- The fundamental laws of economics suggest that smaller brands will always be at a commercial disadvantage. It’s time to challenge this very costly thinking, says Chris Green, co-founder of Young Foodies
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Compare a rate card enjoyed by a large blue-chip brand to that of a small challenger and it won’t surprise you to see a demonstrable difference. The challenges faced by a small brand are many, and arguably, none are more damaging to their growth than that of extortionate pricing.
Let’s talk manufacturing for a moment. Firstly, I’d like to commend the few that have made some drastic changes to their infrastructure and approach to accommodate young brands. Wise move in my opinion – strategic even - as the rise of smaller brands is only just building traction and it will be these brands that will ultimately influence manufacturing for years to come.
But right now, due to a lack of scale, they will inevitably be ‘troublesome’ in the early days, demanding low MOQs and more time than ‘commodity’ products. But these guys are the future. Penalising them with premiums now will only serve to stifle their ability to grow within the manufacturers’ four walls.
A new era calls for new thinking. Look past the ‘troublesomes’ and see the ‘game changers.’
So how about we waive those premiums, and co-invest in the early days. Yes, there will be a slight hit on margins at the start, but a collaboration could mean incredible growth potential across the board.
Packaging is another example of where small brands lose out. There is one very reputable provider of drinks packaging who not only charges a premium per unit for a ‘low MOQ’ but also goes on to charge a set up cost on top of it. Low MOQ in this instance is somewhat comical.
I’m not oblivious to the fact that there are some fundamental manufacturing challenges (and costs) associated with running ‘small’ production runs but, these are essentially the large production runs of tomorrow. I’m not saying move to an agile business model overnight, but I am saying be alert to the growth in this sector and if it’s not in the strategy now, it should be.
The same goes for logistics rate cards, lack of scale is penalised.
So how, with so many operational barriers, can the Davids compete with the Goliaths? Economies of scale, that’s how.
When 50 brands suddenly realise how powerful they are when they act as one, everybody wins. Suddenly we’re talking about buying power that not only matches that of the blue-chips but is a lot more exciting. When those brands are collectively growing 70% YoY, I know what I’d be more interested in.
When we consolidate buying, capitalise on synergies (how big brand of me), and have a very loud shared voice, we make change! That change is what will drive this industry forward and I, for one, can’t wait to see a whole new ‘status quo’.