Here’s to our second full year in business. This past year presented many learning opportunities in order to allow us to grow in the coming years. From production efficiencies to sales and certifications, we’re now well prepared for the long term. I’m confident 2019 will be our best year yet!
However, food startup life is far from sunshine and butterflies. This 2018 recap is my first attempt at letting you into our collective brain as we build this bone broth brand. I find it inspiring when entrepreneurs talk openly about their struggles.
This is my attempt to do so for you. It’ll serve as an artifact from which our team can look back on for years to come.
With that let’s look at the ups and downs and plans for 2019.
We’ll start with what did not go well.
Name change, a blessing in disguise
This was a complete shit show. If you are unaware, a competitive company submitted complaints about us to the CFIA (Canadian Food Inspection Agency).
There’s a lot of legal mumbo jumbo about using the term ‘pure’ on food labels. The complaintee (is that word?) argued that in order for our product label to state ‘pure bone broth,’ then our ingredients should only be bones and water. Since we use organic vegetables and spices, then we are ‘misleading’ to consumers, so they say.
Whenever people cast hate on you, they’re projecting their own insecurities. I decided to play nice and change our name. The alternative was a lengthy and expensive legal process. Two things I don’t have are time and money.
In general people are horrible at placing fair value on their time. For example: is it really worth getting stuck in a phone tree for two hours to dispute an extra $2.5 on your phone bill? That is a digression for another day.
Now I see our name change as a compliment because whoever did this is clearly threatened and concerned about their own situation in business and in life. I kind of pity them in a weird way.
Regardless of that, it’s difficult to quantify the damages here to our brand. But I figure it cost us a lot. We had no effective way to communicate this change to our customers. This is still the main challenge with retail based businesses: limited customer interactions and data.
This also led to the most stressful couple months of my life between mid december 2017 and mid February 2018. There was a ton of uncertainty between our business, our copacking partner and the CFIA.
It kickstarted lengthy inspections by the CFIA into our packaging, sourcing and production methods.
At one point it seemed as though we were going to get all of our bone broth pulled off of store shelves. This is hard to come back from. Let me just say that I’m glad this saga is over.
After reading Ryan Holiday’s work years ago, I’ve trained myself to see obstacles as opportunities to learn. My default mindset now reframes setbacks as ways to grow. There is always a positive in every failure, you just have to look for it.
In our case, changing the name to BLUEBIRD PROVISIONS allowed us to extend our product range outside of bone broth without confusing our existing customers. We’d have to consider a brand shift or name change at some point anyways.
This just expedited things :). This brings me to the next thing that did not go so well.
Product launches are tricky (Vegan Mushroom Broth is coming)
As of this writing, there are a few days left in 2018 and we still do not have our new vegan mushroom broth on store shelves. I envisioned launching this September 1 and now January 15 looks to be more realistic.
It’s easy to say this was out of my hands, with much of it due to bureaucracy and certifications slowing things to a standstill for months. However looking back I could have planned double the amount of time to get the vegan mushroom broth to market.
There’s also no playbook for making broth out of medicinal mushrooms. No one has done it to my knowledge, so it took a ton of research and test batches to get the taste right. My standards are incredibly high!
Never in my wildest dreams did I think it would take 6 months to launch. We’re now at 8 months and counting with still nothing to show for it (although it is finally ready to ship). We missed the important holiday broth season. I take a major L on this one. Lesson learned.
That being said, the early sampling feedback we got from customers in Vancouver and also at CHFA East is amazing! There is no product remotely like it on the market.
Selling things is tough!
We missed my lofty sales target, causing me to adjust things a bit for 2019. The category did not quite grow as quickly as my optimism suggested. This is okay as I am playing the long game anyways.
I expected a few new retail and distributor accounts which did not pan out for various reasons. One is that more bone broth companies entered the market, increasing our competition.
Another is our organic certifications were supposed to come through in October, and we have a lot of new business hinging on that. Also, the vegan mushroom broth delay hurt our sales.
In the organic food industry, you get a lot of enthusiasm on sales calls and at trade shows from retailers. However, these are just window dressing until you get a purchase order in hand.
As we grow across Canada the sales cycle gets longer. Gone are the days when I could show up at a grocery store, samples in hand, and make a sale. We now have to wait for category reviews once per year before we get the opportunity to pitch and ultimately get on the shelf.
I value all of our shortcomings. Mistakes and failures remind us how close we can to not having a good story to tell.
Let’s switch gears to more positive things. What went well in 2018?
Strengthened our supply chain
2017 we had major issues locating enough raw ingredients to meet our growth. We also switched to a new copacker which further caused delays getting up to speed with our production and fulfillment.
It left me frustrated that we were constantly late and in many cases shorting (not shipping the full order) our retailers. As a people pleaser, this was far from an ideal situation.
I couldn't sleep knowing that we’d eventually be shorting more orders throughout 2017. Addressing our supply chain and manufacturing quality was my main goal of 2018.
This past year we’ve deepened our relationships with the farms we source from in order to sustain growth for the coming years. It makes me incredibly happy that we can continue our growth using 100% Canadian GAP (Global Animal Partnership) and Organic Certified farms for both our beef and chicken bone broth.
GAP is a third party animal welfare audit which ensures that farms adhere to the highest ethical standards when raising and treating animals. They also ensure that our beef farms are practising regenerative agriculture which is a net positive for the environment.
