3
Prove that your brand
has mass appeal.
While selling at Whole Foods is a good validator
of your brand's potential and resonance with
millennial shoppers, which is a key consumer
demographic, it is still not enough to prove that
your brand is scalable, says Ng. "You need to
develop strong case studies on velocities across
customers and channels like a Walmart, Target,
and/or Costco as well, to prove that this brand has
substantial potential brand value."
4
Show sustained growth
over time.
"Being able to grow your brand 30 percent plus over
a couple of years is a good goal. But it is critical to
do it the right way," Ng says. "More importantly,
growing the right way historically will allow a
brand to grow in the long run without sacrificing
profitability. With good margins, you will be able
to continuously fuel growth through marketing
without having to raise too much capital."
5
Remember that market
conditions don't matter.
"In a good market a lot of things sell and in a bad
market only the good things sell," says Ng. "No
one is able to perfectly time markets so keep your
head down and try to build a fantastic business
the right way."
Brandon Ng, senior associate at Houlihan
Lokey, a global investment bank with expertise in
mergers and acquisitions, capital markets, financial
restructuring and valuation, has worked with
category-disrupting brands such as Cholula Foods
Co., Tate's Bake Shop, SkinnyPop, and My/Mo
Mochi Ice Cream.
He says that emerging specialty food brands
should consider the following when trying to reach
large-scale success. (The opinions are Ng's and not
that of Houlihan Lokey.)
1
Be disciplined.
"Every dollar of incremental growth is not
created equal," says Ng, who advises entrepreneurs
to focus on developing hero SKUs rather than on
proliferating SKUs just to chase that additional
dollar of growth. This strategy helps you create a
more profitable company as you gain economies of
scale with your top two to three SKUs.
2
Don't cheapen your brand.
Steer clear of aggressive discounts that could
cheapen your brand in the eyes of consumers. "Are
the best brands like Apple and Lululemon ever
discounted? No, because they have such strong
brand equity that they don't need to lower their
prices. Never train your consumers to buy your
product on discount."
Ng offered as an example Tate's Bake Shop,
which was acquired by Mondelez. "Tate's never
gave the product away and has continued to
maintain strong price point architecture as they
expanded across different channels."
5 Things to Consider When
Preparing for Sale or Investment
BY JULIE GALLAGHER
•• SPECIALTY FOOD SPECIALTYFOOD.COM
SPECIALTY FOOD
MAKER
Julie Gallagher is managing editor of Specialty Food.
