Making It in America: How Britain’s Favourite Healthy Food Snack Company Entered the US Market
Thursday 21st September
Having seen innocent drinks and graze through their scale-up journey, we spoke to graze CEO, Anthony Fletcher on how his team harnessed technology to charge to the top of the UK’s healthy snacking food chain and take on the US market along the way.
The year was 2013 and private equity group Carlyle had just acquired an undisclosed majority stake in graze. Whilst the business was cash generative, it still had to consider servicing its debt from the buyout leading one to assume that expanding across the pond into the US market at that time was a risky idea.
However, graze went on to do exactly that. Two developers, eight weeks and a minimum viable product (MVP) website later, graze launched headlong into the US market — testing over 100 KPIs to help them hack how Americans snack.
It was a bold skip that paid off as the business achieved a run rate of over £20m in its first year of US operations. However, this was not achieved purely out of luck or serendipity alone, but because of how prudently they made technology work for them in the following four ways:
- Understanding consumers
- Creating new innovation models
- Building brand and reputation
- Getting organised
As a technology-enabled healthy snacking food brand, graze is a company fuelled by data. By creating a data-driven feedback loop — they receive well over 15,000 product ratings every hour — graze is able to inform their performance marketing, plan their multinational expansion into the US and decide which of their multichannel customer journeys are the most productive.
Create new innovation models
Compared to the glacial pace of innovation processes at large FMCG companies, graze’s innovation model allows them to move at lightning speed. By creating an environment where innovation costs are driven down, they can innovate quicker, more wildly and more freely. Their iterative approach is supported by the vertical integration of their manufacturing operations. Product design, refinement and packaging development all run simultaneously as a sprint, allowing them to bring new products to market more rapidly. New products reach consumers within an astounding 24 hours, kick-starting the feedback loop as they start collecting responses from consumers.
graze is informed by data constantly flowing into the business from customer feedback. If consumers don’t like a new product, they never have to make it again. This data-led and iterative model helped graze achieve success in the US market and establish their brand presence there. graze avoided spending too many resources on market research by launching two to three UK products into the US every week, gradually learning what worked there.
Building brand and reputation
As one of the leading healthy snack food brands in the UK for spontaneous awareness, graze has established a solid name and reputation for itself. With an awareness twice that of Kellogg’s (which sits behind graze at number two), Anthony credits the direct-to-consumer (D2C) model and the role tech played in providing brand new ways to build a reputation around graze’s products. The ability to produce experiences beyond just physical products formed a big part of graze’s D2C model. One of graze’s earliest defining experiences was the snack boxes that could fit through letterboxes. By creating differentiated and unique experiences, graze was able to build a distinctive brand asset that lodged in their consumers’ minds. Anthony’s main takeaway from innocent drinks and graze (from a branding perspective) is “be distinctive, be memorable — it’s worth a lot.”
Technology helped graze organise the internal workings of the business by streamlining processes and speeding up systems. This was especially crucial when it came to scaling the growth of their organisation. graze was able to sustain multichannel growth by organising their business processes efficiently. It was important that they designed processes which could move at speed to keep up with the company’s growth. Processes that bring people together with purpose. Processes that made data the key decision maker rather than management hierarchies and structures. To quote Anthony, “Process is your friend. Be careful with how you design it.”
Observing these four practices also helped graze with multichannel expansion when they rolled out retail products in the UK and reproduced the same in the US. Fundamentally, what interests graze today is the idea of not how you enter new markets, but how you can continue to use you multichannel presence to keep thrusting your business forward.
Always be responsive to your consumers and constantly think about how to innovate quicker than the large strategists who have traditionally dominated any market. By focusing on how to maximise technological advancement to achieve these four business priorities, you should be able to enter new markets more successfully than you ever could have ten years ago and break into an industry that used to have very high barriers to entry.
Multichannel or multinational?
Growing a business in a multichannel way offers many advantages. On the other hand, deciding when to go international is a difficult and contextual problem. A business needs to have a strong core before it is ready to go multinational. For graze, the leveraged buyout (the acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition) meant having to factor in the timeline for their debt repayment before getting the Minimal Viable Product test done to gain clarity on the US market. This was when graze decided it was the right time to go into the US market!
Direct-to-consumer or retail?
D2C equips you with what you need to help create “wow” experiences for your customers that will also help build your brand. The more data-directed environment of D2C allows you to find your product market fit in a more forgiving environment as you are able to establish a feedback loop with your consumers directly.
Anthony shared his insights with us when he came to talk at Food Tech Wednesdays in June 2017. Food Tech Wednesdays is our free monthly meetup held every last Wednesday of the month. We get founders, startups, future-preneurs and larger brands coming together over their interest and passion for Food Tech and we’re always welcoming fresh and familiar faces. Be sure to join us next month for another exciting instalment!
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