Food and Drink

“Food Matters Live” event comes to Cripps
12 October, 2017

We recently hosted the Food Matters Live industry briefing in conjunction with HSBC and Produced in Kent. Attended by a raFood Matters Livenge of professionals working in the food and drink sector, the briefing focused on how businesses can increase their sales and profits.

Speakers included Rachel Rowntree (Managing Director, Wide Eyed Owl), Nimisha Raja (founder of Nim’s Fruit Crisps) and Bob Gorton (Managing Director, Old St. Andrews), with each of them sharing their experiences and tips for growing a successful food or drink business and how they overcame various challenges. 

Amit Hindocha, Investment Director of Mobeus Equity Partners (a leading investor in UK-based SMEs) then ran through the six key things equity funders look for when considering funding, using their experience investing in restaurant chain Tapas Revolution.

The presentations were followed by a Q&A panel, one-to-Food Matters Liveone sessions with a number of experts, invaluable networking and a product showcase from a variety of local food and drink producers.

 Here are some of the top tips and themes:  

1. Know your consumer and your brand

Rachel (Wide Eyed Owl) who specialises in helping entrepreneurs get their products into supermarkets and multiples, stressed that while it seems simple, often businesses do not appreciate the importance of understanding their target customer.  When pitching to supermarkets or other large retailers, their first question is always ‘Who is your target market?’  Understanding the perceptions and habits of your core audience will help determine which retailers or distributors are most suitable for your product and where they should place your product. 

Nimisha who has had much success with Nim’s Fruit Crisps, the award winning range of air dried fruit and vegetable crisps, said that ‘Made in Britain’ is a part of its success and that food provenance matters to its target market. 

2. Scaling up

If you’re looking to scale up your business there’s a lot to consider. Rachel took us through the practical issues her own business faced after the excitement of receiving orders from Tesco for its gluten free puff pastry product. She said businesses should consider whether their product is really ‘retail ready’. Can the packaginFood Matters Liveg be palletised? Are there sufficient bar codes on the outer packaging? What about logistics and other practicalities with the supply chain if you receive a particularly large or small order?  Will the price and payment and delivery terms actually work for you?

Bob Gorton, of Old St. Andrews which supplies distinctive alcohol brands, stressed the importance of understanding your business’s ‘critical resource limit’ which he says is the one thing that will put a brake on growth – in other words, what will break first if you try to double sales?  After acquiring the Old St. Andrews business as a turnaround project, he soon realised that the whisky selling business and profits were restricted by the limited supply of whisky, so he explored the gift market requiring smaller volumes of product, and later diversified into gin and vodka.

3. Working with others and getting support

Nimisha said that joining Produced in Kent was one of the best things she has done, as it has provided her with additional support and many useful introductions.  She also recommended setting up in business with someone else if you can, so that you’re not trying to do everything yourself.  However, Bob warned to choose carefully as “the wrong investor is worse than the wrong wife…divorce is easier!”

Rachel warned to look out for an ‘entrepreneurial slump’ – after some initial success it can be difficult to maintain the excitement – keep your team motivated and manage periods of less activity.

In terms of financial support, Amit HFood Matters Liveindocha, (Mobeus Equity Partners) talked about the six key things equity funders look for when considering funding, following Mobeus’s £2.5m investment in Tapas Revolution. Unsurprisingly, a ‘good management team’ was top of his wish list.

Nimisha said that Nim’s Fruit Crisps has benefited from government grants and her tip was for businesses to find out what might be available to them.

4.  Brexit

The panel agreed that Brexit is likely to have a significant impact on the food and drink sector.  Bob described it as the “biggest risk we have at the moment”.  He warned businesses to be prepared for ‘outrageous misfortune’, irrespective of Brexit, and to have a war-chest and a fall back plan.  

5. Amazon is on the horizon

The panel discussed the impact of Amazon on the industry.  Businesses were advised to consider whether their brand would benefit from being associated with Amazon. Possible benefits would include increased market presence and awareness and greater sales, but the risks include a lack of control and potentially unfavourable contract terms.

