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Food and drink innovation: Cooking up a treat

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In a fiercely competitive market, food and drink businesses need to do something different to stand out – and small firms are leading the way, says Rob Gray. 

If you’re looking to build a business in the food and drink sector, there’s a lot of pie (and numerous other foodstuffs, plus beverages) from which to take a slice. In fact, it’s the largest manufacturing sector in the UK – bigger than automotive and aerospace combined.
 
Although the market is huge, it is also full of multinational heavyweights with big brands and deep pockets, from the likes of Unilever, Heinz, Mars and Nestlé on the fast-moving consumer goods side to McDonald’s and Pizza Hut in mass market dining.
 
However, the food and drink sector is also home to approximately 7,030 micro, small and medium-sized manufacturers, with 110,000 employees and total turnover of around £25 billion in 2018, according to Government figures.
 
For large players and small firms alike, turning a profit in this sector has never been more challenging. The ‘casual dining crunch’ is well-known, with a number of high-profile restaurant chains having collapsed or encountered problems during the past couple of years.
 
A recent UHY Hacker Young report calculated more than 1,400 insolvencies in the restaurant sector in the year to June 2019, with weakening consumer spending, over-saturation in the casual dining market and increased costs being the biggest factors behind the failures. On the food producer start-up side, for every successful Reggae Reggae sauce or Heck sausage business, countless others have failed to make the cut. 
 
In this incredibly cluttered market, businesses must harness innovation if they are to prosper. Research for BDO’s Food and Drink Report 2018 revealed that 52 per cent of companies in the sector expected future growth to come through new product development. This was far ahead of any other strategy under consideration to drive business growth. In addition to developing new products, more than a third of respondents planned to refresh existing products and services.
 
How can small firms go about delivering innovation within their businesses? “It is no easy feat to, firstly, have a good idea and, secondly, be in a position to capitalise on it,” says UKHospitality CEO Kate Nicholls. “It can be like trying to capture lightning in a bottle, and it’s a perennial question with which entrepreneurs constantly wrestle. Try to foster an environment in which team members feel encouraged to suggest new things and provide feedback on their work. Their insight is as valuable as those of the customer.”
 
It’s also critical to do your homework and make sure your offer is really different. After establishing there was nothing similar in his region, Andy Craig, owner of Whittington’s Tea Barge, invested in fitting out a narrowboat as a floating café that can offer two-hour river cruises, as well as trade from its mooring in Reading. “No one within a 50-mile radius of us is doing what we’re doing,” he says. “We even do takeaways out of the kitchen window to river boats that pull up next to us!”
 
Finding the money to innovate can be difficult. Grants are few and far between, although the Government’s innovation agency Innovate UK does provide support for businesses to get their ideas off the ground, with grants and innovation loans available to 

SMEs that meet the right criteria. 

FSB Funding Platform can also help firms find the funding they need to innovate – see fsb.org.uk/benefits for more information. 

“Despite the pressures facing many small businesses – particularly those on the high street – there’s a world of opportunity to succeed as a food and drink entrepreneur,” says Mike Cherry, FSB’s National Chairman. “New technology, as well as changes in the way we all live and work, have prompted really strong innovation in the sector.”

As food and drink is a very trend-driven sector, it’s important to keep an eye on the latest developments. For instance, research for trade magazine The Grocer found that a third of UK consumers would buy food and drink products containing cannabis plant extract CBD. This has added momentum to a wave of CBD food and drink product launches, including Good Hemp’s plant-based milk, Hemp Matcha from frozen desserts retailer Yogland, and the no-added-sugar Drink 420 range of soft drinks. All of these are positioned as healthy options. 


“In terms of food trends, street food has continued to dominate as time-poor customers look to grab food that is convenient but also high quality,” adds Ms Nicholls. “Not surprisingly, customers are also seeking healthier options, and we have seen an explosion in vegetarian and vegan options. These may have been relatively niche just a few years ago but are now increasingly mainstream and, in fact, expected by large numbers of consumers.” 

Although big brands have the muscle, innovative SMEs absolutely have an opportunity and the ability to flourish in these areas, with customers increasingly concerned about issues such as local sourcing, welfare, provenance and sustainability.

The Pished Fish 

James Eagle started smoking salmon and other fish as a hobby in his garden. As he became more proficient, he began experimenting with different flavour combinations. 
Soon he became convinced he was onto something with commercial potential, but concluded that, for a business to work, it would have to be innovative. “I looked around and saw a very crowded marketplace with everyone doing the same thing really: oak-smoked salmon,” he says. “So I tried to do things differently to the way everyone else has done them.” 

