Small Business: Why Hawke’s Bay business Good Feeding is focused on United States expansion

Hawke’s Bay based entrepreneur Phil McGrath talks setting up a multi-million-dollar baby food company and why it is focused on winning the American market.

What does your business do?

Good Feeding is more than just a subscription-based chilled baby food business, it is a 24-week weaning programme that delivers nutrient-dense infant food in a step-by-step feeding guide, and offers expert advice to parents of babies. Our business is set out to support parents to help slowly introduce their baby to a range of different flavours, textures to help them develop healthy eating habits. We started the business three years ago, but we started working on the concept as a project about seven years ago.

What was the motivation for starting it?

I’ve started baby food companies before, I co-founded Rafferty’s Garden Baby Food, and so about seven years ago I found a new technology that allowed us to make really high-quality nutrient-dense baby food, and it was very apparent to me that we needed to do more than make good baby food and talking to my wife Frances, whose background was from the medical side helping people working with their diabetes or obesity, I said ‘What would happen if we created a product that started training those healthy lifestyles from day one, and how could we do that.’ We did a lot of research looking at the anxiety of Mums during that weaning period, how they get those first solids into the baby, and we worked out that you have to create the right environment and we needed to be able to support parents through the complex journey. Our motivation was; how do we do more than just sell baby food.

How big is your team?

We have 10 people within New Zealand and five people spread across the United States.

How did you fund your business?

We put in all of the personal assets that we could to fund the dream, and then we called on friends and family to invest. We’ve had a fantastic group of people invest and support us in our vision from day one. We’ve put over $5 million into this business, and done a lot of market validation to prove the concept.

You’re launching Good Feeding in America, talk me through that and the decision to focus so much of your attention on a market more than 12,000 kilometers away from your Hawke’s Bay base?

We’re launching in America right now and so we’re making our food in North Carolina, but opening up sales right across America through e-commerce. We see our business as too complex for our food to be stocked in retail stores. It is largely about education and working with parents, we need that direct line of communication – we offer a 15 minute consult with each Mum with a nutritionist which helps them through issues of how to wean a baby, so to have this on a supermarket shelf doesn’t really work. Our strategy is direct-to-consumer through e-commerce.

The USA is a large scalable market, we’ve had a very good start there, there’s a lot of customers that are looking for direct to consumer baby food options. America doesn’t have a Plunket or coffee groups so there are a lot of Mums there that need support and advice.

The reason why we are focusing our initial efforts on operations in the United States as that is the market that is most ready for our offering. In New Zealand, the gold standard is to make your own baby food, Mums also have the support and advice from coffee groups, antenatal classes and Plunket, but in the USA they don’t have any of that, and are crying our for that information.

How has Covid-19 impacted the business?

We’re lucky we did a lot of work in the US before the onset of Covid. We found our staff, made our connections with the factory and had seven years of visiting every month. But Covid has massively hit the USA and there is incredible pressure on supply chains. The pandemic has been a slight blessing, not that we’d ever wish Covid on the world, but direct to consumer in the USA is booming. Luckily for us we’re at the stage where we are exactly what the customer wants, and people are very health-conscious there now.

What are the long term plans for the business?

Our intention is to launch and grow within the USA, then come back to focus on New Zealand, and also launch in the United Kingdom. We want to take this product assistance with Mums global. We also plan to expand outside of baby, and move into different food ranges such as food toddlers; anything where it takes careful education on how to improve our health outcomes using nutrition. We’re working on toddler food and children’s food, and have goals for later on in life in the elder care space.

What’s your focus for the next three months?

The next three months is all about optimising our product range and working through with customers. Right now we have 80 Mums involved in a very big research programme for the next 24 weeks, getting weekly food deliveries, so we’re working through using feedback to optimise our programme, supply chain distribution and growing within the USA.

What are you financial forecasts over the next couple of years?

It will be a slow build taking the direct-to-consumer approach, but we’ve had over 15,000 visits on our website, we’ve got 3600 people signed up on our database already. We are expecting to see sales in the millions by the end of the year, our market validation has been positive showing that this is a US$7 billion market and we hope to capture 28 per cent of that market. In the next five years, we’ll have an US$80 million turnover.

What advice do you give to others who want to start their own business?

Back yourself. Running a business takes vision. Get good people around you that know their stuff and understand what it takes to implement your vision. Secondly, get investors around you that also good people and understand what it takes, and that it will take time. Being in business is all consuming but incredibly rewarding.

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