes with images which will sort a lot of anxiety out in terms of changing the number into a picture for brands. This sorts out the volume smaller brands need.
How do you think breakthrough brands can bounce back from Brexit?
G: Startups are arguably the most at risk, and yet they are the ones driving category growth, and so we should support them in any way that we can. All we can do is inform them as we learn of any new developments on this front.
In terms of opportunities, there is a massive prospect for exports. A lot of them have done a fantastic job in the UK and can certainly see a lot of success in disrupting categories across the world.
Most interestingly, they are agile and can change things quickly. These guys will find ways to tackle whatever comes out of the Brexit negotiations as they are creative, nimble, and will find new opportunities as they are passionate about what they do.
A: The main fear comes in the form of a decline in labour resources; manufacturers are finding it difficult to source factory staff, and on the distribution network lorry drivers are in short supply which drives up costs in that.
There’s also the direct cost of materials – the UK is not, for example, a big producer of packaging. We have to source that from Europe. So we probably have more flexibility in our pricing than some of the bigger players.
While it is terrifying to think of 20% cost increases to products, we know we can find a 20% saving elsewhere because we know we aren’t that competitive right now. We’re relying a lot on support from the rest of the industry to say that yes, these are small brands, but they are driving the face of innovation for the UK and should be supported in their pricing.
Theadora Alexander and Chris Green were speaking with FoodBev Media’s Harriet Jachec.
© FoodBev Media Ltd 2019