Startup Spotlight: Olo Foods
This specialty food newcomer asks industry veterans for advice on launching a line extension, managing time and resources, and selling overseas.
Tessa Lowe created an all-natural chipotle paste as a solution to a recurring problem: wasting half-used cans of chipotle peppers when a recipe called for less. The idea for the product came when her son, Owen, was born and she was searching for ways to make life easier and cut down on food prep time. So she named the product after her nickname for him, Olo, and in 2012 the business debuted.
Two teaspoons of Olo’s Chipotle Paste, which is packaged in a 4-ounce aluminum tube, can substitute for one chipotle pepper. The company initially sold the product online through Amazon. Sur La Table was one of Olo’s first retail customers; today the products are carried by Whole Foods Markets, Albertsons, and many independent retailers.
In 2014 Olo’s started working with national distributors KeHe and UNFI, and sales have been ramping up. Olo’s will be launching a new harissa paste in a tube this summer.
Here, Lowe asks a panel of experienced producers about growing her business.
What are the challenges of selling specialty dry grocery products?
T.K.: The challenges can be addressed with the 4+1 p’s: product, price, placement, promotion (+1 is perseverance).
The first hurdle is to have a product that people want to buy. What is your unique selling proposition: taste, ingredients, packaging, size, flavors? Learn how to highlight those differences in your sales presentations succinctly.
What will people pay for your product? How do your costs compare to other like products? Will that price provide enough profit for your company? Do you have enough gross margin in your pricing to support promotions? Learn how to properly build a price model that includes overhead, staffing, freight, promotions, and other marketing activity—but don’t overprice your product, especially for introductions.
Placement: How do you get your product to the retailer and consumer? Where does your product belong in the retailer’s store? Online sales for direct to consumers, selling direct to retailers, going through distributors for larger retailers? You can do all three, but it needs to be managed carefully.
After you get the product, price, and placement established, perhaps the biggest challenge is figuring out ways to promote the product. Advertising and social media will help establish brand awareness. In-store demos and sampling will get the consumer to try the product. Price reductions that allow the retailer to offer “deals” to the consumer to spur sales are a must. I recommend creating a go-to demo that will be easy to execute in a variety of store environments. Cross-promote all in-store activity on social media and use your content to try and gain support from the retailer’s social audience. Facebook advertising is the best bang for your buck for a small company, and you can use the segmenting features to reach your target audience. Saturate your local market before going national. Use Google Analytics to track your geographic hot spots and focus efforts there and where you have the biggest distribution. Managing all of these tactics won’t guarantee success, but doing none of them will guarantee failure.
As for perseverance, create a go-to-market plan and revisit it often. If one buyer doesn’t bring in your product perhaps there is another department where it may work. Take each “no” as a learning experience to fine-tune your marketing message. Track performance of every “yes” to ensure sell-through. Make friends as well as business contacts. This is a cool business; enjoy the ride.
I would love to attend every trade show and be able to do demos for all of our customers, but it’s not financially or physically possible. When ranking the importance between demos and trade shows, where should we place more resources at this point?
M.A.: We’ve been there, but the great thing we’ve learned about building a company with limited resources is that is requires focus. That focus can become the key to your success.
We chose to focus our time and finances on a few trade shows that put us in front of key buyers, distributors, and press. We built a cost-effective booth and did our best to share the Chuao experience with everyone we can. Once we had those relationships in play, we worked on creative, cost-efficient ways to reach the end consumer, through social media, press, and partnerships with like-minded brands.
With an innovative, culinary-focused brand like yours, brand partnerships might help you increase your exposure. You can choose to participate in culinary events and demo at times you know will be high-traffic, like store openings or holiday weekends.
We have had many requests for our product in the U.K. Are there any considerations when selling a product overseas?
D.R.: I can assure you that there are indeed considerations. I visited the London area five times over a 10-year period before we finally established a solid distributor. You will probably spend a significantly disproportionate amount of time and money before you start to see any return on international sales. Although you may initially be able to hand-apply “stickers” with country-specific labeling, we prefer to create professional packaging for each international market as soon as sales justify this. It’s also quite possible that you’ll need to create recipe cards, fliers, and so on to help explain to the international consumer what to do with your product.
Keep in mind that international customers often require you to provide ingredient breakdowns that are essentially your recipe. They are not trying to be sneaky; it’s just a very standard aspect of their evaluation process. You’re often allowed to round the most sensitive ingredients to “<1%.” In the U.K., if you call an item “raspberry sauce,” for example, you may have to add the percentage of raspberry in the product to the ingredient statement. Although this makes sense in the example, you may find situations where your product name is actually a small percentage of the total product due to the nature of hot chile peppers.
Lastly, we have found that it will save serious time and money if you a) price your products FOB [free on board] at a U.S. port city, i.e., don’t get involved with trying to arrange international freight yourself, and b) exhibit at international trade shows as part of the Specialty Food Association’s pavilion, not on your own. Foreign trade shows are often held 8 a.m. to 6 p.m. for four or five days in a row. It helps to have support staff there to cover for you so that you’re not personally trying to staff a booth for all that time. Also keep in mind that international shows, demos, and trips take a lot of time out of your schedule. I’m fortunate to have two cousins in our business, both of whom have exhibited at shows in London for us.
Founder: Tessa Lowe
Product: Olo’s Chipotle Paste
Denise Purcell and Susan Segrest are editor and contributing editor, respectively, of Specialty Food Magazine.
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