By Richard Horwell, Brand Relations
Over the years we have met many budding entrepreneurs wanting to bring their dreams to life and start up in the beverage business. I have seen some innovative and exciting ideas that have great potential, and quite a few that made no sense at all.
Very often people think that they can start up their own drinks brand on a shoestring. So, if you have an amazing idea, you need to ask yourself if you really understand what it will cost.
Every business needs money to start and, believe me, the Food & Drink industry is no different. In fact, it can suck up a lot more cash than many other sectors.
If you are ready and determined to go ahead, the first step is to seek professional help. Doing this by yourself, without any knowledge or experience of the industry, will almost certainly guarantee you fail. This is why so many co-packing companies refuse to deal with start-ups as it ends up becoming a combination of mentoring and firefighting. So, find an experienced professional to help you.
I also can’t emphasise enough just how important research is before you do anything; the more knowledgeable you are about the market and the industry, the better your chances of launching and surviving. Far too many start-ups try to cut corners and do everything themselves. To date, I haven’t seen a single one of those survive.
So, what professionals do you need to help you and what might this all cost?
1/ Recipe Developers
Whatever you have made in the kitchen will be unlikely to transfer to the factory for mass production. You’ll need to find a recipe developer to translate your mix into a simple recipe that can be mass produced.
There are several elements you also need to take into consideration, including the nutritional information that will be required on the packaging, and the legality of the ingredients. Not all ingredients are allowed to be used. To understand this, you need to digest the Novel Foods regulations. You also need to know the health and taxation issues surrounding sugar levels.
Your recipe developer can help you with all of this. Look for one that can match your tastes and expectations. As with any industry, there are good ones and bad, so do your research, speak to previous clients, and trust your gut.
2/ Packaging
Deciding on the packaging is crucial to moving forward, there are a few options: Glass, PET (plastic), Cans or Tetra Pak.
Glass is cheap to produce as it can be filled in small runs because the material can cope with high temperatures of pasteurisation. But don’t be fooled by the price, glass is great until a wholesaler turns you down due to the weight of cases, or the unfortunate fact that glass often breaks while being transported or sold on the shelf in store.
Glass does not cope well with mail order either, which due to the pandemic has grown massively within the last year.
PET (plastic) has lost popularity since the campaign against single-use plastic packaging. Many buyers will no longer stock anything other than recyclable packaging.
There are three types of PET packaging:
– ‘Hot fill’ which can be completed in small runs but requires thick unattractive packaging to withstand the high temperatures the product is filled at.
– ‘Aseptic’ which must be completed in high volumes due to the aseptic area the drink is filled in. The lines must be cleaned each time making this style of production VERY expensive with only a six-month ambient shelf life.
– ‘HPP’ or ‘High-Pressure Processing’ is more suited to juices as you can utilise the pressure of cold water to kill any bacteria. Again, very expensive due to the small batches and short 60-day shelf life and the need for the product to be kept chilled at all times. However, this style of packaging is fantastic for juices due to its retainment of flavour and antioxidants.
– ‘Tetra Pak’. The advantage of this packaging is that it comes in a variety of shapes and sizes, but the downside is that it is VERY expensive for start-ups due to the minimum run being 100,000 units per flavour.
– ‘Cans’. With 75% of the world’s aluminium now being recyclable, cans are the most popular format of packaging on the market. They are available in a variety of sizes; 150ml, 250ml, 330ml and 500ml formats and with can be filled in runs as low as 1000ltrs, by filling blank cans to keep the overall cost, down as the can be labelled at a later date. They are also much easier to transport and have a two-year shelf life making them the least wasteful of all the packaging options.
3/ Branding
When it comes to communicating your drink to your target consumer, avoid cutting corners. There is a big difference between a designer with technical skills, and a brand consultant who can speak to your target market through the messaging on the drink’s packaging design. While it may seem a good idea to utilise a friend or family member to bring your design to life, it will likely only end up costing you extra time and money in the long run. This could have been avoided by using someone with the requisite knowledge in the first place. The most expensive word in this industry is education, so your branding absolutely must be able to educate your target market quickly, simply, and clearly. A beautiful eye-catching design is pointless if it doesn’t tell you consumer what s/he needs to know.
It is key to work with a professional branding company that understands the Food & Drink industry if you are to maximise your chances of success. I cannot stress enough that effective branding is not just about a fancy logo splashed all over the packaging. For a new brand, the name or logo means nothing to a consumer until it is fully established with years of business success behind it.
Your product must clearly and simply showcase its point of difference and its advantages over the competition. This is much more important than your logo. So, focus on what you want to tell your target consumer, not on the design you think is attractive.
DO NOT cut corners here as 90% of a first sale is the branding. If this isn’t right you can have the best tasting product in the World, but no one will pick it up off the shelf, so no one will ever know.
4/ Website and Marketing Material
Many F&B start-ups forget to budget for this, yet it is both essential and costly. And getting professional help will make a real difference.
Getting your website right is important as it is your shop window to the world. In your product’s early days, it is used mainly as a showcase to trade buyers looking into your brand, but once you launch to consumers it will also need to be your online shop. It is an important tool that will help generate online sales and explain to customers why they should buy into your brand.
In addition, you’ll need to budget for sample boxes and other marketing material. Everything adds up so allow a little more to cover the unexpected.
You’ll also need to budget for PR, Social Media and possibly online advertising too.
So how much will all this cost?
Recipe development, packaging, branding, website and marketing to take you to the launch will easily cost you in excess of £35,000. Once you launch then there will be additional costs to consider and don’t be fooled into thinking sales will fund these – in the short-term that is very unlikely, especially as many wholesalers have long payment terms.
If you don’t have, or can’t afford to lose, at least £35k, then my recommendation would be to spend your money elsewhere.
Like all new businesses only one in 10 survive. Launching a new drink is a long, slow journey. When you see successful brands out there, it hasn’t been instant and they will have used up a lot more than their initial investment before they came onto yours or anyone else’s radar.
From my own experience with my brand, I never made a penny, let alone drew a salary for the first five years – despite the product being sold successfully all over the world. Any profit I made I sank straight into marketing. But I made it all back and a lot more, when I sold the brand to a Dutch Billionaire. So, make sure you plan your budget, seek professional advice, be prepared for any additional costs and don’t expect an income right away. Having done your homework and with the right expectations you could be set for success.
ABOUT THE AUTHOR
Richard Horwell is the owner of Brand Relations, a specialist food and drink marketing and branding company based in London. Over the last 13 years, Brand Relations has been behind the launch and development of over 100 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 UK, USA, Australia and the Middle East.
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