Nimisha said that QVC is fantastic for food and she considers it to be one of the best kept secrets, being particularly good for innovative products.  Nim’s Fruit Crisps have had good sales results from this.

6. The ‘eating out’ experience is growing

Amit said that in the UK, 33% of calories are consumed outside of the home – in the US this is as much as 50%.  The trend is predicted to continue, particularly in shopping centres.  Currently 52% of consumers who go to a shopping centre eat out and they are increasingly looking to combine shopping, food and entertainment as an experience.

For further insights, the Food Matters Live Conference and exhibition will be held at ExCel on 21-23 November 2017. Click here for more information.

If you are involved in the food and drink industry and would like to sign up to receive our blog, please email digital@cripps.co.uk

For regular updates and the latest news follow us on Twitter @CrippsFoodLaw


Brand Protection – It Matters
28 September, 2017

Regardless of your place in the food and drink industry, brand matters. Whether a business mainly deals with other businesses or if its main income is from enticing consumers, a strong brand helps to build loyalty and goodwill.

There are a number of ways to build and protect a brand but they don’t happen on their own. Brand protection is an active endeavour and the most successful businesses have a structured approach to enforcement and updating of their brand.

Traditional avenues such as trade marks will always have an important place in a businesses brand portfolio but equally important are domain names and social media accounts. The rise of influencer and social media marketing has made it essential for food and drink businesses to raise their online profile, and ensure online infringement is kept in check.

Food Matters Live is coming to Cripps on Thursday 5 October from 3pm – 7pm. Brand protection is one of the topics of the event so if you are interested in attending this sector briefing and finding out more, please register here https://www.foodmatterslive.com/about/industry-briefings/hsbc-industry-briefing

If you are affected by issues in the food and drink industry please subscribe to our dedicated blog.

For regular updates and the latest news follow us on Twitter @CrippsFoodLaw

 


Automation of the warehouse
26 September, 2017

Ocado, the world’s largest online-only grocery retailer has warehouse automationimplemented a state-of-the-art warehouse automation solution which it is claimed has reduced ‘pick-time’ from 2 hours to 15 minutes.  Is warehouse automation the future for greengrocers and what could this mean for the industry?

Ocado’s warehouse in Andover, Hampshire, has 1,000 machines receiving 10 commands a second over a 4G telecoms network.  In an area the size of an Olympic swimming pool, the machines buzz frantically around their grid-like ‘Hive’, mechanically moving everything from avocados to quail eggs.  This is apparently the most densely packed mobile network on the planet.  Ocado claims that this is highly scalable and the network could theoretically handle a command chain 20 times as large.

Why is Ocado automating its process in this way?

When it comes to routine tasks such as moving, loading and replenishing, machines simply perform far more efficiently than their human counterparts. In this warehouse at any one moment the machines will be moving thousands of packages along miles and miles of conveyor belt (they get through a staggering 1.3 million items a day), constantly being fed live information as to the most efficient route to be taken. Humans are simply not capable of such a feat and limit capacity.

But this is not to say the human element is now redundant – the more front-facing picking and fulfilment of orders is still the domain of the human, and in this respect we do not yet have a competitive counterpart.  In particular the handling of unpredictably shaped objects such as fruits or fragile products is difficult to mechanize as is quality control although a sophisticated robot hand ‘grabber’ is in the process of development.

What could this mean for the industry?

Much can be learnt from Ocado’s example and substantial continuing investment in technology. Many warehouses around the UK are still laid out much like a supermarket, with aisle upon aisle of half-stocked shelves and individuals trundling up and down. Ocado has clearly bucked the trend with its frenetic robots now doing the leg work, dramatically increasing’s Ocado’s capacity and profits. 

Whilst the automation of warehouses will potentially render obsolete those unskilled roles that could instead be undertaken by the machines, on the flip side it will also help to create highly-skilled roles in software and technology development within the industry.

Ocado is keen to sell the platform on to overseas retailers and has even suggested that airfields, construction sites and factories could benefit from this solution, which is highly modular and scalable. If Ocado is successful in rolling this technology out to other retailers and industries, improved efficiencies in modes of operation will potentially stimulate multi-sector growth.


