From Crisis to Creativity - Entrepreneurial action in Finnish packaged food & beverage products

F ro m

CRISIS C R E AT I V I T Y to

E ntre pre n e u ri al ac t i o n in F inn i s h p ac k a g e d f ood & b e ve ra g e p ro d u c t s

© 2 0 2 0 A alto Des ign Factor y EDITO R S Tua Björklund Maria Mikkonen Erika Perttunen Anna Kuukka A R T D IR ECTION & L AYO UT Anna Kuukka PH OTOGR A PH Y Maria Mikkonen PRO D U CT & B R A N D PH OTO S Image copyright: the food & beverage brands ILLUS TR ATIO N S Joel Menenes Paul Mikkonen ISB N 978-952-60-3787-5

C O N TACT US: www.designfactory.aalto.fi/designbites Instagram: @DesignBts Twitter: @DesignBites

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CONTENTS FO R E WO R D : L E A R N I N G F RO M E NTR EPR EN EUR IA L ACTIVIT Y 7

D e s i g n B i te s ca s e co m p a n i es

6

Th e fo o d & b eve ra g e i n d u s t r y in Finland

8

E n tre p re n e u r s h i p i n p a c ka g ed food & beverag e p roduct s

10

D e s i g n B i te s fo o d & b eve ra g e ent rep reneur s

12

T i m e l i n e o f t h e Fi n n i s h fo od & beverag e indus t r y

16

Re s p o n s e s to C OV I D - 1 9 f ro m com p anies

18

TAC K LI N G C H A L L E N G E S

21

G o a l s & a s p i ra ti o n s

22

C h a l l e n g e s i n t h e p a c ka g e d food & beverag e indus t r y

24

C OV I D - 1 9 p e r ce p ti o n s o f cris is

26

3 d i f f e re n t C OV I D - 1 9 re s p ons es

28

T R E ND I N G R E S PO N S E S

31

C u rre n t m e g a tre n d s

32

Tre n d m a p p i n g

34

Fo o d & b eve ra g e tre n d s o n t h e s h el ves

36

Tre n d i n g C OV I D - 1 9 re s p o n s es 38 C O LL A BO RAT I N G I N TH E F I E L D

41

D eve l o p m e n t i n te ra cti o n s bet ween ent rep reneur s & s t akeh older s

42

S etti n g t h e t a b l e fo r j o i n t value creat ion wit h in t h e food indus t r y

44

M ov i n g u p & d ow n t h e p ro duct ion, s up p l y & cons um p t ion c h ain to d eve l o p o f f e ri n g

46

C a s ti n g a w i d e n et fo r d evelop m ent ins igh t s & collaborat ion

48

J o i n i n g fo r ce s to b a ttl e t h e ef fect s of t h e corona loc k down

50

F R O M F I N L A N D W I TH LOV E

53

7 s tra te g i e s fo r i n te rn a l i z at ion

54

I n te rn a ti o n a l i z a ti o n s tra te g ies in p ract ice

56

E x p o r ts i n t h e i n d u s tr y

58

H yp e rl o ca l i t y - fo o d f ro m your own bac k yar d

60

( I n te r ) n a ti o n a l i t y i n s o ci a l m edia

62

S to ri e s o f re g i o n a l i t y

66

I n te rn a ti o n a l e f f e cts a m i d s t C OVID- 19

68

Bo o s ti n g t h e Fi n n i s h p a c kag ed food & beverag e ecos y s tem

70

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4

LEARNING F RO M ENTREPRENEURIAL AC T I V I T Y

in the Finnish packa ged food & bevera ges industry

T

his report offers an overview of the state, opportunities and challenges of small to medium packaged food and beverage ventures in Finland. By capturing the industry both at large and the recent turns amidst the corona crisis, we aim to share insights and support entrepreneurial efforts towards creating better, sustainable business. Although the restrictions and lockdown hit the industry hard, creativity can also thrive amidst constraints, as can be seen in the numerous adaptations and pivots that this report shines light to.

Aalto University, the Jenny and Antti Wihuri Foundation and Business Finland.

The report builds on the DesignBites data set of 93 indepth interviews and other data from 47 small and medium Finnish companies offering packaged food and beverage products that we have been compiling 2018 onwards, a social media activity data set of 66 companies during the corona crisis collected March–June 2020, and publicly available statistics of the food and beverage industry at large.

This report has been created by DesignBites, an Aalto University Design Factory research project funded by

Tua BjĂśrklund

Maria Mikkonen

Erika Perttunen

5

Anna Kuukka

Teo Keipi

DesignBites case

C O M PA N I E S

6

!

N OTE THAT TH E REPOR T C ONT ENT MAY N OT REF LECT T HE V I E WS , O PE RAT I O NS O R PO LI CI E S O F A NY I ND I V I D UA L CA S E C O M PA N Y.

7

The food & bevera ge industry

IN FINLAND T

he packaged food and beverage industry is the largest manufacturer of consumables and the fourth largest industry in Finland, with

NET SALES OF

11 200 000 000 € 2018, Ministry of Economic Affairs

>80%

FINNISH CONSUMERS PREFER D O M E S T I C A L LY P R O D U C E D F O O D & WA N T TO S U P P O RT T H E F I N N I S H I N D U S T RY

Finnish Food and Drink Industries’ Federation

8

66 500 000 â‚R&D EXPENDITURE 2018, Ministry of Economic Affairs

5%

AV E R A G E N E T P RO F I T F RO M A N N UA L T U R N OV E R O F F O O D C O M PA N I E S Statistics Finland

16%

OF FOOD & BEVERAGE VENTURES E X P O RT P RO D U C T S

Ministry of Economic Affairs

9

ENTREPRENEURSHIP in packa ged food & bevera ge products

A

lthough Finnish icons such as Fazerin Sininen, HK Lenkkimakkara or Paulig Juhlamokka, or large companies such as Valio, Atria or Hartwall might come to mind first when thinking about this industry, 79% of companies operating in the food and beverage industry have less than 10 employees (Statistics Finland).

1194

VENTURES W I T H < 5 E M P L OY E E S ,

210

W I T H 5 - 9 E M P L OY E E S

241

NEW VENTURES FORMED IN 2019

10

IN A ONE-YEAR P E R I O D ,

OUT OF 190 FOOD & BEVERAGE VENTURES...

83%

H A D L AU N C H E D N E W P RO D U C T S O R S E RV I C E S

40%

ADOPTED NEW TECHNOLOGIES

29%

E X PA N D E D I N TO N E W M A R K E T S

15%

IMPLEMENTED NEW BUSINESS MODELS

Pk-yritysbarometri 2/2019

11

DESIGNBITES food & bevera ge entre preneu rs

12

no previous entrepreneurial experience

71%

29%

previous entrepreneurial experience

7

6 5

5%

4

4% 2%

1

22%

7%

3

20%

founder team size

40%

2

n

= AMO UNT O F FO U N D E RS I N C O M PA N Y

13

MILLENNIAL INFLUENCES G E N E R AT I O N A L B R E A K D O W N OF FOUNDERS !

SC O P E : 47 D E S I G N B I TE S C O M PA N I E S

< 24 Y EA R S [ Generation Z ]

24 - 39 Y EA R S [ Millenials ]

40 - 55 Y EA R S [ Generation X ]

56 - 74 Y EA R S [ Boomers ]

14

3%

5 6%

25%

16%

58%

OF CO M PAN IES HAV E AT L EA ST ONE FOUNDE R

WITH A B US I NE S S OR M A R K ET IN G D EG R EE O R PREV I OUS WORK EX P ER IEN C E

29%

OF CO M PAN IES HAV E AT L EA ST ONE FOUNDE R

WITH A D E S I GN OR A RTS D EG R EE O R PREV I OUS WORK EX P ER IEN C E

38%

OF CO M PAN IES HAV E AT L EA ST ONE FOUNDE R

WITH A S CI E NCE , T E C H N O LO GY O R EN G IN EER I N G DEG REE OR P R E V I OU S WO R K EX P ER IEN C E

38%

OF CO M PAN IES HA D AT L EA ST ONE FOUNDE R

WITH PRE V I OUS E XP ER IEN C E IN T H E FO O D & BEVERAGE I ND USTRY, B U T O NLY ARO UN D

2%

HAD A F O UN DER O R A N EA RLY KE Y E MPLOYE E COMING FROM RE TAIL CH A I N S , W HI C H REPRES EN T K E Y STAKE HOLDE RS AND BUSINE SS CU STO M E RS F O R PAC K AGED F OOD & BE VE RAGE PRODUCTS.

