FMCG should be avoided at all costs by start-ups
Fast-Moving Consumer Goods (FMCG) are a nightmare. When starting a business is already hard enough, entering into the FMCG sector is essentially a kamikaze mission. If I’d had a little more nous, I would’ve looked at Lashbrook Lassis’s competitors and realised we were doomed from the outset.
The fact is, products we aspired to were either run by multi-national cooperations (such as Innocent, owned by Coca Cola) or independent labels that clearly had a lot more money that we did (Jimmy’s Iced Coffee for example, had their Mum and Dad give them £140,000). The reason entering the food-to-go market is so difficult is because getting products quickly onto shelves is a monumental logistical operation… and if it isn’t, then you’re probably doomed like we were.
Retailers who buy these products want as long as possible to sell them, otherwise they have to throw them away. I remember when we met Booths and explained that our lassis lasted over 30 days. They said, “great, we’ll place an order once a week”. This though was for a fresh batch made every week, but we only wanted to make one huge batch once a month to keep our costs down. We would’ve simply been running a loss if we’d made smaller batches every week just so Booths could have a longer shelf life.
The very characteristics of almost every FMCG make them more of a logistics business than anything else. They are often purchased frequently, at relatively low cost and in low volumes; none of which are particularly helpful for small businesses.
Ultimately, if Lashbrook Lassis had been an ambient drink with a shelf life of a year, we could’ve taken the logistical headache out of our business and had a much greater chance of success.