That started with the distinctive and humorous business name, The Pished Fish, which highlights a key point of difference: all bar one of the varieties are cured in alcohol, from brandy, whisky and bourbon to aquavit, tequila and Pernod. The product is also presented in thicker cuts than the wafer-thin slices consumers typically associate with smoked salmon.  

The brand has been listed by Ocado and is available at a growing number of Unearthed deli counters within Waitrose, as well as being stocked at the likes of Fortnum and Mason. Going forward, a key objective is to grow exports to the Far East. 

Mr Eagle concedes that Pished Fish is not to everyone’s taste and launching the business was a “bit of a leap of faith” – which has been vindicated. “For every person who doesn’t like it thickly sliced, thankfully there are 10 people who do. You’ve got to hold your nerve and stick to what you believe.”  

Screaming Chimp

After a string of dead-end jobs, by 2015 Niall McKay-Mount was despondent. A friend’s gift of some chilli seedlings helped turn things around. 
 
His sister Emily asked him to make a challenge sauce for a chicken wing eating competition at a university; he made a sauce that was 40 per cent chilli – and Screaming Chimp was born.
 
The brand launched in June 2016, and by 2017 had gained two Great Taste awards from the Guild of Fine Food, been shipped to Australia and the US, was listed on the Slimming World database and had been stocked in Fenwick food hall, which Mr McKay-Mount calls “the Harrods of the north-east of England.”
 
In 2019, at the Speciality Fine Food Fayre, the Mixology Group used the company’s Chimpotle sauce to make Bloody Mary cocktails. It also supplies Dough and Brew in Warwick, voted England’s best pizza restaurant.
 
More than 30,000 bottles have been sold worldwide, all from a home kitchen. A deal has now been struck to outsource production to The Chilli Mash Co in Portsmouth.
 
“We’d love our Chimps to swing on as many branches as they can the world over, so are looking to grow our troop of natural, gluten-free, dairy-free, vegan-friendly, low-calorie, low-sodium chilli sauces,” says Mr McKay-Mount.

 

Lussa Drinks Company


Claire Fletcher, Alicia MacInnes and Georgina Kitching are neighbours on Jura – an island off the west coast of Scotland that has a population of just over 200 people. 

They started Lussa Drinks Company five years ago because of their shared love of Jura, growing plants and gin. They also wanted a flexible business that would work with their busy home lives, and which reflected their diverse skill-set.

HMRC has relaxed licensing rules for rectifying gin, meaning it is no longer necessary to have an enormous still. “We could buy a 10-litre still, which we named Jim, and start in a kitchen,” says Ms Fletcher. “We made more than 4,000 bottles in the kitchen while we renovated an old stables building to move into and house Hamish, our 200-litre copper alembic still.”


Lussa Gin is made using 15 botanicals that are grown or foraged on the island. The botanicals are frozen, rather than dried, which makes for a zesty, aromatic gin. 

“We have many challenges,” admits Ms Fletcher. “We’re two ferries from the mainland, so distribution can be problematic, and our internet connectivity is poor – as is our single-track road. The very first pallet of bottles made it all the way from France, only to 
fall over within a mile of the distillery.”

However, despite all this, Lussa now produces just over 10,000 bottles a year, about 20 per cent of which are exported. The plan is to double production soon.

Kent Crisps

Independently owned and managed Kent Crisps was founded in 2011, but changed hands in 2017 when its then Commercial Director Laura Bounds executed a management buyout. The company makes hand-cooked crisps using British-grown, Red Tractor-assured potatoes, and works closely with British producers to create unique flavours that show off the best local food and drink.  

“There are numerous USPs setting Kent Crisps apart,” says Ms Bounds. “These include having been one of the first crisps producers to use flavours from real ingredients, the use of local produce and producers for the flavours, such as Ashmore cheese, Biddenden cider and Kent chillies, and the use of landscapes and landmarks on pack fronts. 

In recent years the demand for local products has continued to grow.”

The brand has strong links to both food tourism and traditional landmark-led tourism. Each flavour features Kent-specific imagery, including an oast house, the White Cliffs of Dover, and the world-famous landmarks Leeds Castle, Canterbury Cathedral and the Turner Contemporary gallery. 

Since Ms Bounds took on the business, regional listings have been secured in Waitrose, 72 Southern Co-op stores and Asda. The crisps are also sold through Amazon UK and the company has diversified to launch sister brands Kentish Oils (a range of cold-pressed rapeseed oils) and Kentish Condiments.

Last May, Kent Crisps was named micro-business of the year at the FSB Celebrating Small Business Awards 2019 UK final.