Book Review: Ramping Your Brand, by James F. Richardson
Disclaimer: It’s important to state that not all kombucha brands want to ‘ramp up.’ A good living can be had selling small volumes of ‘booch at farmers’ markets and a few local cafes, bars, and restaurants. This is the case if there are no outside investors who want to see a pay-off and overheads are low. These are the classic “Ma & Pa” operations—earning a sufficient income to provide for the family while being your own boss. These are most of the 2,700 companies listed in the Worldwide Directory.
The author of Ramping Your Brand draws from his extensive experience as an advisor to successful Consumer Packaged Goods (CPG) brands. He provides a pragmatic framework, the lens necessary to think through one’s strategy, and the key levers that need to be considered.
As he states in the book, 80% of brands will not get over $1 million in annual revenue. Nevertheless, he reports, over 100 premium CPG brands have scaled into mature nine-figure businesses, GTs among them.
The book has several themes.
- CPG Industry Dynamics: Richardson dissects the dynamics of the CPG industry, highlighting the competitive nature and the challenges that brands face. He explains the importance of understanding the industry landscape–specifically category fundamentals–in order to navigate it successfully.
- Growth Strategies: As the title suggests, the book focuses on a growth curve for successful CPG brands shaped like a skateboard ramp. Richardson discusses strategies for scaling operations, expanding market reach, and sustaining long-term growth. He stresses the need for adaptability in a rapidly evolving industry and encourages brands to be agile and responsive to changing consumer preferences and market dynamics. He reviews various growth strategies, from product innovation and brand positioning to distribution and pricing.
- Product Innovation and Development: The author explores the process of creating innovative products that meet consumer demands and stand out in a crowded marketplace. He emphasizes the need for continuous innovation to stay ahead of the curve.
- Building Strong Brands: A central theme of the book is the importance of building a solid brand. Richardson explains how to create a brand that resonates with consumers and differentiates itself from the competition. He discusses brand identity, storytelling, and the role of emotion in brand-building. A key to crafting a brand identity that resonates with consumers and creates a lasting impression is to make your brand “memorable.” “Undercapitalized CPG entrepreneurs must be far more memorable than the average …Unlike BigCo brands, they can’t simply buy access to distribution, to immediate mass consumer awareness, or to instant trust. They need to generate repeat sales faster and hold them better, and only superior memorability can make this happen.” This “memorability” is best achieved by field marketing – at music events, yoga retreats, sporting events, and (although he missed this one) farmers’ markets.
- Sales and Distribution: CPG growth has two primary levers: distribution and consumer demand. The author looks at the critical aspects of sales and distribution, showcasing how a well-executed distribution strategy can drive growth. He discusses various distribution channels, including e-commerce, brick-and-mortar retail, and direct-to-consumer sales.
- Consumer Insights: Understanding consumers is vital. Richardson highlights the significance of consumer insights, market research, and data analysis in making informed decisions and tailoring products to consumer preferences.
- Operations: Scaling a CPG brand requires efficient operations. The book provides valuable insights into scaling challenges and how to overcome them, covering topics such as supply chain management, manufacturing, and logistics.
- Marketing and Promotion: Richardson explores various marketing channels, advertising methods, and the power of social media in reaching and engaging consumers.
Throughout the book, Richardson includes case studies and real-world examples of successful CPG brands that have effectively implemented the strategies he discusses. Among the ‘Skate Ramp Winners’ listed: GTs Kombucha.
The path to success
In reading the book, I noted what he suggests that successful CPG brands must do to stay on the path to success. Understanding how to implement these will benefit start-ups and smaller “Ma and Pa” operations as much as the companies looking to reach multi-million-dollar size.
- To ‘stay on the curve,’ aim to double sales every year, with most of the growth generated at the back end – rewarding the founders for exercising patience in scaling.
- Clearly understand how to–perhaps counterintuitively–‘throttle’ sales when revenue is still under a million dollars. (See pages 102-107 for a detailed explanation of this crucial part of the growth strategy.)
- Build business on the back of heavy users first. Then, pace distribution led by consumer demand.
- Target offerings to dense social networks of consumers inclined to want the product. Yoga retreats, anyone? However, “don’t just pick any trendy tribe and start handing out samples. Instead, create tons of opportunities to interact with ANY early consumers (online and offline).”
- Know the power of word-of-mouth marketing, which “is about engaging in authentic, relevant storytelling about your product experience … [But] this only works at all when it literally inserts your brand into extraordinary local moments and settings…when consumers are open to sensory influence.” In other words, pick relevant events.
- Collect and analyze smart, inferential data by interacting with consumers in the real world. Farmers’ markets, anyone?
