MVPs for CPGs — How Food and Beverage Brands Evolve

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Spend more than a month at a tech startup and your default definition of M.V.P. will shift from Most Valuable Player to Minimum Viable Product. For those unversed in lean startup parlance, the idea is to release the simplest market-acceptable version of your grand vision and incorporate the lessons learned in future releases.

Since joining the food and beverage industry, I’ve pondered whether the concept still applies. Instagram’s filtered photo sharing MVP, for example, lacked advanced editing, business accounts, advertising and other more recent features. So what’s the MVP for a new cookie or cold-brew?

A nascent CPG business requires execution on multiple fronts: taste, SKU and size, design and visual, unit economics, distribution and so forth. If your initial offering falls so short in any area that it discourages prospective consumers or alienates the few willing to give it a chance, you’re doomed. Think about it:

An intelligent launch strategy initially dodges a bullet or two from the above, posing fewer potential landmines at the start. For example, if you start a beer brand by delivering kegs to restaurants instead of 6-packs to retail, you can streamline your distribution and delay defining your visual identity. You’ll also inculcate a grassroots fan base to help you hit retail shelves with greater velocity.

Alternatively, you can come out of the gate buttoned up as can be. Hippeas did this by delivering a delicious, on-trend product with a captivating brand story and immediate widespread distribution. Unless you’re a seasoned entrepreneur with deep financial backing, however, this appears the less traveled path to success. CEO Livio Bisterzo admits their Fortune 500 worthy rollout reflects his years of having learned lessons the hard way.

Polished from the start, Source: Hippeas

Productive product cycles empower entrepreneurs to learn the hard way while easing any negative impact on their business. More important than getting everything right is realizing what’s wrong and then adapting as affordably and expediently as possible.

The iterative process often frustrates entrepreneurs with a grand initial vision. Perhaps you want to create a USDA Organic, shelf-stable, nitro chai latte. That sounds delicious but how does it intersect with practical considerations such as development costs and, more critically, finding a co-packer willing to accept the challenge despite low initial volumes? A groundbreaking idea can drive success or paralysis.

Balancing ambition with the limitations inherent to most startups can adumbrate a product pipeline. Getting to market faster and evolving your vision as you scale solves many problems. As Jeff Grogg, Managing Director of business development consultancy group JPG Resources, likes to say, “Your most important tool as a small brand…is to grow. Go sell more!” Growth enables R&D, creates economies of scale and allows experimentation.

Look at Califia. Founded in 2012 with a core line of almond milk flavors, it has since expanded into fresh fruit juices and even inspired creations like its beautifully packaged, chicory flavored, Nitro Cold Brew New Orleans coffee. Just like Volkswagen gained the financial stability to make its flagship Bugatti Veyron, food and beverage brands must earn aspirational moonshots.

Sometimes, in fact, basic performs better. Tito’s became the vodka of choice among Millennial consumers by rejecting the gaudiness embraced by incumbents like Grey Goose and Belvedere. When asked about its no-frills design, founder Tito Beveridge remarked:

I did the label and logo myself in Corel Draw and picked the fanciest font I could find — Lucida Calligraphy in bold italic. I was dating this vegetarian girl at the time and she went with me to the printer and insisted I use a recycled paper…I think there’s some kind of charm in the plaintive quality of the bottle,” he said. “I’m a geologist by education, and my friends say it looks like a rock.”

Minimum packaging, maximum success. Source, Tito’s Vodka via Equities.com

The success Tito’s found with plain design reminds me to be patient and open when evaluating the nascent concepts hitting my inbox. Not only are there the opposing Hippeas and Tito’s success stories, but also the evolutionary routes taken by brands including KeVita, Koia, Pretzel Crisps and RxBar. The graphic below helps illustrate how far each has come:

Before and after for selected food and beverage brands.

As the above brands illustrate, you don’t need to be Hippeas from Day 1, but you do need to improve with each step. Whether it’s a family recipe honed over generations or a booming, billion dollar brand, the secret to getting ahead is getting started.

ABOUT THE AUTHOR: 

After graduating with honors degrees in English Literature and Economics from New York University, Ryan entered Houlihan Lokey, the leading M&A advisor for U.S. consumer, food & retail transactions under $1 billion, as an Investment Banking Analyst before joining Techstars, a startup accelerator and venture capital firm, as an Associate. He subsequently lead Finance and Operations for PANATEA, a leading matcha tea brand and currently works with 2-4 food and beverage startups at any given time, providing financial modeling and operational support.