I notice that usually beverage entrepreneurs are making similar mistakes when they are launching their beverage startup companies. You can avoid mistakes if you do your homework properly.
Most common mistakes are lack of market analysis, no marketing strategy, no USP, awful positioning or lack of financing. Moreover, I see that entrepreneurs just love to enter beverage industry without understanding anything about it. So what you should do before starting a beverage company?
Market analysis. You have to understand your market. Is your market fragmented or not? What’s the Annual Average Growth Rate (AAGR)? What are the main players? What’s the differentiation? Main goal of market analysis is to understand your playing field and to see the opportunity. Best opportunities emerge when you determine a problem which is not solved already.
I know how expensive market reports are. Usually it’s too expensive to purchase them. In case you do not have this opportunity here are several free solutions:
Google Keyword Planner – great analysis tool to understand how big is your market and how many people are searching for similar products.
Google Trends – I just love this tool. It enables to determine the trend of your market. You can read my other article about How to determine beverage trends using Google Trends?
Google Surveys – I have never tried this tool, however, I believe it’s a nice tool to make in-depth analysis of your future consumers.
In fact there are more tools for your online market research. I advise to use them, however, to careful with your conclusions.
Marketing. Once you will determine your opportunity it will be only the first step. Next step – marketing. During this stage you will have to answer a lot of questions about your future product. It’s also a very important stage as it will determine success of your product. Once again – do your homework! Before starting to develop your marketing strategy I advise to read Peter Wennstrom’s “Four Factors of Success”.
What’s your product?
How does it differentiate from competitors?
What’s the competitive advantage? Do you have it?
What’s the value?
Is there a need for your product? Who? When and why?
Do you have a merchandising strategy?
Do you have a market entrance strategy?
What are your main sales channels? What’s your sales strategy? What’s your distribution strategy?
Do you have a hypothetic target consumer? How does he look? How are you planning to reach him?
Well there are way more questions to answer. However, this list will help you to start development process.
R&D and Manufacturing. This topic deserves a separate article. Nowadays entrepreneurs outsourcing R&D and Manufacturing to other companies. It’s very important to choose the right partner for your project. You can have great market analysis and marketing strategy, however, in case you will have wrong product – you will fail. Here are several questions you have to answer:
Do you have an idea for the recipe? Are you planning to use the services of beverage development from other companies? Who are they? Do they have experience? How long they are working in the industry?
What kind of beverage ingredients are you planning to use? How well they are known to general public?
Where are you planning to bottle the product? Who is your co-packing partner? Where he is located?
What kind of packaging do you want to use?
What’s the quantity of your product you are willing to start with?
What’s the transportation cost?
Each partner has to be evaluated separately. I do not advise to work with unknown companies without any experience in this field. Usually entrepreneurs do not have any experience with this topic, so I advise to work with professionals to avoid making mistakes that could cost you your business.
Believe me… there are many more questions to answer, however, it’s a good starting point.
This article is also published in DrinkPreneur – Beverage Business for entrepreneurs.