March 18, 2019

The Logistics Behind Starting A Shelf-Stable Food Business

How does one enter a relatively crowded marketplace filled with large players in a product category that requires shelf-stability? Mary Ann Rollano shares her experiences with us today on the podcast.

TRANSCRIPT:
Jennifer: Today we have Mary Ann Rollano on our podcast. She is an award-winning tea entrepreneur and the founder of MaryAnna’s Tea which offers artisan brewed bottled tea. She’s also the founder of Life Is Better With Tea, an educational blog introducing conventional tea drinkers to the world of special-tea tea. Enthusiasts learn the skills of selecting, brewing and creating recipes with tea. Her hope is to inspire a love of tea in others.

So we, as food entrepreneurs, we’ve all heard it before where somebody says, “Oh, my goodness, your recipe is so good. You have got to start a food business.” And as flattering as that is, it takes a lot of work and there are a lot of challenges to actually getting there, even more so if you’re trying to develop a shelf-stable food product and work with a co-packer, which is why I’m so excited, Mary Ann, that you’re joining us today. So thank you so much, Mary Ann.

Mary Ann: Thank you. Thank you for having me, Jennifer.

Jennifer: Can you give us a brief synopsis into why you started your business. What was that moment that you said, “Okay, this is something … This is not only a good idea, but this something I’m going to do.”

Mary Ann: Well, it really started out as more of a passion project. It wasn’t something that I had planned out. It was after I had been laid off from my job as a nurse during the recession, and I’ve always been a tea person, I always loved tea, always loved iced tea, and always making it at home. But every time I would go out to buy a bottled tea, it never really tasted like real tea to me or to my family.

Mary Ann: So I tried to figure out how I can make it on my own. It was really a challenge to myself to see, “Why isn’t anyone making this as a real brewed beverage and putting it in a bottle and then selling it that way? Why is everything artificial, and why is it not the way real tea tastes?” So I kind of went into it that way, challenging myself, “There has to be a way to do this. Why isn’t anyone doing it? And I’m going to find out how to do it.”

Mary Ann: And that’s what started me on the whole venture.

Jennifer: I’m assuming that, though correct me if I’m wrong, I’m assuming that part of it is that it’s probably a lot harder to do is as a brewed tea versus artificial. But you placed a premium on using real ingredients. I mean, that was important to you as the business owner. How did you go about figuring out, “Okay, we’re going to be using real ingredients in this and staying away from the artificial,” and then actually making that work, and figuring out how to make that work.

Mary Ann: Exactly. It was a challenge and it took a lot of research, but thank goodness for the internet. I did a lot of my research on the internet and it was easier to find out information that way, and once I found that there are food venture programs out there at the major universities, that was a big help to me. And the first one I found was the Cornell. They have a food venture center and I contacted them and they’re the ones that said, “Well, all you have to do is put your recipe as you would normally make it, put it in a bottle and send it off to us, and we’ll tell you if this is something you could do.”

Mary Ann: I sent it to them, they converted it into a commercial-type formulation they call a schedule process, and I found out that I could actually use the real brew tea and make my product that way, based on what they had told me.

Jennifer: Can you, just very briefly, for somebody who might be listening and not be familiar with that phrase, food venture center, can you explain what that is for folks?

Mary Ann: Well, a lot of the large universities that have food science programs have what they call either a food venture center or something along those lines. It might be an agricultural center, but I discovered it, again, online, reading about them. They will help people who want to take their food product and bring it to market, and they have entrepreneurial programs. Every university or college is different, but the ones I worked with were Cornell in New York State and then Rutgers University in New Jersey. But I’m sure, across the country, if there’s a university that has a food science program, they will have some sort of food venture program as well.

Jennifer: You know, and I’ll just add onto that because I’m out here in the Pacific Northwest, and I know that we certainly have those out here as well, so for folks who are listening and you’re thinking, “Well, I’m not located in the Northeast,” this is definitely, as Mary Ann said, this is not just a Northeast organization, that you can find these across the United States, and I would assume possibly in Canada as well.

Mary Ann: Yeah. And it’s definitely a better way to go than trying to go to a private company, because it’s going to be a lot less expensive.