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TIMELINE

of th e Finnish food & bevera ge industry Introduction of yoghurt in Finnish grocery stores

Automization of production processess

Large export of foods to Soviet Union

Expansion of prepared food beyond schools & hospitals

First Finnish pizzeria opened in Lappeenranta

Concerns about the health risks of certain types of food eg.butter, sugar and flour

19 4 0 Import of foods increases as a result of urbanization, introduction of fridges & women starting to work

Cooperative food companies (osuustoiminnalliset ruokayritykset)

Pre-processed food in schools & hospitals

Industrially produced food 30% of the Finnish diet

1 910 S Group foundedn in 1904

Prohibition laws during 1919-1932

Kesko founded in 1940

War time with food rationing (coupons, etc. to buy food with)

Frozen foods gain popularity among ‘common’ people

Elintarviketeollisuusliitto (ETL) founded

Convenience foods introduced to Finland

Beginning of widescale urbanization & transformation of society from agriculture-based self-sufficiency into urban & commercial one

First companies in sweets, bakeries & dairy products Fazer founded in 1891

Increase & technical development of food production, e.g. production of butter, cheese, candy & coffee increases 3-4-fold compared to time before the wars

Publication of Kotiliesi food magazine starts

1 920 Food rationing due to First World War & Civil War

Majority of food and beverage industry branches founded / introduced

Introduction of canned food, in the beginning targeted mainly for the military

1900 Gustav Paulig Coffee roastery founded in 1904

Industrially produced food 75% of the Finnish diet

1 95 0

1 93 0 Depression with food rationing (coupons, etc. to buy food with)

Expansion of branded food production & marketing

1 960

1 970 Increase of processed foods, e.g. introduction of semi-skimmed milk & skimmed milk

Internationalization & More precise M&As of food & bevrequirements for erage companies, e.g. information on food Kotisaari-Ingman in the packages dairy industry, Apetit Pakaste merged from the frozen food segments of Huhtamäki & Paulig

First food fair (elintarvikemessut) in Finland in 1926

before First companies in the grain mills & meat industry in the 1850s

First companies in the beverage industry in the 1810s Sinebrychoff brewery founded in 1819

16

First food production plant in Finland, sugar plant in Turku, founded in 1756

1 900

19 4 80

Pohjois-Karjala project to address increasing health concerns and denounce tobacco, excess of salt & saturated fats

Rising consumption of low-fat milk products & fruit

Price wars among retail chains

Increased expansion of Finnish food & beverage companies into neighbouring countries

Eco store Ruohonjuuri founded in 1982

Finnish fast food chain Hesburger founded in 1980

2000

First foreign retail chain, Lidl, enters Finland in 2002

First McDonalds restaurant opened in Finland in 1984

First Finnish restaurant, Palace Gourmet, gets a Michelin star in 1987

1 990 Increased foreign ownership of Finnish food & beverage companies

Increased investment in R&D by food & beverage companies

Expansion of food products with health benefits, e.g. Benecol

Finland becomes part of EU; free movement of raw ingredients & products

First Burger King restaurant opened in Finland in 2013

Trends: veganism, plant-based foods, organic, food with no additives

Environmental certifications on packages

New ingredients & foods require education of customers, e.g. insects, kombucha, fermented products, pulled oats

Food delivery service Wolt founded in 2014

The Restaurant Day event organized for the first time in 2014

20 10 Increased collaboration among actors in the Finnish food & beverage industry

Obesity of the Finnish people becomes a concern

COVID-19 crisis challenges the food & beverage industry

Increased concerns for animal welfare

20 20 DesignBites project of Aalto Design Factory starts in 2018

17

RESPONSES TO COVID-19 32 from compa nies

New sales channels

30

17

New services & experiences

!

BASE D ON SOCI AL MED IA ACT IVIT Y SE T OF 66 C OM PANIES

Support & prosocial actions

71

New products / Product modifications

March WE E K 12

WEEK 13

April WEEK 14

18

WEEK 15

WEEK 16

W EEK

K 17

T

he packaged food and beverage industry, through the lens of Instagram posts, was very active already from the first weeks of March when the Covid-19 situation started to reveal its severity. While the social media posts consisted mostly of communications and marketing content, we identified 152 different creative actions taken during the three months.

The beginning of the pandemic showed a high intensity of activity, which peaked during the holidays of Easter, Mother’s Day and May Day celebrations, and started to fade out towards the end of May where the lockdown restrictions were eased.

Strict restrictions closing down restaurants, cafes and bars, along with social distancing measures changed the way food and beverage products were consumed during the lockdown. One of the major changes has been the shift to take-away culture from eating indoors, with for example Finnjävel, a fine dining restaurant, delivering traditional meals to households in the capital region and the restaurant Villd, turning wild food brunches into deliverable versions. In some cases restaurants also partnered with retail stores,

for example K-Market Töölöntori selling pre-packed portions from local restaurants Linko Pizzabar, Finnjävel and Jätkäsaaren Sushi (HS 25.03.2020)..

I

n the retail market, online sales of food and beverage products increased at best up to 800% in a week according to Mikko Helander, the managing director of Kesko (Yle 28.04.2020), with over 70 000 households ordering food from online for the first time (Pirkka magazine 6/2020). Overall, the sales in hypermarkets increased the most, as in April the sales grew 14,1%, while in turn the sales in the smaller retail stores decreased 13,7%. Stores located within public transportation hubs, gas stations or smaller cities relying on tourism, suffered the most. According to Kesko, the first two weeks of pandemic got consumers to stock basic food items such as pasta and rice, but levelled back to normal soon after. The increase in available free time and desire for more psychological safety got people baking to the extent that retailers were running out of yeast and more flour was purchased during weeks 11-13 than prior to the Christmas holidays.

May WE E K 18

WEEK 19

WEEK 20

WEEK 21

WEEK 2 2

SUP P O R T AC T I O N S

N EW PR ODUCT S & PR O DUCT MO DIFICATIO N S

NE W SA L E S C H A N N E L S

C OVID- 19 R EL ATED MA R KETIN G & C OMMUN ICATIO N S

NE W S E RV I C E S & E X PE RI E N C E S

19

20

TA C K L I N G CHALLENGES 21

GOALS & ASPIRAT IONS W

hile all of the 47 ventures we have investigated in DesignBites have been for-profit companies looking to grow, monetary gains are rarely the driving force that keep entrepreneurs fired up. Rather, entrepreneurs often launch their ventures to create something new, love for their craft, industry or team, and the drive to make a difference. %

=

Ventures can also be a means toward a larger end.

Entrepreneurs seek impact in a wide variety of issues, ranging from ethical causes and improving sustainability to changing customers’ views on certain food and influencing legislation or the food culture. Almost all ventures name at least one mission. These often stem from the founders’ own passions towards certain causes or issues and are imprinted in the companies’ DNA as leading principles, having an impact on the choices that the entrepreneurs make.

AM OU N T OF M ENT IONS I N DE SI G NBI TE S DATA

18%

… FO R M A K I N G A N I MPACT

Many entrepreneurs note that loving what you do is the only way to make entrepreneurship work. Entrepreneurs emphasize their love for their product, their love for their company, and their love for doing what they are doing.

Being a food entrepreneur is not an easy job, so you have to have your heart in the work to get one through the ups and downs and enjoy the journey.

38%

… FO R T H E PRO DUCT, F I E L D A N D V E NTUR E

Creating something is the most commonly referred to motivation for being a food entrepreneur. One gets to dream, to be inspired, to experiment and even get a little crazy. There is a strong sense of ownership and fulfillment seeing one’s idea manifest into a product on the shelf of a grocery store. The concrete results of the work like a product, a package or a logo – essentially seeing the fruit of one’s labor - as well as positive feedback and purchases from customers are strong motivators and considered as proof of achievement.

44%

… FO R C RE ATIN G

S O M E TH I N G N EW

22

N O T- S O - C O V E R T MISSIONS

43%

36%

21% S o c i al i m p a ct

P rotect ing th e e nv i ro n m e n t C hangin g fo od cu lture Inciting cultural change is the most commonly mentioned mission. Behavior and habits related to food often sit tight, for example the dominance of coffee over tea in Finland, the aversion towards berry wines, or the view of insects as pests rather than food.

