Business Essentials: Will fresh baby food cause retailers to spit out their dummies?

Little Gourmets wants to step up distribution, finds Kate Hilpern. But it is concerned that products with a short shelf life might hit problems in the supply chain and meet resistance in shops

Sue Roberts's business idea was born in the kitchen a couple of years ago. She was trying to find a way to give her young daughter food that was healthy but whose preparation didn't eat up too much of her time.

Sue Roberts's business idea was born in the kitchen a couple of years ago. She was trying to find a way to give her young daughter food that was healthy but whose preparation didn't eat up too much of her time.

"I wanted quality time with Ella, but I seemed to be spending a lot of time preparing batches of fresh food," she explains. "I started to talk to other mums in similar situations and we all felt the same: we wanted someone else to take this tedious task off our hands.

"On looking at what was commercially available, there was only jarred varieties of baby food, many with shelf lives of up to two years and many with additives, both poor in nutritional value and taste."

So Ms Roberts took on the task of trying to fill the gap in the market herself. The concept she came up with was to manufacture and sell a premium range of fresh, chilled, organic, ready-made meals for children from four months to five years old. Her company, Little Gourmets, was formally founded in January 2003, with the first product range being launched in September.

To date, Ms Roberts has been successful in selling to independent outlets - delicatessens and organic food retailers - in London. Indeed, one of her main triumphs to date was hearing that a store on the King's Road in Chelsea had almost sold all its stock just a few days after the launch. But her next step, increasing national distribution, is proving harder.

"Our product is made in Totnes, Devon and shipped to a wholesaler in London with limited distribution," she explains. "Volumes for the independent sector are a lot smaller than big supermarkets and, with a low retail price point, the key is selling in large enough volumes across a broad customer base. Managing the whole distribution channel is a big challenge and one where we do not have a lot of experience or knowledge."

She suspects the solution is to tie in with a chilled distributor which already delivers to relevant wholesalers. "Ideally, these wholesalers would have their own group of customers and, in addition, we would locate new independent outlets they could deliver to," she says.

The biggest problem for Ms Roberts is that Little Gourmets' products should be consumed within just 14 days. "Baby food traditionally comes in a jar with a long shelf life, so this makes us a brand new category," she says. "Inevitably, there has been some scepticism from retailers as short-shelf-life products can sometimes be viewed as difficult to manage."

Logistically, too, there is no margin for error when the food must be sold quickly. "We can't afford to waste up to five days in the distribution chain," says Ms Roberts. "Time is of the essence."

Little Gourmets is due to carry out a big trial at a supermarket within the next few months. In addition, Ms Roberts profits from Little Gourmets Local - the home-delivery arm of the business which employs mothers to sell and deliver in their own area. "But this makes me no less determined to crack the independent sector."

www.littlegourmets.co.uk

WHAT THE EXPERTS SAY

Kevin Swoffer, head of technical services,British Retail Consortium

"Retailers are avid supporters of innovation and Little Gourmets is a classic example of an entrepreneur designing a product to meet a market need.

"UK retailing is about the delivery of fresh quality products to the consumer, and the sector of infant formulation has been ignored in the past. But the safety of infant foods is a highly emotive issue and in the past there has been a reluctance to innovate.

"It is important in Little Gourmets' development that it works closely with the whole of the supply chain to ensure the safety and quality of its products are not compromised.

"Sue is probably right that an existing chilled distributor would be her best ally in opening up new areas in the independent retail sector, but that the short shelf life is a barrier. Appropriate labelling, to ensure customers handle and use these products correctly, should help her overcome some of the scepticism."

Paul Clarke, retail sector expert, Barclays Bank

"The key is to create a strong consumer awareness; Sue should leverage the strength of 'mum power'.

"If mums start asking for Little Gourmet meals at their local stores, major retailers will be looking at how they can get these premium products on their shelves - making large-scale distribution more viable.

"By encouraging organisations like the National Childbirth Trust, and parenting publications, to test her foods, she can generate publicity. She should aim to get her products endorsed by a parenting body or a children's charity.

"Sue will also need to know how to ramp up production to meet larger orders. Her business plan should forecast cash flow, costs and profitability, and ensure an accessible source of funding."

Richard Reed, co-founder, Innocent Drinks

"At Innocent, we insist on being 100 per cent natural, so using preservatives is not an option. I expect the same will be true for Sue. The question is, what can be done naturally to extend the life of her products?

The first thing is increase frequency of production so you have a longer life to play with. To make this economically viable, focus on core lines; the majority of sales will probably come from three or four recipes. Make early in the morning and work with your distributor to get them out the same day. Every hour is critical.

"Sue has realised the importance of the people she teams up with. Go to target outlets and ask who they buy their chilled goods from and who they find reliable. Then go talk to those companies. Help the retailers by guaranteeing a minimum shelf life -seven days, say - and get the wholesaler to return anything with less than a week on it so it doesn't go to the shops.

"You can then use these returns for samplings, free stock to use in trials for other outlets, or for donations to charities like Crisis Fareshare. It means nothing goes to waste."