Jennifer: That’s good to know, because that’s usually one of the stumbling blocks for a lot of food entrepreneurs, especially as you start to talk about a product that’s going to need shelf stability. And so how were you able to determine that your product could be shelf-stable using the type of ingredients that you wanted to be using? Was that part of working with the Cornell Food Venture Center?

Mary Ann: It was, because I had no idea. I didn’t know if it was going to be shelf-stable because my whole goal was to not add preservatives. I wanted it to be a completely natural product, so I didn’t know if I could do that or how it could be done, so that’s what Cornell had told me. And they have all kinds of parameters as to what the pH level should be or what the temperature level should be when you pack a product, and if it’s not a beverage product, if it’s another type of product, they will tell you what the parameters are and what you need to do. They’re the ones who guided me, so I went by what they had told me, and when they told me that my product could be shelf-stable just the way it is, that was perfect.

Jennifer: Oh, fantastic. I’m curious, because you entered into what would be considered a fairly crowded market place, the beverage market place and then certainly, even within that, the shelf-stable and refrigerated teas market, and there are some really big players in that market. Did that ever dissuade you or make you nervous, or did you feel really confident in that you had a point of differentiation that you could market and explain to consumers?

Mary Ann: Well, that was the whole idea. All those big players didn’t have teas that I felt were really brewed tea, and I wanted to differentiate from that, so it actually is what spurred me on in the first place, because I didn’t like what they were making, so I thought … And I think that happens a lot with a lot of the small food businesses. You don’t like what the big players are making and you want something that’s a better-for-you product, a natural food product, and I think consumers are wanting that and looking for that. So, I felt strongly about that even though that was a big, big hurdle. I still felt that it was something that was important to do.

Jennifer: Did you run into any challenges, the fact that you were using real ingredients, and how that would impact the cost and the price of your product relative to what your competitors were pricing their products, or what you could probably assume what their costs are, that they might be lower because of economies of scale? Did you run into issues with regards to pricing because of the quality ingredients you were using?

Mary Ann: Absolutely. A lot of issues, and I’m still running into those issues. And part of it is finding a co-packer who will actually … For me, it was for actually brewing the tea, because nobody wanted to deal with real tea leaves, which is something that I wanted to do. So they’re very and few between that will do that, even though in New Jersey there are a lot of beverage co-packers available, they weren’t available to me because they didn’t want to deal with the tea leaves.

So I went with a smaller co-packer who was willing to do that with me, but it’s pricey. It’s definitely more expensive to do it that way.

Jennifer: How did you … you said that there are a number of co-packers, theoretically, who are available to you, that they don’t necessarily meet what you need, but how did you even find that list of co-packers who could work with a beverage product in the first place, because I get that question from food entrepreneurs all the time, which is like, “Short of Googling stuff, how do I find out where these co-packers are?”

Mary Ann: You know, it is tough to find and there’s really no list out there, I don’t think, because I don’t know that they advertise, but actually I found them through working with Rutgers.

Jennifer: Okay.

Mary Ann: So working through their food entrepreneurial program, they’re the ones that steered me towards different co-packers, and the small co-packer that I’m currently with and that I first went to, was one that Rutgers had referred to me and they said, “We’ve worked with them in the past. We know that they have good manufacturing practices, and you can go with them.” So then when I approached them, they were on board and they said, “Sure, we can produce it for you,” after I gave them what my specifications were. And that’s how I found them.

Jennifer: I’m trying to put all these pieces in the right order in my mind. So you were initially working with Cornell Food Venture Center to figure out, is this idea even viable? And to come up with the formula, if you will, in the processes. And then, do you take that to one of the small co-packers or did you take that to Rutgers to do a small test batch run and … What was that next step?

Mary Ann: That was the first thing I did. Cornell is a little further away from me than Rutgers, so even though I started with Cornell and they gave me my scheduled process and this is how you’re going to make it to be a safe product in the commercial space, I ended up going to Rutgers (Food Innovation Center). Cornell told me about Rutgers, and they said, “Well, they have a food venture center that’s closer to you so they can probably help you out.” So when I contacted them, they have like, I want to say, a test lab, because they do have a food science center, so they actually did the first run for me, and of course it’s a little costly but it’s certainly less costly than if you were to go to like a commercial producer and try to test out a product.