Additionally, appreciation for the quality as well as the healthiness of food are areas where a change is needed.

Despite the challenge, many companies are on a mission to change customersâ&#x20AC;&#x2122; food related behavior and habits and, on a larger scale, change Finnish food culture.

The environment, sustainability, and Finnish nature also feature strongly in missions. Many have ecological and sustainable principles as the backbones of their company, influencing everything from the choice of production facilities to the design of the product and the choice of the package. Many ventures also attempt to educate their customers about the environment â&#x20AC;&#x201C; how does the food they eat affect the environment, what is sustainable and responsible food production, and how does a circular food system work among other things.

Environmental missions also often included the quest to favor regional and local ingredients in products and increase the appreciation of local ingredients.

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Social impact ranged from creating jobs and vitality in rural areas to supporting charity causes and organizations such as saving the Baltic Sea or Mannerheim League for Child Welfare. While most social missions were related to local or Nordic issues, social impact could also be sought in the production and supply chains, such as improving coffee or chocolate bean farmersâ&#x20AC;&#x2122; livelihood and working conditions in developing countries.

CHALLENGES in the packa ged food & bevera ge industry

I

n 2019, 25% of Finnish food and beverage companies struggled with insufficient demand, making it the most common hindrance to growth. The runner-ups include insufficient production capacity and lack of skilled workforce at 11% (Finnish Food and Drink Industriesâ&#x20AC;&#x2122; Federation 2019).

The top 3 growth challenges for Finnish food and beverage SMEs are cost levels, laws and regulations, and falling short in financing (SME panel 2/2019, Finnish Entrepreneurs, Finnvera and Ministry of Economic Affairs).

O P ER ATIO N A L & B USIN ESS SC OPE C H A LLEN GES

PR ODUCT & PAC KAGIN G R EL ATED C H A LLEN GES

CUS TOMER S & SA LES R EL ATED C H A LLEN GES

S CA L I N G & MA N AGIN G PR ODUCTIO N A N D SUPPLY C H A IN

UN CLEA R MA R KET & H IGH C OMPETITIO N

L AWS, R EGUL ATIO N S & CULTUR E C H A LLEN GES

TEA M & OWN R OLE & WOR KLOA D C H A LLEN GES

LIMITED R ESOUR CES %

=

AM OU NT OF M E NT IONS IN D ESIGNBIT ES DATA

24

4% 9% 9% 14% 15% 15% 17% 17%

“

The package is really the only thing that the customer sees on the shelf. They don’t see the actual product nor taste it. They don’t taste how good it is. They see only the package and based on that assess whether the product would be good or bad.

“

All the paperwork needed really slows down the growth.

“

On a regular basis, I get offers that someone wants to invest in us, but we’re not really looking for anything like that, because we love to work together. So we want to make this work on our own, with our own resources.

The challenge is to find the right team and the right partners to make this work.

“

There are lots of pieces to juggle in making physical goods, like for example regarding raw materials, what regulations are there, how to ensure their preservation, how to deal with spoilage…. or regarding the package, what should it look like, how to market and sell it.

“

All companies struggle with liquidity when growing. At the same time you should run production as usual, invest in growth and all other kinds of things.

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COVID-19 PERCEPTIONS OF CRISIS C

ompanies followed through Instagram posts showed various levels of engagement from direct actions, to solely communications and marketing, to minimal response. Moreover, the severity of the situation forced some entrepreneurs to react immediately through organizing internal employee safe!

ty measures and ensuring continuation of production, while some ventures werenâ&#x20AC;&#x2122;t affected as much and could in turn use the opportunity to help their communities and experiment with for example new ways of engaging with customers in the virtual sphere.

BASE D ON SOCI AL MEDIA AC T IVIT Y SET OF 66 C OMPANIES

Direct actions & communications [4 0 C OM PAN I E S ]

Mainly marketing & communications [ 11 C O M PA N I E S ]

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Minimal or no response [ 15 C O M PA N I E S ]

DIVERSE CHALLENGES

RE S T R ICTIO N S ON TR AVEL C LO S I N G OF SPECIA LT Y S TO R ES C LO S I N G OF R ES TAUR A N T S A N D BA R S E N S U RI N G A SA FE WO R KIN G EN VIR O N MEN T O R G A N I Z I N G H OMESC H OO LIN G FOR TH E FA MILY AVA I L A BI L I T Y O F R AW IN GR EDIEN T S & PAC KAGIN G MATER IA L S E XC E S S RAW I N G RE D I E N T S AT H A N D DUE TO DECR EA SED DEMA N D & SA LES U N A BL E TO H O S T TA S TIN G EVEN T S IN SUPER MA R KET S H A LTI N G O F I NTER N ATIO N A L SA LES EFFO R T S S E RV I N G R ISK GR OUP CUS TOMER S CA N C E L L ED EVEN T S & FES TIVA L S S O C I A L DIS TA N CIN G MEA SUR ES C H A N GES IN SUPPLY C H A IN C LO SIN G OF H OTEL S

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Dif ferent products types, simila r challenges -

3 DIFFERENT COVID-19 RESPONSES T

he closing down of restaurants, bars and cafes posed major challenges to many of the studied food and beverage companies. While all have packaged goods sold in the retail market, for many, B2B sales is a major source of revenue. Three of the ventures, Kakola Brewing in the craft beer industry, Lehmus Roastery selling coffee and teas, and Helsinki Distilling Company focusing on alcoholic beverages, might have very different types of products, but the crisis affected their sales to their B2B customers in a similar manner, as well as forced their physical restaurant and cafe spaces to be closed down. Battling with similar hurdles, all ventures engaged in activities to get them through the immediate situation, as well as developing their businesses for the future.

â&#x20AC;&#x153;

There are a lot of mixed messages about what is going to happen. Like this morning, I was wondering what did that mean, will there be a third or fourth wave, when do the vaccinations come and what else again.

Everyone is still quite prepared, its not like its going to be a Woodstock-summer, in the sense that all the big events are cancelled. But there have been some good signals too, for example someone still wanted to organise their wedding here in June, which instead of 60 will now have 40 guests.

- M ikko M ykkäne n , Helsinki D istil l ing Compa ny

O PENIN G A KIO S K TO S EL L

FAC EMA SKS

T HEIR PR O DUCT S ,

P ROD U C ED A S A

HAND SANIT IZ ER &

Helsinki Distilling Company

FACE MAS KS

C OLL A BORATI V E P ROD U C T

E NS UR IN G T HAT

S TAR T S

T H E R E S TAUR ANT

PROD U C TI ON

ORG A NI ZATI ON-

S PAC E S C O MPLY WIT H

OF HA ND

A L C HA N GES TO

T H E C OVID- 1 9 SAFET Y

SA NI TI ZER

TEMP ORA RI LY L AY OF F

R E G UL AT IO NS FO R S MAL L

EMP LOYEES, RE-HI RI N G

G AT H E RIN GS AFT ER

FOR HA ND SA NI TI ZER

01.06.2020

P ROD U C TI ON

28

“

PAR T IC IPAT IN G IN A J O INT V ID EO P RO J ECT S H OWCAS IN G

PIVOT IN G

T H E CA N- D O- S P IR IT O F

T HE B EER TAP

TH E LOCA L E NT R E P R E -

PR O DUCT MÄKI L AGER

NE U R S IN T U R K U

INTO A BOT T LED

“Positivity is probably, in all of its beauty, the thing that surprised us and the vibe in our doing. During this time we were able to create things, which we would have liked to do in any case, but we haven’t had the time to. And now, we didn’t have a choice. We just had to keep doing, to revitalise our business to the near normal levels.

VER S IO N

Kakola Brewing

- Ee va Torniaine n , Kakol a Bre wing

O P ENI N G A N C R E AT IO N OF A

O NLI NE S TORE

PR OD U CT B UND L E ,

FO R P RE-ORD ER

SIS S IK A S S I, C OM -

& P I C K -U P

P O S E D OF E X IS T IN G

C HAL L E N GIN G

BEERS

OT HER B R EWER IE S INTO A VIR T UAL ‘ BAT T L E O F T HE

“

B R EWER S ’

B UND L IN G A P RO D-

These external crises are felt by everyone and my own feelings change from deep desperation to extreme know-how. Lehmus Roastery and Satamatie 6 have decided to do everything we can, until we have to put anything else on the doors than ‘opening hours’.

After disinfecting, learning to work remotely, possible layoffs and sorting our mandatory bills, we’ll get to a phase where we’ll decide what we can do in this situation.

