True this, let me offer a counterpoint. Lots of industries command a premium over cost and operate with high gross margins, and not all of them are related to finding mates. Pharmaceuticals, for example, have a 90%+ GM level.
So how do we really understand the gross margins in food? I think it might boil down to Porter’s 5-forces model - specifically the very intense competitive force of ‘substitutes’. Your granola competes with a commodity grain sold by an Indian farmer-wholesaler-retailer channel, a commodity nut marketed by a US conglomerate, and so on. When consumers have this choice of cheaper calories, they will rarely pay a premium of more than 20-30%.
So the real problem to solve for food companies is: how do you rise above the calorie-level competition.
Very True Shashank. Being a food entrepreneur myself have come to this realization 3-4 years down the journey :). Given all the challenges you have built one of most valuable new age food brand. Can the Indian consumers pay high premium for food and in what format ? a question which eludes me all the time. Would love to know your thoughts on this 😀.
As I read through your article, I was struck by the idea that packaged foods could potentially scale by tapping into the concepts of self-worth and status. In today’s social media-driven world, I’ve observed that organic foods, in particular, tend to resonate with a specific audience—primarily the fitness-conscious crowd. This demographic is especially focused on how these foods benefit their health and wellness.
When an influencer within this community endorses a product, it often sparks interest among their followers, who may be motivated either to achieve similar health goals or simply to emulate their idol. Given that your brand emphasizes authenticity and honesty, it might be worthwhile to consider a trial campaign where an influencer samples your product and offers a genuine review. For example, they could share how a protein bar serves as a quick and effective pre-workout snack. This approach not only aligns with your brand values but also has the potential to attract a wider audience organically.
Great review.👍👍👍
Good insights
True this, let me offer a counterpoint. Lots of industries command a premium over cost and operate with high gross margins, and not all of them are related to finding mates. Pharmaceuticals, for example, have a 90%+ GM level.
So how do we really understand the gross margins in food? I think it might boil down to Porter’s 5-forces model - specifically the very intense competitive force of ‘substitutes’. Your granola competes with a commodity grain sold by an Indian farmer-wholesaler-retailer channel, a commodity nut marketed by a US conglomerate, and so on. When consumers have this choice of cheaper calories, they will rarely pay a premium of more than 20-30%.
So the real problem to solve for food companies is: how do you rise above the calorie-level competition.
Very True Shashank. Being a food entrepreneur myself have come to this realization 3-4 years down the journey :). Given all the challenges you have built one of most valuable new age food brand. Can the Indian consumers pay high premium for food and in what format ? a question which eludes me all the time. Would love to know your thoughts on this 😀.
Dear Sir,
As I read through your article, I was struck by the idea that packaged foods could potentially scale by tapping into the concepts of self-worth and status. In today’s social media-driven world, I’ve observed that organic foods, in particular, tend to resonate with a specific audience—primarily the fitness-conscious crowd. This demographic is especially focused on how these foods benefit their health and wellness.
When an influencer within this community endorses a product, it often sparks interest among their followers, who may be motivated either to achieve similar health goals or simply to emulate their idol. Given that your brand emphasizes authenticity and honesty, it might be worthwhile to consider a trial campaign where an influencer samples your product and offers a genuine review. For example, they could share how a protein bar serves as a quick and effective pre-workout snack. This approach not only aligns with your brand values but also has the potential to attract a wider audience organically.
Brilliantly written