So, they helped me source my ingredients, commercial level ingredients, and then we did a test run based on the formulation just to see. They brewed my first thousand bottles.

Jennifer: Okay.

Mary Ann: Figuring, “Okay, well, we’ll try it, a thousand bottles, cost you a dollar a bottle, plus your ingredients and everything else, plus the cost of the bottles,” so it’s not that inexpensive to do it. You know you’re not going to make any money during your research and development phase, but at least it gives you a product that you can take to the market place. So that’s what I did.

Mary Ann: They brewed my first thousand bottles for me and I just took those bottles and brought it to my local stores that I thought that product would fit in, and they accepted it. They said, “Sure, yeah, you’re local, we’re local, we’ll be happy to support you,” and they put it on their shelves and it sold out. And I was surprised. I didn’t know it was going to sell out, but it certainly did. So, at that point, that’s when I needed to go look for a co-packer.

Jennifer: Okay. And that’s when Rutgers helped identify for you who potential good co-packing partners might me.

Mary Ann: Exactly. Yes.

Jennifer: One of my favorite parts … I was reading through your site and your blog articles, and again, for folks who are listening, I’m going to be posting links to all of this online in the transcript for today’s podcast. One of the things I love is that you’re really open and upfront to other food entrepreneurs about, “This was my journey, and this was some of the ups and the downs, and here are some of the steps that I went through.” And one thing that you talk about was that, in starting a food business, one of the hardest things that you found has been sales and marketing.

Jennifer: And it’s so funny because I feel most food entrepreneurs are looking at this saying, “Okay, I’ve got to get my packaging dialed in, finding that co-packer, how do I figure out the right recipe formulation?” and yet sales and marketing is what tops your list. And that’s a part that I find many food entrepreneurs often overlook, both the time that’s going to be needed to get this product marketed correctly, the strategy involved in that. So tell us a little bit about why you find sales and marketing to be one of the harder aspects of food entrepreneurship?

Mary Ann: Well, it is the hardest part, but it’s the part that you don’t think about in the beginning, because you’re so focused on actually creating your product and getting it produced and all of the details that go into that. You don’t think about, “Okay, once I’ve produced that, then how am I going to get that out there over the years.” Kind of reminds me, when you have a child, you’re so into that whole process of pregnancy, having a baby, “How am I going to do this, how are all the details gong to work,” but then the hard part is actually raising that child.

Mary Ann: So that’s what this is like to me. The hard part is actually getting it out there and moving it along in the market place, and it’s not something that you can always do by yourself. You need distributors, as well, so distribution is huge in getting your product out there, unless you decide to self-distribute, which is what we decided to do.

Jennifer: Okay. So you decided to self-distribute, so that meant that you focused on your local market?

Mary Ann: Exactly. Because, since I’m self-distributing, it’s my husband and I, he does the distribution for me. We are staying in our local area, maybe an hour, or an hour-and-a-half drive. We try to stay within that parameter. But fortunately for us, we can do that because we live in New Jersey which is a very densely populated state. So within that hour-and-a-half radius, there are many, many, many stores to choose from or where we could potentially market our product.

Mary Ann: But if I were in a more rural area, we wouldn’t be able to do that at all. You might not have as many stores, so you definitely have to go with a distributor, and then that’s going to add to your costs.

Jennifer: Yeah. I heard an interesting fact the other day, that it’s kind of the Ohio-Pennsylvania-New Jersey area is basically within like a certain numbers of hours, is within 60% of the US population, which is kind of fascinated me, that, “Wow.”

Mary Ann: I didn’t know that.

Jennifer: That’s a huge chunk, which is why you do find a lot of distributors and manufacturing facilities in that part of the woods, too.

Mary Ann: Yeah. That’s interesting. I didn’t know that. I knew I was in a very densely populated area but I didn’t know that much.

Jennifer: So you have chosen to self-distribute the product. How have you worked to grow that distribution range and to make contacts with new retailers? And then also that piece of, “Okay, it’s on the retail shelf but now I’ve got to sell it to a consumer who is living an hour-and-a-half away from me. How am I marketing to that person?”