U CT PAC K AG E S FO R M AY DAY CE L E B R AT IO NS A N D FO R M OT H E R’ S DAY, D E L IV E R E D LO CA L LY BY C YCL E BY T H E FOUNDER O F K AKOL A

CR EAT IO N O F P RO DUCT B UNDL E S

- Arttu Muukkonen, Lehmus Roastery, Instagram

F R OM OWN PR O DUCT S , AS W E L L AS JO ININ G FO R CE S LO CA L LY FO R A PR O DUCT CAL L E D ‘ T EE S E IT S E IDÄS SÄ’

P I VOTI N G

Lehmus Roastery O R G AN-

A N ETÄ K A HVI ( REMOTE C OF F EE) BRA ND ED

L APPE ENR ANTA BASED

P ROD U C T NEW

& PR O DUCT IO N FACI LI -

C OF F EE & TEA

T IE S TO C O MPLY W I TH

V IR T UAL C O FFE E

U C T S MEA NT FOR A C OF F EE F ES TI VA L I NTO

IZ IN G T HEIR CAFE AT T HE R OAS TERY

O R G ANIZ IN G

EXI S TI N G P ROD -

P ROD U C T S BRA ND -

T HE C OVID- 1 9 DI-

ED U ND ER THE

R ECT IO NS

B R E A KS T HR O UGH

N A MES LOC K D OWN

D EVELOP I N G

& RETK I K A HVI

A P ROD U C T FO R

S OCIAL MEDIA

EMP LOYERS AIM IN G

P L AT FO R MS

TO C HEER U P TH EIR REMOTE WORK ERS

29

30

TRENDING RESPONSES 31

CURRENT M E G AT R E N D S in food industry

32

FER MEN TATIO N

RYE Q UIN OA

GLUTEN

FAVA

FR EE

B EA N S

OAT S

CARBO N R E DU C T I O N VEGETA B LE V E R T I CAL

MEAT

H O L IS TIC

FAR MI N G

DA IRY FR EE

W E L L B EIN G

U R BA N

vegan boom

FA RM I N G

CAR BO N

FLEXITA R IA N ISM

R E D UC T I O N

su sta i n a bl e p rod ucti on

A N IMA L R IGH T S & WELLB EIN G

CIR C UL AR

MISSION - DR IVEN

EC O N O MY

C O MPA N IES

ethi cal food

WA S TE MAN AG E M E N T LO CA L I T Y PAC K AGI N G REC YC LI N G

I N S EC T

C O- CREAT ION EN TR EPR EN EUR N ET WOR KIN G

FO O D DO ME S T I C

ORGANIC

FR E E - R AN G E

FO O D T R A N SPA R EN CY

C O R POR ATE R ESPON SIB ILIT Y

S U PE RFO O D S IN PRO D U C T IO N

IN VA LUE C H A IN

33

TREND MAPPING

“

“ U rb a n Fo o d tech” The future of food production makes the most out of resources available with as little waste as possible. Minimizing emissions from transport, the production facilities are located in the middle of population centers. Farming goes not only urban, but also vertical with indoor facilities and significant saving of water, often with the help of renewable energy solutions. New food ingredients, such as insects and microgreens, are becoming more widely known as common household products.

Several new listings and venture funds have also sprung up to focus on foodtech in particular.

“Taste from Waste”

“G rains o n th e Way”

In the wake of oats, there are several dark horses in the alternative sources of protein and new grains.

Gaining customer acceptance as plant-based proteins are faba beans, and quinoa is raising interest as a gluten free choice. Rye is continuing to grow in export markets for the 5th year in a row.

“Arct i c I n te rest”

Rescuing ingredients from spoilage - or rather, circular economy - is creating viable business. The leftover merchandise from supermarkets is refined from dated bread and smushy fruits into branded products like beer craft beers and premium ice cream, and used coffee grounds turn into a substrate for a thriving mushroom farm.

Especially in exporting to Asia, Finland is on the rise as a brand with a mental link to pure ingredients and unspoiled nature. ‘Nordic’ still has a nice ring to it with lifestyle associations, but ‘arctic’’ might be t he new buzzwor d in marketing if you want to score the points on exoticism!

FOOD & B E VE R AG E TRE NDS Kesko & Suomen Jäätelö: BANANASAJÄÄMÄ BRAN D & P R O D UC T

Helsieni

E XAM P LE S

Vaasan & From Waste to Taste ry: Wasted hävikkileipäolut Jävla Sås

u pcomi ng 34

Entocube

Korpimaan Kyynel

Beanit

Helsieni

Arctic Gin

Härtelö

Pinoa Foods

Kyrö Distillery

Robbes Lilla Trädgård

Arctic Power Berries

Gold&Green Pulled Oats Mozumo

“T h e Ne w C ra ft”

From being the garage-produced underdogs to holding a permanent shelf space in the hypermarket assortments, the craft products keep on snatching bigger portions of the average consumer’s shopping basket. They are not able to compete in pricing, instead, attracting interest by providing a sense of authenticity, uniqueness, storytelling, and transparency - often with a human face behind the brand. Also, smaller players are often the most agile ones, and craft ventures cater the novelty-seeking consumer by creating limited range flavors, the renaissance of micro breweries being a prime example.

“ C o -C o oked C omm od ities” As no man is an island, neither is a food company. Collaborations of different forms ranging from product co-creation, cobranding and brand crossovers, together with actors such as competitors, chefs and restaurants to partners not even operating in the food industry like cosmetics manufacturers, artists or fashion designers are becoming everyday business. In addition to financial motives, the collaborations are often driven by motivations like a culture of experimentation, belonging to the same community, desire to help other small entrepreneurs or simply having fun together.

“ O a ts on th e Ri se” Oat-based commodities have embarked the Finnish markets from various vantage points, addressing the consumer through not only the obvious features such as the appealing locality of the ingredient, benefits for health and environment, but also the sheer diversity of the product range. It has quickly become the unofficial top of mind plant-based protein in the country. In the future, oat may gain ground in the international markets, too, with the keywords of ‘Nordic lifestyle’, ‘pure ingredient’, ‘wellbeing’, and ‘natural superfood’.

METTÄ Nordic & Sugar Daddies

Elovena

Oatly

The Good Guys Kombutcha Olarin Panimo

Sugar Daddies & Kyrö Distillery

Kaslink

Sun-Spelt

Goodio

Sugar Daddies

Polar Nutrition & Villd Restaurant

MÖ Foods Yosa

Fat Lizard

Warrior Coffee

Ice Beaver & Beerger

Nyhtökaura

Kyrö Distillery

m a i n st re am 35

Food & bevera ge trends

O N T H E S H E LV E S "TASTE FROM WASTE":

B a nanasa jä ä m ä Bananasajäämä, a banana ice cream, was born out of a pair of K-retailers’ quest to utilize overripe bananas that would have otherwise ended up in biowaste. Luckily, the ice cream manufacturer Suomen Jäätelö was up for the task and developed a delicious vegan banana ice cream out of Kesko’s surplus bananas. This way, leftovers are upcycled for tasty treats.

"URBAN FOODTECH":

I nsect farm ing s olutio n s Entocube, a forerunner in the Finnish insect food scene, is mainly known for their first product - Sirkkapurkki featured in the mass media as the first product bringing palatable insects to domestic consumers. However, the focus of the venture is on insect farming technology, having developed numerous technological solutions for efficient urban insect breeding. Cricket containers can be placed anywhere, bringing new opportunities for producing protein sources in conditions unsuited for traditional livestock.

"ARCTIC INTEREST":

Kor pimaa n Kyyn el Korpimaan Kyynel, the award-winning vodka from W&K Premium, draws inspiration from the Finnish tradition of homebrew spirits speaking to the Finnish psyche. The spirit, handbrewn and bottled in small batches, has hints of the traditional Finnish grains, rye and barley, in its taste palate adding to its unique Nordic identity. The branding leverages the international appeal of the cold and pure Arctic imagery.

36

"GRAINS ON THE WAY":

Härtel ö

Härtelö, the fava bean ice cream, was developed by seven food science students during a university course.

Fava beans didn’t have much of a reputation despite being one of the oldest grains in the world, but this delicious vegan ice cream has helped to demonstrate their versatility and potential. Fava beans have entered the limelight and product development plans.

