Best way to break into healthier foods and beverages
New ventures that launch an on-the-go snack or beverage with a “free-from” positioning have the best chance of success.
New research that looked at 151 businesses founded between 2002 and 2013 in the UK, USA and Australia, found that snack and beverage start-ups showed to be the most resilient in the healthier foods market. Snacks are an entrepreneur’s best bet with a 64% success rate, and if they add a “free–from” message, the success rate rises to 88%.
Although beverages come in at a modest second with 56% of the ventures still on the market, they are the category most successful at breaking into the mass-market. However, a look at the distribution of successful start-ups according to the benefit platforms is revealing: the kids’ beverages are bringing down the average. When these are stripped out, the beverage category in fact achieves higher success rates than snacks.
Dairy is a high-risk category, and the only group where failure exceeds success, with 57% of start-ups no longer present on the market. The results indicated that the combination of benefit and product category has an influence on the success rate.
Certain benefits alone make a product stand out. Managing expectations regarding success is another important tip entrepreneurs can draw from the analysis.
Food and beverage start-ups with a focus on health have a reputation of having low success rate. The main purpose of the project was to verify such assumptions against good data, and provide a tool for developing data-driven business strategies. New Nutrition Business has been studying start-ups for almost 20 years, and now holds a vast database about them.