Mary Ann: Right. Well, a lot of times when I’m first in a new store, I’ll do in-store demos or tastings and that really helps the consumer because now you’re introducing your product to them, and that’s probably the best way to get the word out, is right, hands on, when you’re in the store, at the point where they’re going to be purchasing it.

Mary Ann: I also do a lot of social media, but I think for getting the word out locally at the specific stores, that the in-store demos and tastings are the best.

Jennifer: Okay. Speaking of sales and marketing and the strategy behind it, how much time do you devote to figuring out what that strategy is? I mean, do you ever have plans where you’re going to sit down and focus on and say, “Okay, we’re going to devote two hours to figuring out the next three months or the next six months, or …” How do you approach that planning piece of it?

Mary Ann: Well, I really don’t, which I probably should, more so, but it’s a very seasonal product so I know that in the summertime my sales are going to take off, so I just focus on getting into as many of the local stores as I can during the peak sales time.

Jennifer: That absolutely makes sense. As a food entrepreneur, and I’m sure that you get asked this all the time. If somebody comes to you and is looking for advice, I’m curious what you feel your biggest piece of advice that you give to aspiring food entrepreneurs is?

Mary Ann: I think the most important factor, and one that I personally overlooked because I was so passionate about my product, is pricing. You really, really have to get your pricing in line. In other words, if you’re thinking, “Okay, it’s going to cost me a dollar to make one bottle of tea, and then I’m going to sell it for four dollars,” well, that’s ridiculous because no one’s going to pay four dollars for a 16 ounce bottle of tea. But if I get my product down to 50 cents and I go to a large volume co-packer, then maybe my pricing will work better.

But you can’t look at your pricing in the future if you get a larger co-packer, and that’s originally what I was doing and I think that was a mistake. You really have to price everything on what it’s costing you today, not what you think it’s going to cost you in the future when you get to a larger volume, because definitely if you go to a larger volume, you’re going to have better pricing and better margins, and with a small volume, you’re going to have very small margins, which is one of the reasons why we self-distribute. Because I have small margins, and it’s a way to cut my costs.

Jennifer: Yeah. No. That’s a smart decision, and say, “Okay, something’s got to give,” if you will, and that will be that point. But it does, then, to what you just said. It’s like, well, if you’re able to price off of your current costs, even though you might not have the world’s biggest margin, it does mean that as your business grows, your margin is just going to grow as well, which is a great thing to be looking forward to.

Mary Ann: Exactly. Exactly. And you can’t worry about … you know, you’re always thinking, “Okay, well, the big guys, the big guys,” but you really can’t compete against the big guys because they’re always going to underprice you, no matter what, and they’re always going to over-distribute to the stores. So what you have to really focus on, I’ve learned, is to not compete against them but really just kind of work around them and give a better product to the consumer, because that’s what the consumer wants. They’re looking for natural products. They’re looking for better products. And then provide a better service to the retailer.

Mary Ann: A lot of times I found the retailers would take my product on instead of a big name product because they don’t want to have to take 30 cases a week because they’re a small store. They’d rather take 10 cases a week, or maybe I won’t give them a minimum purchase, and that’s what they like. So, if I’m working with them, then they’re going to work with me, and I’m not going to bombard them with product that they can’t sell and then they have to dump because it expires.

Jennifer: That’s really wise. I love … As you were talking there, I’m just thinking, “Yes, over-deliver to the consumer from a quality standpoint, and over-deliver to the retailer from a service standpoint.” And it sounds so simple, but yet that is a huge differentiation for a small producer when you are competing against “bigger folks”. That’s really genius, thank you.

Mary Ann: It took me a while to learn that one.

Jennifer: That is wonderful. Well, Mary Ann, thank you so much for sharing your thoughts with us today, and again, like I said, for folks who are listening, I’m going to include links in the transcripts to her website and to some of the other information that Mary Ann has online for folks to take a look at, because it is really informative and she goes very in-depth on some of these aspects of her entrepreneurship journey that, I feel, is really helpful for other people going through that same thing to read and learn from.

Jennifer: So, Mary Ann, thank you so much.

Mary Ann: Thank you, Jennifer. Thanks for having me. I enjoyed it.

Jennifer: Oh, I appreciate it. Thank you.

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