To make the challenge more complex is the constant emergence of new competitors into the food and drinks category. This level of innovation can drive businesses on and inspire category interest with consumers but how can food businesses optimise their chances of standing out in such a competitive marketplace?
Lorcan Bannon, our Associate Director Food and Agribusiness takes a closer look.
When we speak with Irish food businesses, an important topic of conversation is sustainability. SMEs are increasingly aware of their opportunity and responsibility to play a more proactive part in the future of our shared environment. Having a clear Environmental, Social and Governance (ESG) plan in your business will give you better internal clarity for the future of your business while also giving you something to talk about externally with buyers, media, and consumers. Your plan should be impactful, true to your business and transparent with tangible impacts.
2. Margin control
It is hard to go green when you are in the red, so before any food business tries to stand out on their sustainability credentials, it is important that you understand the underlying numbers that are driving your business. Conducting a full product range audit will give you clarity of what your input costs are, what costs you are incurring for third parties like distributors, what you are making by channel, your packaging costs by product and which products are giving you the best returns. With significant cost inflation, regular margin analysis will ensure that you have the financial understanding needed to stay competitive.
3. Operational efficiencies
To stand out from your competitors, especially in the retail space, look at ways to improve your operational efficiencies. To get a reputation as a good supplier you should focus on:
Production of good quality products consistently
Deliver the right amounts in each order
Ensure every delivery has the right paperwork attached
Invoice correctly and on-time
Be organised and get the basic transaction elements right
Avoid thinking negatively about buyers. Try to build collaborative relationships.
Doing the small things consistently well with retailers will add up over time and build the reputation of your brand.
In a hugely competitive marketplace, food packaging needs to work harder than ever before for Irish food businesses, on both the digital and physical shelves. It needs to operate as your silent salesperson. Always clear and consistent, communicating your brand values and product credentials. Underestimating the marketing potential of your products’ packaging could be a seriously missed opportunity for your business to stand out from the competition.
Invest in your people; they are your greatest asset. Without a team of co-conspirators who buy into your vision of the future and want to help make it a reality, standing out from the crowd will be very challenging. Every business leader needs to be able to sell their business to prospective staff. They need to be able to bring in new team members as well as retaining and supporting the best of existing staff members. With increasing wage demands, having the ability to attract the right staff is not going to get any easier but avoid the temptation to bring less than A-level players into your senior team. The short-term relief will generally lead to medium term frustration when they start to underperform.
6. Routes to market
One upshot of the Covid-19 pandemic was that it forced most food businesses to explore alternative routes to market. Businesses that had traditionally only focused on food service for example, learned to sell to retail, brands with a focus on retail learned to sell online. This flexibility and openness to exploring new routes to market can help to make your business more diversified and reduce an over reliance on one channel.
Growing a food business is generally not covered by a one product and you’re done approach. To be successful and to stand out from competitors, innovation is paramount. When speaking with retailers, food businesses are not only selling their current product offering, but they are also expected to sell the innovations that they can introduce to the category over time. Consumers who love your core product will soon be looking for logical next step products to enjoy. Having an open mindset and a structured approach to innovation is an important way to stand out from your competition and build real brand value over time.
In his book on high performance brands, “Zag”, Marty Neumeier talks of the need to have a clear focus on what makes your product different, understand what wider trends are driving your business forward and then communicate consistently
a compelling reason why consumers should care. Effective marketing can play a critical part in standing out from your competitive set. SMEs have finite marketing budgets, so we encourage food businesses to focus on getting the marketing basics right. Have a clear brand identity, and a consistent tone of voice for your brand. Focus on word-of-mouth and creating advocacy with important customers and industry influencers. As your marketing experience grows, paid media can be explored to enhance the organic momentum that you have built. Repeatedly instil your passion for your business in others and watch the fire take-off.
Standing out can come with its own risks. Taking the step to invest in more sustainable packaging, investing in a new senior recruit, or developing a more impactful brand, can create additional worries in the minds of SME owners about what happens if things do not go to plan. However, staying in the competitive group is a sure way not to build a differentiated business.
The last twenty-four months have been a rollercoaster for food businesses while the next twelve months don’t seem any less choppy. Do your research, identify the areas of growth that best suit your business and take your first step out of the crowd.