Food and drink brands had a tough time this year, with shoppers’ purse strings were pulled tight as economic tough times, and interest rates, hit hard. Founder of Females in Food and the Foodpreneurs Festival, Chelsea Ford, looks at the state of the start-up sector.
There has been enormous change in the food and drink consumer packaged goods industry (CPG) since I started in it, almost 30 years ago. Today, small and large players co-habit more frequently and consumers have more products to choose from.
That said, consumers consider the purchase of specialty brands largely as discretionary, so when their disposable incomes are less disposable, they decide to use more discretion and small brands ultimately suffer.
But disappointment isn’t the whole story for the 2023 start-up industry, there are also good things to talk about. Things worth championing and that help firm up Australia’s position on the world stage as a thriving hub of innovation in the CPG industry.
Here’s a snapshot of the year that was, starting with the good times.
Good Times
Healthy, nutritious, and better-for-you food and drink brands continued to challenge the market, promising to provide health related outcomes. They are mostly powered by plants, with functional benefits and better for the planet sustainability credentials. Following are three examples of ‘good’ food and drink brands getting on the retail shelf in 2023:
Avalon Health Club: An organic super greens, plant protein, and cacao brand. Avalon Health Club launched this year and promises you’ll start your day feeling energised and mentally sharp with its protein powder designed to elevate your morning routine.
Nimbus: A sustainable powdered Australian oat milk. Nimbus launched this year and because it has extracted the water, it means less weight, packaging, and emissions.
Blume tonics: Real fruit, prebiotics, and plant fibre tonics. Blume launched last year but gained significant traction in independent retailers this year. Blume says it uses the tastiest and science-backed ingredients to help nourish the life within you in the most delicious way.
Not only did we welcome those and many other fabulous better-for-you brands this year, we were also doing a lot of celebrating and filling up on ‘permissible’ snacks. Picture your summer pool party vibes and with retro and vintage eras reimagined. Two brands shaking it up on the ‘cool kid emerging brand’ scene are:
Via Drinks: With their trademarked adaptogens – Viagenics – VIA Drinks founders Sarah Morley and Kiersten Mason, are focused on elevating your mood and calming your mind with their functional ingredients in their botanical-based, all-natural, non-alcoholic drinks. With retailers recognising the need for more inclusivity when it comes to beverage choices, VIA Drinks expanded their reach off the back of retailer WH Smith’s Dry July promotion.
Fox Pops: Fox Pops popped water lily seeds, a product with ancient origins from India but relatively new to the Australian market. Founders Melanie Sawla and Bhuvan Dua lean on a retro look to inform their branding and are now landing in corporate workplaces and independent retailers.
But before I get too carried away with new brands, let’s see what 2023 looked like for many other challenger food and drink brands that weren’t so new but were new enough to make this list.
Challenging Times
What makes start-ups and emerging brands the lifeblood of the innovation economy also comes with a major dose of disappointments. Most founders are bootstrapping their growth and realising that just because your product looks and tastes delicious doesn’t mean it lands on more shelves and into more consumers’ hands.
To make it as a small brand in Australia, the most disparately populated country in the world (after Greenland, Mongolia, and Namibia), requires operational excellence because it’s a tough gig to a) get product distributed nationally, b) do it in a way that’s affordable, and c) target the consumers who will spend the money.
Consumers know independent retailers have specialty products and expect to pay the right price for them. Unlike most grocery store shoppers, consumers of small brands look to specialty grocery stores for their shopping.
But there’s a growing issue with that scenario – the steady decline in the number of independent retailers. The current market share data shows Coles and Woolworths hold 65 per cent, Aldi 10 per cent, and IGA seven per cent.
Direct-to-consumer sales is an option but covering Australia’s vast distances makes it less that ideal. Shipping products, especially ones packed in glass, is not easy or affordable (even if shipping costs are passed onto consumers at a time when most are budget conscious).The other issue is, consumers do not want to shop at multiple ecommerce sites preferring to order all their products from a central location, regardless of whether that is on-premise or online.
The net effect of consumers spending less money on small and emerging brands, was seeing a number of food and drink companies go under. Locako, HRVST St, Dark City Foundry, and Meru Miso all went into voluntary administration in the last 12 months.
But let’s end on a high note of hope for start-ups.
New Opportunities
In May this year, I launched the Foodpreneurs Festival, creating an event for start-up brand owners to take their shot at getting on the retail shelf. The day brought packaged food and drink brand owners, retail buyers, media and industry experts together under one roof.
It was an epic celebration of all things sales and promotion with 174 attendees, 78 stockists, 97 per cent Net Promoter Score, and 27 industry experts sharing their experiences and advice.One retailer listed 18 of the 20 pitches they received, with 88 per cent of them being small-batch businesses owned by women.
Joseph Romeo from Romeo’s IGA said, “I am impressed. I had no idea how good this would be and how good it is to discover these small brands in one place.”
The event will return to Sydney on 17 May 2024. Visit foodpreneursfestival.com to become a festival insider.
This article first appeared in our annual Top 100, December/January edition of the print magazine.