Protecting your brand: a costly lesson learned…
8 September, 2017

Paul Hollywood hit the headlines again this week, but this time for all the wrong reasons. He has been accused of bully boy tactics after being drawn into a dispute with an established bakery business, “Knead Bakes”, over the use of its business name.

Despite being a successful business, established three years ago and supplying major names such as Selfridges, Fortnum and Mason and Harvey Nichols, Knead Bakes has been threatened by legal action by Mr Hollywood’s legal advisers unless they change their name.

The existing business is suffering from its failure to take basic steps to protect it’s name when it first established. Paul Hollywood has since registered a trade mark under the name “Knead” in connection with his new bakery store to open at Euston station later this month.

Registering a trade mark is often seen as a daunting task and an unnecessary expense by a fledgling business, but a failure to take basic steps to protect your brand can cost you dear in the long run, as Knead Bakes is now discovering.

Trade marks are, put simply, a ‘badge of origin’, helping consumers to connect to a business. By registering a mark, a business can prevent others from using identical or similar branding going forward. Trade marks can be registered at two levels, either UK or European wide. The cost can vary significantly so the former option is often preferred by start ups, but this can be short sighted if the business plan is to expand across the continent.

It is possible to register trade marks over a wide range of forms. Most people associate marks connected to word, numbers or images but it is becoming more common place to trade mark more exotic marks such as smells, sounds and colours.

The key for any new business is to think about protecting the brand early. That includes not only trade marks but also registering company names, domain names and putting policies in place to ensure the business’s image is used consistently across all media.

The apparent failure of Knead Bakes to take these basic steps could mean the goodwill they have worked so hard to generate in the last three years is lost, and they will need to re-establish themselves under a new image going forward. For a good product, with an established market, this may not be the end of the world, but we suspect the time and cost (both monetary and emotional) this will entail would have been better spent elsewhere.


Top tips for food partnerships
21 August, 2017

Here’s our top tips if you’re operating your food business in a partnership. Partnership text

Many farmers or others involved in food businesses trade together in partnership.  This can be an efficient and flexible way of running a business when it works well, but all too often people get on with running their business, without giving much thought to what being in a partnership actually means. 

What is a partnership?

Firstly, it’s important to consider whether or not you’re in a partnership.  A partnership is a collection of individuals carrying on a business in common with a view to making a profit.  It isn’t essential that the business actually makes a profit, but this must be the desire or intention.  Taking the example of two brothers who are arable farmers, who own two fields that were passed to them following their father’s death and who buy their raw materials together and sell their crops to the same buyer – they are almost certainly trading as a business partnership. 

What does this mean?

Unless you’ve agreed otherwise, the terms set out in the Partnership Act 1890 (the Act) apply to partnerships.  It’s best practice to have a written partnership agreement setting out how the business should be run and how any disputes should be resolved.  

Things to think about and try to agree if you’re in a partnership

  1.  How are the assets / proceeds divided?

    It seems simple, but often the partners in a business have a different view as to what they believe is their personal asset and what belongs to the partnership.  In the above example, is the farmland a partnership asset?  What about if one of the brothers buys a new tractor?

  1.  Succession / family planning

    What will happen if one of the partners dies?  Under the Act, the partnership would be dissolved and farmland / buildings that have been in the family for generations could end up being sold.

  1.  Can my children take over my interest in the business?

    Unless all the other partners agree, you can’t retire from a partnership and appoint your children in your place.  The default position under the Act is that the original partnership would be dissolved and it’s important to consider and agree on how the partnership should change over time.

  1.  What if there is a disagreement?

    The fallout from any disagreements, especially within a family business can be catastrophic.  Having an agreed process of resolving any disagreement can help keep the business going (and money coming in) when a dispute arises.

What should I do next?

Even if you think your partnership is working well, it’s sensible for all the partners to sit down and consider how the business should be run.  Planning for the future can help avoid any potential disputes and keep the business going for generations to come.  For further advice on your partnership or if you have a partnership dispute please contact Tom Bourne on 01892 506099 or tom.bourne@cripps.co.uk.