|
|
|
You can get e-magazine links on WhatsApp. Click here
|
|
|
|
|
|
Startups are doing only a little bit better than established companies
|
|
Monday, 18 February, 2019, 15 : 00 PM [IST]
|
|
London
|
Investors and consultants alike are full of excitement about the success potential of startups. Phrases like “there’s never been a better time to launch a startup” pop up frequently. These claims and more were taken up for research recently.
Food industry analyst Julian Mellentin, director of New Nutrition Business, a research and consultancy company, states, “But the reality is that although startups are doing better than established companies, they are only doing a little bit better.”
“The success rate among startup brands is only slightly higher than that of brands from established businesses.”
To address the absence of data on rates of success or failure for startups, New Nutrition Business analysed its database of startup brands, going back to 2002, to shed light on their performance.
The sample comprises 267 US, UK and Australian food and beverage startups who launched products in the years 2002-2016. The sample focusses on snacking, beverages and dairy (all strongly over-represented among startups) as well as kids’ products.
The analysis found:
An overall startup success rate of 67% (almost the same result as 2016)
An 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%,” notes Mellentin.
For comparison, New Nutrition Business also analysed a sample of 288 brands from established companies – not startups – 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 startup sample.
Their overall success rate (whether a brand was in mass distribution or niche) was 54%. “That’s less impressive than the startups, but not so far behind,” says Mellentin.
Snacking the clear winner
Mellentin says that if you want to maximise your chances of success and reduce your risk of failure, make your product a snack. “If you had launched a startup food or beverage business during the years 2002-2016, you would have been most likely to succeed if your launch was a snack or a mini-meal,” he says.
The success rate for snacking startups is an impressive 72.5%, compared to 53% for established companies.
That makes sense to Mellentin: “Snacking makes good sense as a place for a startup – the products are usually shelf-stable and have a long shelf-life, eliminating the supply chain and wastage problems that kills many startups in chilled products.”
|
|
|
|
|
|
|
|
|
|