Statistics reported by The Grocer has revealed that 81% of food and drink start-ups don’t feel they get enough support, especially when considering the growth it generates for the Grocery industry. The numbers seem to back this up too, with food and drink start-ups accounting for 59% of growth in the industry, according to the Food & Drink Federation.
So, are supermarkets doing enough to support start-ups?
Sainsbury’s have a valued program designed to support new brands dubbed the ‘Future Brands Incubator Scheme’. The scheme provides chosen start-ups with a listing in-store and in return Sainsbury’s receive 12 months exclusivity for the products. Sainsbury’s also provides the brands with guidance, access to data and fast payment services to aid in the company’s growth. The supermarket also released the second phase in June of this year, creating a bespoke bay in their stores dedicated for new products from big and start-up brands alike, using an ‘if it sells, it stays’ rule for long term stocking.
Earlier in 2019, Whole Foods Market organised an event allowing start-up companies an opportunity to pitch their products. Initially, the firm utilised an Instagram hashtag, #WFMLocalPitchDay, for start-up companies to upload their products. From this Instagram scheme, 10 products were picked to attend a live-pitch day in London where they received guidance, mentoring and help from Whole Foods Market executives. The winner worked with Whole Foods Market to get their product to market and had an official launch in October.
Big supermarket brands such as Asda, Marks & Spencer and Tesco, to name just a few, also offer similar support to start-up firms. However, even the brands fortunate enough to qualify for these schemes and receive support still face many difficulties ensuring the success of their company and products. While the programmes are present across the big brands, the competition for inclusion is fierce.
Giles Brook, Vita Coco CEO, noted:
“Supermarkets are doing a fantastic job, but some are being a little bit too short-sighted in terms of their demands”.
Cashflow demands for start-ups also create new challenges, as the upfront costs for logistics, manufacturing and delivery can consume the majority of a business’s budget, reducing their capacity for growth and investment.
It can be argued that supermarkets don’t exist to support and help start-up brands reach success, with business goals integral to their growth and that the schemes implemented should be applauded, not scrutinized. However, in contrast, the new generation of millennial consumers are actively seeking to support small start-up brands over traditional household names. In this case, embracing start-ups could be a crucial factor in future success.