"CO-COOKED COMMODITIES":

C ranmary

Cranmary, a gin-infused vegan chocolate, is the result of two beloved Finnish food ventures, Goodio and Kyrö Distillery, joining forces. The collaborative product leverages the best of both brands and is something that both partners love to gift to their collaborators and stakeholders. It’s also a popular international gift, sold at the Helsinki-Vantaa airport. With both ventures having strong brands, such collaborative products help to introduce new customers to the other through crossover.

"OATS ON THE RISE":

Kaurarah k u

Two oat-utilizing ventures, MÖ Foods and Gold&Green, joined forces to create an oat-based quark with a protein granola on top for some supercharged oat power.

Replacing dairy with oat for the quark, and adding some plant-based protein to the granola, this collaborative product opened a new category of oat-based products on the dairy shelves.

"THE NEW CRAFT":

B ette r brea k room cof fee Finns dominate the world coffee consumption statistics as coffee is such an integral part of the Finnish culture we have mandatory coffee breaks included in work contracts. However, often quantity comes before quality in workplace coffee and this is something that for example Warrior Coffee has set to tackle. Its overarching mission is to offer Finnish companies high quality craft-made coffees to serve their employees and, thus, make the coffee breaks even better!

37

TRENDING COVID-19 RESPONSES !

BASE D ON 66 FI NNISH FOOD & BEVERAGE C OMPANIES DU RI N G S PR I N G 2020

PRODUCT BUNDLES [36] Grouping existing products into a bundle with its own brand, either from one’s own product portfolio or by joining forces with other companies was the most common response. These bundles were typically sold through online stores, with the newly created brands linking to remote working, quarantining or holidays that landed on the lockdown period.

“

Somehow, once the first was done, then came the May Day version, which was much easier and faster to do, when you already had a working model. Then came the Mother’s Day Box and these will become permanent additions to us.

- Mik a G rönda h l , Ch jok o

NEW PICK-UP POINTS [11]

HOME DELIVERY SERVICES [8]

Companies relying on on-site product sales, such as breweries or coffee roasteries, were quick to design their services to function in a Covid-19 safe manner.

For example, Fat Lizard Brewing Co., based in Otaniemi set up a beer pick-up outlet, Kyrö Distillery and Helsinki Distilling Co. went for hand sanitizer kiosks and Espoon Oma Panimo turned a van into a Bissebiili - a beer delivery truck.

Often linked to newly created online sales channels, entrepreneurs were quick to think ways of delivering their products to the homes of customers. This meant either partnering with delivery services or personally delivering products in the immediate communities, as for example in the case of Caccu, where customers enjoyed the personal visits by the founder.

38

ONLINE STORES [14] New online stores and sales platforms were created by both food and beverage companies in order to catch up with declining sales and use the momentum of trending online purchasing.

“

30

“

VIRTUAL EXPERIENCES [17]

We started building an online store right away, so we could get some euros back. Plus, now that the worst shock is over, we keep thinking that now that we’ve got it going, it will be useful once this situation becomes normal again. Might be that without the boost of this corona-wave, the online store would be still under works next fall. So I try to see this as a positive thing as well.

N EW SERV IC ES & EX P ER IEN C ES

- Jesse Park k ali , Reco rd Coffee

The ways that we’ve packaged things and tried to make the process easier for people to buy our products, has really worked. For example, the way I can just click ’Sissikassi’ [a pre-packed product bundle of Kakola Brewing’s beers] from our online store and then get directions for the pickup, has lowered the barrier even for the people who usually don’t visit the craft brewery isles at the grocery stores. So we’ve realised that we’ve also been able to attract new and different types of customers this way as well.

Virtual product launches, coffee breaks or brewery tours and other experiences were used as a way to engage with customers when physical contact was toned down to a minimum. The channels used ranged from popular social media platforms such as Instagram LIVE to creating own online platforms, such as Kaffetuubi created

by Warrior coffee or shedding light to the lives of honeybees, set up by Sugar Daddies Honey Co.

“

- Ee v a Ka k ola, Ka k ol a Bre w i n g Co m p a ny

For three weeks almost day and night we worked on the setup and concept. I learned how to use the different software, got all kinds of cables and adapters and programs, and got help from others how to set them up. Because the only way to do [Kaffetuubi virtual coffee breaks], was that I could handle the practicalities with the sessions

NEW CORONA RELATED PRODUCTS [8] The pressing pandemic served as an inspiration to create Covid-19 related products by either entering a completely new product category, such as the production of hand sanitizer or masks, or then through re-branding existing products.

- Riku Uski , Warrior Coffee

39

40

C O L L A B O R AT I N G in

THE FIELD 41

DEVELOPMENT INTERACTIONS between entre preneurs & their sta keholders

W

ithin 72 entrepreneur interviews, DesignBites case companies reported 606 interactions with stakeholders outside of their company when describing their development efforts. These included inflowing information and help from stakeholders to the entrepreneurs, collaboration where both parties learned from each other, and entrepreneurs helping stakeholders through sharing knowledge, contacts and skills. New products, services and business models do not emerge in isolation!

42

=

I NF LOW I N G K N OW LE D G E F R O M S TA K E HO LD E RS TO E NT R E P R E N E U R S

=

M UT UA L LE A RNI N G A ND C O LL A BO R AT I O N

=

O UT F LOW I N G HE LP F R O M E NT R E PRE NE UR S TO S TA K E HO L DE R S

Food industry

other food & beverage companies, restaurants, cafes, bars, industry experts

Supply & sales chain retailers, suppliers, distributors

End users

customers, user communities, influencers

Other industry

companies in other industries, consultants, investors, designers

Public sector & interest governmental funders, media, educational institutions, regional agencies

Personal networks friends, family, former colleagues

46%

26%

43% 11%

20%

75% 25%

81%

19%

16% 3%

58%

14%

37% 5%

67%

12%

32% 1% 91%

9%

7% 2%

43

Setting the ta ble for

J O I N T VA L U E C R E AT I O N

within the food industry

FOOD AND BEVERAGE COMPANIES

RESTAURANTS, CAFES, BARS

and their in-house know-how serve as informal experts in product development for packaged food and beverage ventures, their customer base can be used as a test group to validate product decisions, and in return, small ventures can offer novelty, luxury and niche solutions for these venues.

often support each other with problem solving and sharing best practices, co-creating solutions and new product ideas, as well as combining resources for joint internationalization efforts. Even competitors can collaborate to the benefit of the whole field, with for example small distilleries and breweries rather openly sharing production processes and visiting each other. Competitors can also band together to advance new-to-market products for joint benefits, with for example Entocube offering their assistance for an international competitor in the development of edible insect laws in another country.

LIGHTWEIGHT:

s h aring

info rmatio n

and training, such as NORD-T organizing training nights for restaurants to advance Finnish tea culture

LIGHTWEIGHT: differentiating products

ACTIVE C OLL ABORATION: tes ting

from competitors or scouting for inspi-

small batches of new products with res-

ration from food trends and products in

taurants before committing to scaling

other countries through social media

production or collaborating to find pairings for novel products, such as Ainoa

ACTIVE COLLABORATION: sharing ex-

Winery’s beet wines and Sasso Restau-

pertise on production processes such as

rant’s Hella ja Huone dishes, or crickets

fermentation or using infused botanicals

and beer in the case of Fat Lizard Brew-

in beverages

ing Co.

CO-CREATION: developing joint prod-

CO-CREATION: co-developing new types

ucts, such as MÖ Foods and Gold&Green

of packaging or refining surplus ingredi-

collaborating for a oat-based quark with

ents for use in food products, such as

granola or Sugar Daddies and Kyrö Dis-

Helsieni delivering mushrooms to restau-

tillery creating a whiskey honey

rants while collecting cafes’ ground coffee waste to grow their products in

44

45

Moving up & down the production, supply & consumption cha in

TO D E V E L O P OFFERING

SUPPLIERS AND DISTRIBUTORS also have valuable information that can be leveraged by ventures developing their offering. Suppliers can share knowledge on new ingredients and production possibilities, while distributors and international buyers can weigh in in branding and packaging.

RETAIL

stores not only act as distributors of packaged food and beverage products to consumers, but can also aid ventures in their development efforts. Particularly smaller speciality stores such as lifestyle stores can actively request new types of products, offer shelf-space for testing and host experimentation sessions, as well as providing feedback and validation for new product ideas. On the other hand, airports and airplanes act as testbeds for internationalization efforts with their access to more diverse and international consumers.