- Survey at least 200-300 repeat buyers who can share why they like your product, how they consume it in daily life, how often, and what, if anything, they would change.
- Understand that the United States is a class-segmented society (an unclear fact of life to many), and people drink premium brands because of “deeply subconscious, class-affinity [reasons] connected to a desire to be seen as hyper-modern and not as a cultural traditionalist.” Since these folks gather in small, tightly knit neighborhoods, there are specific zip codes that are key upmarket-launch geos. The fact is that “America’s upper-middle-class … has birthed virtually all of the major food trends in the past half-century.” Kombucha companies elsewhere in the world have their own socio-economic landscapes to navigate. Is it any surprise that GT Dave was raised in Beverly Hills?
The road to failure
Here are some of the mistakes brands make that lead to sub-optimal performance and eventual failure as a business.
- Entrepreneurs who set unrealistically fast growth rates and have a distorted view of their optimal growth.
- Being misled by significant door-count gains in the first year, only to see retailers and distributors drop their products and sales decline in year two.
- Failing to grasp how unstable new CPG brands are regarding retail account security, cash flow, and “mouth-to-mouth velocities.”
It’s worth quoting at length what TIG Brands advises:
Here is what you must clearly understand: unit economics, channel economics, and the effect both have on cash. Starting with unit economics, be clear on your baseline COGS. Know what contributes to the final cost, such as ingredients, packaging, and tolling/processing. Once you establish that baseline, attack each with a mindset of continuous improvement. You must have a line of sight as to what changes can be made to drive out costs. When I ask this question, the most common answer I get from founders is volume. Frankly, that is weak. You should understand not only the impact your run size has on costs, but also investigate potential formula adjustments, purchasing options for packing and ingredients, and what if any process changes can be made. All can have a significant impact on the final number.
Channel economics also needs to be understood. This understanding includes the competitive landscape, retailer and distributor margins, trade spend, and logistics. I see a lot of backing into this rather than working forward. Let me explain. Most, not all, founders target a retail price first. Then back out the retailer margin and distributor mark-up winding up at a FOB dock price. That’s flawed logic. It leads to the all too often outcome where every unit sold is an investment. Not enough remains between the selling price and COGS to support trade spend and logistics and that’s before you add in expenses like marketing and SG&A.
- Suffer from low to no awareness of their trademark (by the trade or consumer).
- Not understanding that kombucha’s premium price point immediately eliminates 90 percent or more of category consumers. Alternatively, engaging in ‘price relaxation’ too soon, or, conversely, “refusing to discount your product ever, like an artisan prima donna.”
- Limited capital.
- Lack of understanding that changing individual beverage consumption behavior is primarily a social process that takes much more effort than passionate, over-eager entrepreneurs realize. (To quote William Kendall, the Chairman of LA Brewery: “I assumed that by now, in the UK, you’d have a multiplicity of flavors and kombucha drinks on the shelf, and for whatever reason it’s taking a lot longer. And I have to say, after 30 years in the food and drink industry, I’m baffled as to why it is taking so long.”)
- Confusing their personal drivers for founding their company with category-relevant demand drivers that scale.
- Opening the kimono at shows like Expo West, where BigCo buyers are on the prowl looking for the next hot thing they then do an end-run around.
- Founders who are inexperienced entrepreneurs without retail and wholesale industry knowledge, who lack access to a network of folks who do have that knowledge, and who do not have ready access to financing. Moreover, they suffer from ‘founder myopia’—assuming the product’s first iteration will scale without marketing evidence to support that hope.
- Sales by “sleepy, specialty food manufacturers comfortable with the closed-in, predictable confines of the specialty food channel.” (If you are happy remaining on the shelf of the local health-food store and in the cooler at the hot yoga studio, more power to you. Just accept you are not going to ‘ramp up’ in the manner this book outlines.)
- Chasing growth by buying distribution — “caught up in a distributor’s view of the universe…working for brokers, distributors, and retailers.” This is an especially easy trap to fall into if an investor hands you a bucket of money early in your learning curve.
- Unable to overcome the ‘kombucha face’ response of many who try their product for the first time. Then, failing to educate consumers such that they connect the beverage to high-stakes dietary outcomes such as digestive comfort. How many Brittany Broski’s have you ignored?
- Overthinking each and every launch detail instead of seeing version 1.0 as an experiment. Then, getting caught in reflexive, anxiety-fueled tweaking of “small moves that [cause] too much signal noise underneath the KPIs, preventing founders from seeing what worked or what didn’t work six to twelve months later.”
If you run a kombucha company, this book is a must-read.
Image source: /imagine a fork in the road, one path leads to stormy weather, the other path leads to blue skies and sunshine –ar 16:9 (Midjourney 5.2)