Recently we spoke with Bob Burke, founder of Natural Products Consulting, and expert in getting Food & Beverage brands on shelf.
What was your initial inspiration for launching your business, Natural Products Consulting?
It all started with my friend Gary Hirshberg, Stonyfield co-founder and CEO. At various conferences, Gary would give an inspirational talk to an audience of entrepreneurs who would invariably ask “how did you get into Whole Foods” or “how did you bring on brokers.” Gary would point to me and say “ask him.”
The short answer is I really liked it. I saw that there was a real need for this kind of assistance and humbly thought I was good at explaining, teaching and empathizing with these early-stage companies. In early 1998, I left Stonyfield on friendly terms and kicked off my consulting career. Early on, I was fortunate enough to work with Annie’s Homegrown, Oregon Chai, ConAgra, and OCP Chocolate, a supplier of organic chocolate ingredients.
About four years later, my friend Rick McKelvey and I published the Natural Products Field Manual; a comprehensive reference manual and how-to guide that was comprised of content, databases, coupons for services, and consulting time from me. This led to sales seminars with my friend John Maggiore, a leading natural products broker, and financing seminars with Mike Burgmaier from Whipstitch Capital, a leading investment banker in the healthy living space.
A theme throughout was taking all my prior mistakes, bad judgment, blown calls, and hard-won learnings in helping to scale Stonyfield and helping the others not make the same one. Another major asset was the large and broad network that I had amassed which allowed me to further add additional value by making connections.
On a personal note, my transition at the time was also sparked by a desire for work/life flexibility. With four kids, I wanted to be there to coach them, join them during the day at school events, and take each of them on international business trips with me. A last factor was my interest in opportunistically taking on board and advisory board seats to stretch myself into new areas outside my comfort zone so as to grow personally and professionally.
What do entrepreneurs launching a food start-up in today's world have to keep in mind?
Oh, where to begin? I usually like to invoke Dr. Who: “First things first, not necessarily in that order.”
This means that before you start stumbling and bumbling around trying to get into somewhere ensure the following:
Do you have a remarkable product that is highly differentiated in meaningful ways? Does it have a clear category management story?
Do you have rewarding and forgiving gross margins?
Do you have some confidence in consumer acceptance? Any validation around the key assumptions - price point, product configuration, messaging, and where to merchandise?
What's your goal? Grow it and sell it to a large CPG or run it more as a lifestyle business?
How capital efficient are you? There is now a much greater appreciation for companies that are capital efficient, i.e. accomplishing more with less money. This is in contrast to the discredited notion of “grow at any cost, lose a lot of money along the way, and all will fall into place when we have our unicorn exit at an irrational valuation”.
Have you clearly defined what success means? When making key internal and external hires, it’s vital to be on the same page around expectations. When these relationships usually go awry, it is because of a mismatch in expectations and wildly different definitions of success.
Focus on fit. This means cultural fit, values, how people behave when things go sideways, as well as a shared outlook on exit horizons and expectations.
The beautiful thing about launching a new brand today versus say 5-10 years ago, is that the resources are plentiful from ways to reach consumers to getting funded. One has the potential to outsource just about every business function, so companies can be more capital efficient and get to cash flow positive sooner.
Looking broadly across the food industry, where do you see the most innovation occurring right now?
Plant-based, in general, is a sprawling, cacophonous broad umbrella category in which undoubtedly there will be shakeouts on a sub-category basis. Already we are seeing a backlash in highly processed plant-based meat, poultry and seafood alternatives. Sure, we might be able to make the proverbial silk purse from a sow’s ear, but should we? It is likely that consumers will gravitate back to shorter ingredient decks and products made from more recognizable whole-food ingredients. Still, there is a lot of innovation happening across the board and it’s clearly a megatrend that will be long-term.
The other pervasive trend is low sugar/low carb. Keto is still white hot and it is more than just low carb, but the expectation is that low sugar/low carb will be the long-term trend. We are seeing low-sugar beverages, confections, mueslis, juices, desserts, yogurts, etc. and they are usually the highest growth segments in their categories.
Also, the trends that we have seen in recent years such as gut health, healthy whole fats and immunity will be with us for a while. If there is one newer area that is having its moment, it is mushrooms. Medicinal/adaptogenic mushrooms have shown up in teas and capsules. Now we are seeing them in coffee, functional drinks, bars, granolas and other categories. If the marketing does not get too ahead of the science, it is an interesting area.
Another is interesting category is nootropics – brain and cognitive health. We are seeing beverages and supplements that purport to be effective in these areas –in some cases long term such as warding off dementia and in others shorter term like drinking a beverage or taking a pill before a test.
The great news is that the qualities that the industry has been promoting for years –clean and natural ingredients, sustainable sourcing and healthier products overall have become mainstream and are no longer niche, specialty products which is really satisfying.
Annette is skilled at identifying growth opportunities and successfully guiding products from concept to launch. At Compass, she advises leading brands and category disruptors in the health & wellness, personal care and digital health sectors.
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