LIGHTWEIGHT: asking distributors for feedback on packaging, exploring alternative ingredients from suppliers

â&#x20AC;&#x153;

LIGHTWEIGHT: organizing sample tasting in grocer y stores or testing, such as

We go through lots of discussion with the suppliers of our raw ingredients, about what works, what doesnâ&#x20AC;&#x2122;t and why. I can quite openly tell them what we are developing.

Kolme Kaveria ice cream testing packaging prototypes in the freezer aisles of familiar shopkeeper

ACTIVE COLLABORATION: combining sales channel knowledge about customers and venture product know -how and

CO-CREATION: developing new pack-

production possibilities to create new

aging or products, such as looking into

products, such as Ruohonjuuri request-

more environmentally friendly packaging

ing new types of products from ventures,

together with suppliers

or utilizing surplus ingredients, such as Olarin Panimo developing a craft beer from leftover bread at the local K-market

46

â&#x20AC;&#x153;

CUSTOM E RS A N D U S E R C O M MU N IT I E S are often happy to share feedback and take

We go to the markets, to these local producer-consumer groups, itâ&#x20AC;&#x2122;s a very good way to get to know the customers, to get feedback. We go all around Uusimaa, so we reach quite many places [...] working the mouth to mouth advertising.

part in tasting sessions. Many newer-to-Finnish-market products have also actively supported the creation of communities around their offering, such as fermenting kombucha or growing mushrooms, expanding their own learning of production and growing processes at the same time.

LIGHTWEIGHT: inviting locals for communal events at production sites for informal feedback, seeing how consumers use products through their social media posts

ACTIVE C OLL ABORATION: d evelop ing testing groups and consumer panels, such as forming a network of families across Finland to test new products-inthe-making or inviting food bloggers to experiment with new products

CO-CREATION: developing production processes with the help of active user communities and helping these communities in return

47

Casting a wide net for

DEVELOPMENT INSIGHTS & C O L L A B O R AT I O N GOVERNMENT AGENCIES, EDUCATIONAL INSTITUTIONS AND NON-PROFITS can offer both formal support in

CO-CREATION:

the forms of grants for purchasing services or internationalization efforts, as well as informal sharing of expertise. Many ventures also work with organizations with aligned values to develop processes and products, but also sharing their own expertise to help others.

cooking courses, building the concept

developing

joint

of-

fering, such as Entocube collaborating with an educational institution for insect and recipes together

WILDCARD COLLABORATIONS

can occur with ventures and professionals from any field - for example, DesignBites ventures reported collaborating with fashion companies, clothing retailers, real estate companies, cosmetics, health and fitness companies, museums. These could leverage access to new customer groups, complementary brands, new materials or all sorts of creative ideas. For example, Helsieni collaborated with the restaurant Ultima and a glass-bowl designer to showcase locally grown mushrooms to restaurant customers, The Good Guys Kombucha and Flow cosmetics were collaborating to see if kombucha waste products could be used in natural cosmetics and KyrĂś Distillery co-developed a moisturizer gift with Tummeli, a cosmetics company and a group of bartenders:

FORMAL SUPPORT: development grants and help, such as health officials clarifying which regulations apply to the operations of a venture

LIGHTWEIGHT: recommendations and help from institutions and foundations, such as a university entrepreneurship program offering advice on funding models or a non-profit connecting a venture with a good designer, or Vegaaniliitto

â&#x20AC;&#x153;

helping Kolme Kaveria ice cream to verify the origin and suitability of their ingredients as well as understand needs of ve-

We saw who we were doing it for, why were we doing it with them specifically and then everyone benefited - bartenders got the hand lotion plus the feeling that they were taken into consideration, Tummeli got a bit of a lift to their brand and we got a better connection to the bartenders.

gan users

ACTIVE C OLL ABORATION: ve n t ures giving back and collaborating with nonprofits, such as The Good Guys Kombucha creating a Baltic Sea conservation themed customized flavor for Flow festival

48

F R I E N D S , F A M I LY A N D F O R M E R PROFESSIONAL NETWORKS also come in handy. First iterations of ventures-to-be are often tested with our nearest and dearest, and are a source for quick and easy feedback on taste, branding, packaging, business plans and so forth. Acquaintances can offer low-threshold access to a surprisingly wide variety of fields and expertise. These types of inputs are typically fairly low-key, more intensive collaboration has been rare - with the exception of going into business with friends, family or colleagues in the first place!

“

This Saturday I’m going cycling with my Finnish friend who also has a food brand here and they’re selling in a large supermarket chain. So every time I have questions related to selling in that retail chain, I always call him and he is super helpful. It also helps me to realize that others have similar problems too, they don’t have it easier either. That is super nice.

“

[Ideas] always come from surprising places. For example, I was talking with my good friend from the States, when she was visiting, and when I explained to her about the new idea she told me we have to change the name. That if you ever want to enter the US market, you’ll be in court on the first day. So, those kind of comments, which even if you Google and try to find out, often when you say things out loud, you can get good feedback.

49

S T RO N G E R TO G E T H E R

- joining forces to battle the ef fects of COVID-19 lockdown

â&#x20AC;&#x153;

E

We have been thinking about different possibilities to help others. Perhaps through that synergy, we started and are bringing out a pollinator guide and seed bag, so we could bring a little more community-feel to people, and at the same time use the fact that people are reachable now and thought about things they would like to do

ngaging in collaboration, supporting the local community and using networks to make it through the crisis was evident during the actions of the entrepreneurs. While some aimed to first get their own situation under control before engaging in collaborative efforts, others partnered up right away or scaled successful venture responses to collaborative ones.

- Vil l e Rinta, S ugar D addies Honey Co.

[9 ]

[8]

[5]

collaborative sales channels

joint product bundles

joint new products

50

17

CASE:

Team spirit in th e cra ft b re wing i nd ustry

SU P P O RT IN G AC T IO N S

The craft brewing industry battling with cancelled events and festivals, and closed down bars and restaurants, showed a multitude of ways to make it through the crisis as a joint effort. Selling each other’s products in own brewery shops, creating joint product bundles, challenging each other to virtual brewing challenges and creating joint products, as in the case of the Karanteeni Collabo, a beer brewed as a joint effort by five craft breweries (Moose on the Loose Brewing, Kimito Brewing, Joenbruu Beer Company, Panimoyhtiö X and Sonnisaari Panimo), were ways to simultaneously increase brand visibility, encourage customers to choose local and craft products, as well as get back the lost sales.

On a broader level, active lobbying by Pienpanimoliitto and engaged entrepreneurs were pushing legislation to allow direct deliveries of Finnish craft beer products to customers’ homes (online delivery from Europe being allowed by law). Behind the scenes, rapid construction of online stores got the breweries to share best practices and help each other to work in the most efficient manner and support each other through the crisis.

!

BA S E D O N S O CI A L M E D I A ACT I V I T Y S E T O F 66 C O M PA NI E S

- Kes ko

CASE:

O f fe r i n g a h el pi n g h a nd Entrepreneurs also showed their concern of their direct communities, other small businesses and the ones working in the front lines of the crisis. One of the first reactions on the brink of the pandemic was the #coffeeaid campaign created by Kuopio-based roastery Record Coffee. The roastery wanted to support the struggling local cafes and restaurants and bought gift cards to these venues that were further gifted to customers buying the #coffeeaid products. Especially in the May of the lockdown period, companies were supporting frontline workers through distributing snacks, beverages and treats as a support gesture for their efforts. Sara Marjoniemi, the founder of Caccu, shared that

“

“

During the same week as the lockdown was issued at least all the companies in within our network started to build online stores. Everyone was exchanging messages in a Whatsapp group and comparing which is the best platform and so on. So we were all in the same situation, and it has been really active and sort of small circles, and good collaboration amongst us.

It does work. And this has also led to for example, we have together with companies outside the capital region exchanged products, so our products are sold in their webstore, and we are selling theirs. We have at least products from three or four companies in our own store.

Few weeks ago we did a raffle where you could win a cookie delivery to your home, along with the opening of our new online store. Some people had suggested really great places to donate the price incase they happened to win. One of them suggested the Meilahti Hospital and I thought it was a great idea! It made me so happy that someone wanted to share joy and help others, so we decided to do it anyway. I got in touch with the director of the corona department with the practicalities and set up the delivery.

- S ara Marjonie mi , Cacc u

- To pi Kai re ni us , Fa t Li z a rd Bre w i n g Co.