We learned how to make a lot of bone broth
In line with our supply chain is our manufacturing. I’m grateful to have met our copacker, who are the most professional group of people I’ve come across in this industry.
Prior to this, I rented a commercial kitchen, purchased all of the equipment needed, hired random people off craigslist and made all of the bone broth myself. I was essentially a glorified line cook getting up at 5am every day to package bone broth.
While far from an ideal situation for my well being I see this period of my life as a rite of passage. You need to eat crow sometimes, and if it were easy then everyone would be doing it.
I wish I could paint you a pretty picture of our transition to the copacker, but that would be a lie. Neither of us have produced bone broth at such a large scale.
To say it is tricky would be an understatement. At times it felt like the blind leading the blind. But patience and persistence paid off.
We invested a lot in research and development and continue to as I see this as an ongoing process. Our bone broth is consistent for the most part, save for a couple of large production runs which did not go so well.
Most importantly is food safety. Our copacker has the highest SQF and GFSI food safety ratings possible in Canada. This helps me sleep at night and I have lots of confidence going into 2019 that we can continue to grow with our current copacker.
There’s a lot of great bone broth available in Canada
Bone broth is growing but is still in its early stages as a food category. There is a low barrier to entry for regional bone broth companies, giving consumers plenty of local choices. Any industrious human can buy equipment, rent a kitchen, get licensed and sell at farmers markets.
As a result, our main competitors are now the 1-3 regional craft style bone broths found in every major Canadian city. For the record I think this is awesome! Competition is needed to introduce new consumers to bone broth.
Bone broth is more difficult to produce and distribute at scale. Every company realizes this at a certain point. Despite what you may think, costs are incredibly high due to more competition for the raw ingredients and shortage of viable production facilities. As a result, margins are incredibly tight despite the seemingly expensive nature of the product.
My long term goal is to make bone broth equitable for everyone in Canada. After all, it doesn’t do a ton of good when the people who need bone broth most cannot afford it.
Regardless, I assure you that no bone broth companies in Canada are printing money. Some smaller regional ones may be profitable. The larger ones in Canada are not. The country is so large that shipping is incredibly expensive.
It will be interesting to see how the category continues to evolve. These craft-style bone broth companies keep us on our toes and drive me personally to be better.
Competition is not only good, but necessary in order to build awareness and grow categories in the organic food industry. We are seeing it with kombucha, where the top brands have banded together so much so that there is a frickin kombucha association funded by these brands.
Bone broth is quite a small category with lots of room to grow. We intend to lead the growth.
What are our commitments to you for 2019?
Rolling out our certified organic bone broth
You read that correctly! We will finally be certified organic for our beef and chicken bone broths. Once we launch we’ll be the only certified organic bone broth available across Canada!
Much like our mushroom broth launch, this is delayed like you would not imagine. It’s been my plan and main goal since starting Pure Bone Broth back in 2016 to go organic.
It also means everything to me and our brand to continue sourcing exclusively from Canadian farms who steward the land responsibly and treat animals by my ethical standards.
You can say what you want about organic certifications, but currently it is the best system we have to ensure quality and integrity of food products at retail.
We are so close! Our bone broth will be certified in Jan or Feb or 2019, then you can expect to see our new organic bone broth on the store shelves across Canada in March or April. Yippee!
Tighten up our margins
Margins are tight. Now that we have some semblance of operational control with producing and shipping frozen bone broth across Canada, we need to get our margins a bit tighter so that we can safely grow.
Luckily I have a plan in place to gradually chip away at this. It is an ongoing process that won’t ever be complete.
Most food startups burn a ton of money. That is because to grow, you need to pay expensive listing fees to get into major retailers. Once you are ‘in,’ you are expected to give free product to each individual store in order to mitigate their risk of stocking the shelves with your product.
Further, to get on shelves means you are bumping off another brand. This is the not-so-big secret that cripples growing food startups.
Let me paint a picture for you that describes most growing food companies. As they grow they have more purchasing power to negotiate more favourable costs from their suppliers. However, this means buying raw ingredients in insanely large quantities up front to ensure no disruptions in the distribution of their finished product at retail.
When companies finally sell this product to retailers, payment terms are typically 30-45 days, although in some cases we have negotiated these down to 15 or 21 days.
This is a long winded way of saying the bank accounts of growing food companies is a giant yo-yo every month. There is not a ton of room to spare and it never gets easier as you grow. You’re just moving more money around then before.
Given we are self funded and running entirely off cash flow, things are tight. As we plan our growth for 2019, I anticipate having to pay large listing fees to get on shelves at certain retailers.
Direct to you
Similar with organic, my other goal when starting this bone broth company was to sell directly to you, the consumer. My naiveté was comical. Anyways, this is tricky because of a few things:
- There is currently no sustainable or recyclable shipping package for frozen foods to individual homes.
- Canada is massive
- It is not cost effective to ship across such a massive country even if there were recyclable shipping materials for frozen food products.
- There are no fulfillment centres (to my knowledge) in Canada who are interested in fulfilling frozen food products.
If you do have a solution to these issues above, please get in touch with me by commenting or emailing me. I’d love to hear from you!
Thanks so much to YOU, our loyal customers, for a great 2018. Also a heartfelt thanks to our suppliers, manufacturing partner and trade partners. It takes a village to keep things moving.
I can’t wait to share more about the highs and lows of building this brand with you in the coming year. Expect more regular updates in writing about how things are going all year.