Snack start-ups successful

Although start-ups are doing better than established companies, New Nutrition Business said it is only by a small margin.

The company analysed 267 US, UK and Australian food and beverage start-ups who launched products in the years 2002–2016 to shed light on their performance. The sample focused on snacking, beverages and dairy (all strongly over-represented among start-ups) as well as kids’ products. It found an overall start-up success rate of 67% and overall failure rate of 33%.

“But if you define ‘real’ success as distribution in mass-market retailers, as opposed to being in niche or regional distribution — which is what most shareholders want — then the success rate falls to 41%,” said food industry analyst Julian Mellentin, Director of New Nutrition Business.

For comparison, New Nutrition Business also analysed a sample of 288 brands from established companies that were launched in 2013 and listed that year in Mintel’s GNPD new product database. They came from the same countries and categories as the start-up sample.

Their overall success rate (whether a brand was in mass distribution or niche) was 54%, which Mellentin said was not too far behind start-ups.

To maximise the chances of success and reduce the risk of failure, Mellentin recommended launching snack products or mini-meals. The success rate for snacking start-ups was 72.5%, compared to 53% for established companies.

“Snacking makes good sense as a place for a start-up — the products are usually shelf-stable and have a long shelf-life, eliminating the supply chain and wastage problems that kills many start-ups in chilled products,” he explained.

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