51

52

F RO M F I N L A N D with

LOVE 53

7 STRATEGIES

f or internationalization

54

!

BASE D ON DE SI G NBIT ES CASE DATA

32%

J O I N I N G FO RCES WITH OTH ER C OMPA N IES

26%

N ATUR A L PULL & N IC H E C OMMUN ITIES

24%

13% 13% 8%

11%

LOCA L DIS TR IB UTO R / AGEN T

USIN G IN TER N ATIO N A L SUPER MA R KET C H A IN S

S OCIA L MEDIA A S A L AUN C H PA D FOR IN C OMIN G EXPO R T R EQ UES T

BU I L D I N G A M A R KET O N YO UR OWN

74%

B US I N E S S F I N L A N D

N O / LIMITED

F

IN TER N ATION A LIZATIO N

inland, with its small population of 5.5 million people, pushes packaged food and beverage companies to seek opportunities outside its borders. Some have established ground locally before considering internationalization, while the ‘born globals’ have had their eyes set towards international markets from day one.

According to DesignBites founder interviews, ventures typically adopt one of more of these 7 common strategies for their internationalization efforts.

55

Internationalization

S T R AT E G I E S IN PRACTICE

a mongst the DesignBites case compa nies LOCAL DISTRIBU TOR / AGE N T

be made available in their countries. Sometimes these requests lead to exports, sometimes not. Nevertheless, they reflect the international appeal of the products.

Using an agent or distributor has been the traditional and most common way to approach foreign markets.

The rationale has been to gain a better understanding of the local culture, access the local agent’s pre-existing relationships with other local actors, and in the best case, step into a ready-built local distribution network.

SEL F-M A D E INTERNATIONALIZATION There is also a group of companies who wish to hold the reins of internationalization in their own hands. They want to establish operations in a new market through local presence of either their employees or trusted local partners. In addition to increased control and influence, this hands-on internationalization enables companies to learn about and familiarize themselves with the new market. This then benefits the firm’s further internationalization efforts, as they mature in a variety of markets and local cultures.

SU PERMA R KE T CHA I N S In addition to food and beverage companies, the Finnish supermarket chains have also started to expand their reach to international markets. As Ruohonjuuri opened its first Swedish branches under the name Happy Food Store and SOK opened its first Prisma in Russia, both companies included Finnish food and beverage products in stocking these stores. As an outcome, some of the case companies became international through somewhat unintended means.

G OV ER N M EN TA L RO U T ES Finnish food and beverage ventures can leverage public assistance and support available for internationalization.

Business Finland and its Food From FInland program, as well as the Centers for Economic Development of the Finnish regions were amongst the most frequently cited public-sector organizations that offer services, such as trips to events and fairs, access to local contacts, and financial aid to companies with internationalization aspirations.

SOCIAL M E D I A AS L AUNCHPA D The significance of social media has increased tremendously in recent years. In addition to being a channel for one-way marketing, food companies are increasingly using it as a medium of two-way communication with their customers. For example, interest has been shown from countries such as the U.A.E. and South Korea, through inquiries as to how DesignBites companies’ goods could

56

J OIN IN G F ORCE S W I T H OTHER COM PANI E S

P U L L A N D N IC H E CO M M U N IT IES

Sometimes internationalization is initiated through partnerships with companies which are not directly involved in the food and beverage industry. The Finnish airline, Finnair, has been an important partner for many of the DesignBites companies, taking their products to the inflight sales selection. This offers the case companies exposure to international travelers. As quite a few of the DesignBites companies have products categorized as premium or exclusive quality, non-food outlets are sometimes the first points of sale in a new country. For example, the collaboration between Goodio and the American bookstore, Barnes & Noble, extended Goodioâ&#x20AC;&#x2122;s reach and presence to every American state.

For food and beverages in more niche or premium categories, the pull for internationalization often comes from a global niche community. A great example of this is the craft beer scene, with its open and collaborative culture among breweries across country borders. For example, both Fat Lizard and Olarin Panimo have done collaborative beers with foreign breweries, the former with a German brand and the latter with an Estonian one. These collaborations are apt to spark interest among the global niche community.

USA BA LTI C S S O U T H E U RO PE

5%

4% N OR DICS

6%

JAPAN

30%

7%

RES T O F ASI A

export markets

8%

11% UK & I R EL A N D

17% 12%

MIDDLE EUR O P E

G E RMA N Y !

BASE D ON DE SI G NBIT ES CASE DATA

57

E X P O RT S

in the industry TO P 8 FI NNI S H F OOD & B EV ER AG E EX P O RTS

155 M €

FRESH FISH

146 M €

A LC O H O L I C B EVER AGES

138 M €

B U TTE R & OTH ER MILK FAT PR O DUCT S

87 M €

S U G A R PRODUCT S

69 M €

POW D E R E D MILK

58 M €

OAT S

53 M €

C H O C O L ATE

48 M €

CHEESE

13,7%

GROWTH I N F OOD & B EV ER AG E EX P O RTS IN THE F I RST HA L F O F 2019 Minis t r y of E c on o m i c A f f a i r s 2 0 1 9

58

16%

F OO D & B E V E R AGE SM Es EX P O RT IN G THEIR GOOD S M in is t r y of E c on o m i c A f f a i r s 2 0 1 9

SWEDEN

19%

OT H E R C O UNT R I E S

35% ES TONIA

8%

export value distribution across markets in 2018

7% FR A N CE

3%

3%

6% 4%

4%

5%

6%

LI T H UA N I A

R USSIA

CHINA NETHERL ANDS PO L A N D

!

GER MA N Y DEN MA R K

SOU RCE : FI NN I SH FOOD AND DRINK INDUS T RIESâ&#x20AC;&#x2122; FEDERAT I O N & CUS TO M S

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HYPERLOCALITY

- food from your backya rd

I

ncreased concerns about the unsustainable nature of the present industrialized global food economy has inspired a group of food startups to think about the choice between domestic and international markets from a hyperlocal perspective. These hyperlocal food ventures aim to build a localized food production system often operating in a circular manner wherever

in the world they are based. These ventures intend their products to be produced using ingredients within the same local region and sometimes even the products are to be consumed with metres, rather than miles, between farm and fork.

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CASE:

Hel sie ni The mushroom home grow kit provider, Helsieni, was born with a quest for circular production. The two founders had a mission of cultivating mushrooms on what others might call waste including used coffee grounds, agro-industrial byproducts and other unutilized nutrient streams. Although Helsieni provides consumers with mushroom home grow kits as well as online support through a Facebook group, they also have their own production facility functioning almost complete with principles of circular economy. All the raw material - except for the actual mushrooms - used in the production come from waste or excess of other local food companies and again the waste from Helsieni’s production go to be raw material either for their consumers or for their backyard garden at their production facilities.

CASE:

P i noa Foo d s Founded by three friends, Pinoa Foods sprang up from joined enthusiasm in technology combined with their interest in agriculture and possibilities of eco-friendly production. Their business idea of growing microgreens locally indoors focuses on sustainable farming aiming for the smallest possible carbon footprint. The vertical farming technology makes maximum use of space, saves significant amounts of water, and, due to the location near the end users, logistic emissions are cut down to minimum. Local top restaurants are their main customer group, but recently they have also introduced products for consumer markets, the names of which feature local neighbourhoods like Töölö and Rööperi almost as further emphasis of hyperlocality.

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(INTER-) N AT I O N A L I T Y on social media

13%

S

ince the launch of social media channels like Facebook and Instagram, they have become the most common way for companies to convey their stories and communicate with customers both domestically and internationally. The visual and instant nature of these channels enables companies to use more casual and aesthetically-oriented tone in their interactions.

OF F I NNS P RE FER PROD UCTS W I T H IN TER E ST I NG STO RY AND ROOTS

As social media is often the first touch point international customers have with a company, the visual narrative it tells has power. For example, the company can choose to emphasize its local Finnish or Nordic identity or convey a more international image, or, on another front, the company can draw an image of naturalness or an image of top-notch technological expertise - or mix and match!

The key is to find what works for you and fits the voice you are aiming for your company to have.

Kes ko

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From Nordic roots …

Emphasis on local Finnish or Nordic identity with social media imagery of fields of crops and idyllic farm houses like in the case of Knehtilän Pieni Puro or of forests, birch trees and picnic baskets as in the case of Nord-T.

