The changing landscape of innovation

Consumer food and beverage innovation is shifting from multinational companies to small businesses and changing the balance of power in the industry. We formed Building Oz, in part, because we believe there is an exciting opportunity to help food and beverage companies leverage industry best-practices to scale their operations and capitalize on market trends.

Following the consumer technology example
In the 70’s and 80’s, innovations in computing technology required multi-million dollar mainframes and teams of computer scientists, and were therefore relegated to the R&D labs of huge companies like IBM and Intel. The democratization of personal computing shifted the balance of power and moved the front lines of innovation to dorm rooms and garages.

computers
The fastest computer in the world in 1970 was the IBM System/370-168, offering 1MB of RAM for a cost of $30 million in today’s dollars. By 1990, the Macintosh Classic II (pictured here with a young Steve Jobs) also had 1MB of RAM, but cost $1,800 in today’s dollars.

Historically, innovation in consumer food and beverage products was no different, and required the resources of multinational food companies. “Innovation” was expensive and slow, and therefore focused primarily on incremental improvements to products with large existing consumer bases in order to maximize ROI.

The consumer product revolution
Advances in food science, reductions in the cost of manufacturing, and access to information spawned an explosion of innovation in new food and beverage products. Thousands of entrepreneurs across the country are developing new products to capitalize on previously under-served and extremely profitable customer segments.

specialty food.png
Jimmy Rosenberg founded both Naked Juice (sold to Pepsi), and then Evolution Fresh a few years later (sold to Starbucks). Quest, founded in 2010, hit $87 million in sales in 2013, making it the 2nd fastest growing private company in the US. Udi’s started producing gluten free foods in 2008. Sales hit $60 million by 2012 and the company sold for $125 million.

The proliferation of “niche” and increasingly premium products has resulted in new distribution channels to better target specific customer segments (mass grocery, premium grocery, farmers markets, specialty stores, e-commerce, etc.). Consumer education and consumer choice have completely revolutionized the US markets for wine, coffee, tea, chocolates, dietary supplements, etc. and shed new light on paths to profitable growth.

While it is easier than ever to start a consumer products company or launch a new product, building and scaling a successful business remains a black art. Less than half all new retail or wholesale businesses survive beyond five years, and less than a third of new product launches succeed.

New business success rate:
5 year Retail success rate: 41%
5 year Wholesale success rate: 47%
US Census Bureau Business Dynamics Statistics. New companies started between 2001 and 2011

New Product Success Rate: US Retail Grocery Industry
All new products: 20-30%
Small business launches: 11.6%
Inez Blackburn. University of Toronto researcher

Large food and beverage companies are acquiring small companies without the means to scale for pennies on the dollar. Imagine the potential of these thousands of visionary entrepreneurs and brilliant product innovations if they had access to the appropriate experience, best practices and relationship network.

Investment2

Our mission
Our mission is to help food and beverage companies innovate and scale by offering services and applying the best-practices appropriate to each stage of business growth. We succeed by partnering with high potential companies, taking an active role in their development, and sharing in their success. Target clients include:

  • Early stage companies with strong value propositions, but without the experience or resources to scale.
  • Regional companies held back by poor branding, manufacturing inefficiencies, a weak supply chain, or lack of resources.
  • International companies with innovative products and strong technical capabilities, but without effective product positioning or distribution in the US market.
  • Established brands looking to enter new markets, launch new product lines, or innovate.

Contact us today to set up a free exploratory conversation.

Written by Charlie Cain

From startups to Starbucks I’ve led teams to re-imagine and revolutionize products and industries by delivering customer experiences that delight the senses while appealing to the head and the heart. Realizing the true potential of a business or market opportunity requires applying the strategies and best practices appropriate for each unique situation and business.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s