IG: @knehtilänpienipuro

IG: @knehtilänpienipuro

IG: @nordtcompany_jp

IG: @nordtcompany_jp

...to international v ibes Highlighting an international identity as for example Goodio does in its Instagram with photos of the signature square chocolate in cities all around the globe, or Beanit and Gold&Green convey with photos of recipes inspired by food cultures worldwide.

IG: @beanitsuomi

IG: @goldandgreenfoods

IG: @goodiogoods

IG: @goldandgreenfoods

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From e m ph a s is on natureâ&#x20AC;Ś Building an image of naturalness as for example METTĂ&#x201E; Nordic does with imagery of lush green forests and plants such as nettles, dandelions and spruce (used as ingredients in their products) or Sugar Daddies with photos of bees and flower meadows and an occasional one of rugged fjords and cold waves.

IG: @mettanordic

IG: @mettanordic

IG: @sugardaddieshoneycompany

IG: @sugardaddieshoneycompany

IG: @pinoafoods

IG: @pinoafoods

IG: @warriorcoffee

IG: @warriorcoffee

...to emphasis on technology Conveying an image of technological expertise with photos of professional and clean production facilities as Pinoa Foods does in its Instagram or with images of top-notch coffee roasting machines and coffee making equipment as in the case of Warrior Coffee.

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S TO R I E S O F REGIONALITY S

torytelling is a way for a company to stand out from competitors, especially when entering international markets. There can be multiple levels of stories starting from the entrepreneurs themselves and the company all the way through to individual products.

Kyrรถ Distillery and The Good Guys Kombucha provide two examples of starting with products not traditionally made in Finland - whiskey and kombucha - and then bringing different levels of regionality into the picture.

F RO M IM P ORT E D T RE N D S TO DOM E ST I C CULT U R E

C H AN GIN G T HE

A DVA N C I N G THE

F INNIS H DR INKIN G

C RA F T KOMBU C HA

CULT U R E BY O FFER IN G

C U LTU RE THROU GH AC TI VE

A B ET T ER AND

PA R TI C I PATI ON I N I ND U S TRY

H E ALT HIE R O PT IO N

ORG A NI ZATI ONS A ND

FO R B E ER

HELP I N G OU T NEWLY FOU ND ED VENTU RES

NE W E S T PR O DUCT R A N G E DR AWIN G INS P IR AT ION FR O M FINNIS H

The G o o d G u ys Ko m b u ch a

N AT UR E WIT H IN GR EDIE NT S L IKE NET T L E AND J UNIPER B ER RY

LEVERAGI N G THE GLOBA L KOMBU C HA TREND A S A WAY TO BRI N G QUA LI T Y TEA

FO UNDER S

BAC K HOME TO

FAL L IN LOVE WI TH

F I NL A ND

Q UAL IT Y T E A DU RI N G T R AVE L S IN S O UT H - E AS T A SI A

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I NTERN AT I ONAL AP P EA L , THO RO UGHLY RE GI O N A L STO RY K YRÖ HA ND SA NI TI ZER WI P ES BROU GHT TO TH E F LI GHT S OF F I NN A IR, THE N ATI ON AL A I RLI NE

C O MPANY T Y PEFACE ADAPT ED FR O M LO CAL C O MMEMO R AT IV E F I ND I N G SI TE

S TAT UE

AT I SO-K YRÖ, WHERE 3/4 FOU ND ERS A RE BORN

Ky rö Dist i l l e r y

N A P U E G IN NAMED AFTER LOCA L H IS TOR IC N A P UE BAT T L E

FOU ND I N G S TORY: I NSP I RATI ON AT THE SAU N A A MON GS T F RI END S

IS O - KY R Ö AND FINNIS H N AT UR E PR O MINE NT IN C O MPANY IMAGE RY

ES TA BLI SHI N G

AND B R AND

K YRÖF ES T A S A LOCA L SU MMER F ES TI VA L AT THE D I S TI LLERY, WI TH MU SI C , A R T A ND OF C OU RSE D RI NKS

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I N T E R N AT I O N A L EFFECTS a mid st COVID-19

N

ot only did the Covid-19 hamper with our domestic consumption patterns and behaviour, but affected the internationalization efforts as well. Common hurdles for the entrepreneur were quickly changing travel restrictions, inability to meet importers face-to-face, changes to supply of foreign raw ingredients, as well as declines of sales in international market channels.

C HAN G ES TO I NTERN AT I ONAL SALES ST R AT E GI E S

SEEK IN G D O M EST IC A LT ER N AT IV ES Palms & Berries in turn, with acai berries as their main ingredient, faced issues over transport from South America. With the limited availability of their raw ingredients, they started to innovate with local Finnish ingredients on ideas that have been waiting for realization in the past.

During the lockdown period, Palms & Berries launched their new smoothie mixes as a way to meet the increase in demand of deliverable healthy snacks and used the opportunity to enter a new product category. The experimentation led to diversification of their product portfolio, new domestic partnerships and increased resilience to face similar situations in the future.

For export-led organization METTĂ&#x201E; Nordic, the pandemic hit hard through halt in direct export sales, new potential market opening, as well as due to lack of tourist customers in Finland.

Foreign markets and international tourists as a target.

Closing down of borders and the instability of the markets cathe Finnish wild herb company METTĂ&#x201E; Nordic to halt their internationalization towards the Japanese market with potential upcoming business opportunities, as well as presence at the Tokyo 2020 summer Olympics. Moreover, a Japanese retailer Muji, serving as a key sales channel to both locals and tourists, closed its doors during the lockdown period. On the bright side, a Business Finland support grant allows them to research and explore new channels for further export sales.

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BOOSTING

the Finnish packa ged food & bevera ge ecosystem

A

ction lies in the heart of entrepreneurship. Crises create real problems, but as a silver lining they can also give the permission to hustle and extend entrepreneurial spirit to the wider community.

Finnish packaged food and beverage companies are packed with not only high-quality goods, but great

examples of stepping up to innovate, co-create and generate a positive impact on communities and the environment. Based on both best practices and challenges faced by entrepreneurs, we offer the following tips to those looking to turn up the heat in the Finnish food and beverage cluster:

F OR E NT RE P R EN EU RS & CO M PA N IES Untap hidden skills and resources.

Can you leverage existing skills amongst your ventureâ&#x20AC;&#x2122;s team members? Are there skills in hobbies or interests outside work that can be used to tweak products or reach new consumers?

Keep experimenting.

Has the crisis lowered the threshold for any experiments you could do? Which previously discarded ideas or ideas waiting in the pipeline could be relevant under the changed circumstances?

Join forces with others.

Can you team up with another company to create a new bundle, product, service or marketing campaign? Which previously discarded ideas, or ideas still waiting to be executed, could be relevant under the changed circumstances? Who could have complementary skills or resources?

Learn from experience.

What have you learned during the crisis that could be used going forward? What can you learn from others in and outside of your field about physical offerings, virtual spaces and combining these?

You will learn more from action than in-action, just take a series of small enough risks rather than going too big to fail.

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F OR CO N SU M ERS Get active on social media and do your research.

Learn about the people behind companies, their underlying missions and send feedback on their products. Your experiences are valuable insights for further development!

Be curious.

Try out one new domestic small product each week or month. You might find a new favorite and support struggling small businesses.

Get closer to the producers and suppliers.

Find out if you can purchase products directly from the producers in your area. Let your local retailer know what products you’d love to see in their aisles and help tailor offerings to the local customer base.

Vote with your wallet.

Your purchases channel resources to someone - what kind of products, services or missions do you want to support?

Specific feedback is golden - share exactly what made a product or experience good when you encounter something you love.

F OR ED UCATORS & P U B L IC O RG A N IZAT IO NS Create new connections.

Who would be easy to help with your skills and resources and who would benefit from your help?

Be available.

If you offer support or help, how do you make sure the right people will find their way to your help? Find out where your stakeholders are and go there, whether that’s for example instagram, word-of-mouth from key connectors or trade magazines.

Strengthen the surrounding community.

How might you strengthen or support the communities you belong to? Can you increase the number of serendipitous encounters and rich interactions to promote learning from one another?

Leverage your public status to lower barriers.

What can you do that a private organization couldn’t? Can you offer support or help for entrepreneurs to navigate amidst the rules and laws in the food and beverage industry?

Learn what's desirable and easy for those you're trying to help to get the most mileage for your support.

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C O N TACT US: www.designfactory.aalto.fi/designbites Instagram: @DesignBts Twitter: @DesignBites