Operating in the same market does not always make competitors. Despite the alcoholic beverages industry being heavily restricted by laws and regulations, it is also an industry with a lot of cooperation going on between different players. Especially the field of craft beer has a myriad of informal collaborating amongst small breweries – competitors in one sense, but collectively seeing themselves as working towards similar goals and in contrast to the “big players”.
Cabbage farmers with passion to innovate and work with various projects involving farming, nature, bees and handcraft, Sugar Daddies Co. based in Iso-Kyrö is a good case where linked missions influence business actions, strategy and decision making. Conveyed through for example in their company story, establishment of a foundation for saving the bees (Sugar Daddies Foundation) and shining light on the actions of the ‘little ones’ at work in their Instagram and Facebook posts, the core mission is raising awareness over their mass extinction and the important work bees are engaged with.
“One evening while paddling through the waves we started thinking from where to get surf wax that would stick like no other and be as ecological as possible. After surf enjoying a hot tea with honey it hit like a lightning. Bees are going to solve our small problem by helping us crafting Arctic Surf Waxand making all of our lives sweeter than ever at the same time – literally.”
– Sugar Daddies
These surf enthusiasts also aim to provide ecological alternative products to the surfing community and thus, contribute to the livability of our oceans and seas across the globe; as such tackling important another mission. Juho Wiberg explains that the starting point for their surf wax was purely from an ecological standing point. They wanted to create something that could even be eaten or wouldn’t cause any harm if accidentally dropped into the ocean. Through tests with the arctic surf community in the Lofoten to the tropics in Bali, Indonesia, a wax consisting three basic elements of spruce resin, beeswax and hemp oil (and some secret herbs) was created – basically created with something that could be picked up from your own backyard.
Over all, the Sugar Daddies also hope that their activities combined with other innovative new companies in Iso-Kyrö, such as Kyrö Distillery, will bring sustainable change and wellbeing in the Kyrö region. Interestingly, there seems to be active drivers in this community who are bringing together like-minded actors within the Iso Kyrö region and sharing knowledge amongst each other.
Collaboration and co-creation between companies can spark new ideas, products and ways forward. Restaurants and their chefs have been one of the most active development collaborators of packaged food and beverage entrepreneurs, testing products as well as coming up with new ideas.
One example of product co-creation in venture-restaurant partnership can be found between Michelin-star restaurant Ora and the raw cacao chocolate-maker Goodio. The relationship between the two started out with Goodio supplying their chocolate to chef Sasu Laukkonen, who had been on the lookout for interesting Finnish made artisan chocolate. Initial good experiences encouraged the restaurant and chocolatiers to deepen their collaboration. They ended up co-creating Goodio’s Nordic Flavours series, drawing inspiration from Finnish nature. The chef of Ora played a key role in figuring out how to produce the signature crystals in the chocolate.
“Sasu Laukkonen, who has used our chocolate in his menus, was actually developing our Nordic Flavours series. He worked with us on the taste profiles and was brainstorming the flavours with us. Sasu went to the woods to get spruce and got them crystallised, among other things.”
– Jan Vilppo, Goodio
Both parties benefited from the new product series – Ora got new treats to be added to their desert menu and Goodio luxurious products to help them stand out in domestic and international markets. Similar ways of working and a shared value base helped to ensure smooth collaboration. Indeed, in addition to – and sometimes despite of – financial motives, such collaborations are often sparked by mutual cultures of experimentation, belonging to the same community, the desire to help other entrepreneurs, or simply enjoying working together.
“The founders of Goodio are similar to me, spontaneous. They want to develop good things and good vibes, and in that we are similar. You usually need similar minded people to do collaborations with, that’s when the work will be fun. Not only is personal chemistry important, but also the way that the other business operates. They have such a good mentality in working, they really can rise above the bulk with their quality.”
– Sasu Laukkonen, Ora
For chefs, their work is often full of experimenting with flavours, ingredients and preparation methods. While product development “as usual” is done within-team, collaborating with similar-minded others outside of the organization can help reach a creative “shared grey zone where you can freely romp about”. Such experimentation can lead to valuable outputs and learnings, despite being unable to predict at the start where these creative collaborations will lead to. As such, the entrepreneurial logic is not trying to predict the future, but rather attempting to create it through action.
“The targets of the collaborations will crystallise themselves with time in co-creation. Very rarely are there any formal assignments. More fluffing around, doing all sorts of things. And what’s produced as a result is free to use.”
– Sasu Laukkonen, Ora
Already familiar with utilizing the expertise of bartenders in their earlier products, Kyrö Distillery Company decided to utilize the expertise of international bartenders in developing their bitters. After choosing seven bartenders as co-developers, the company sent out development kits of herb distillments for them to mix and experiment with. An open-ended development period started where the bartenders could create their own bitters, and with them also cocktails using the company’s other products.
“This was really open-ended, we just decided that we want to do a bitter, but we hadn’t limited it beyond that. Another scope decision, which of course was made consciously, was that we chose bartenders, so that we could in a way get a bitter that would be possible to mix or use in cocktails.”
– Kyrö Distillery
Video conferences were used to share recipes and ideas periodically. Finally, the co-creators were invited to the distillery in Isokyrö for a three day workshop on finalizing the product on-site. The co-created bitters were then moved to internal development and prepared for production. Two bitters were launched just in time for a bitter Valentine’s Day event in 2018, banding together with the bitter chocolates of Goodio to offer an alternative mood for the traditionally sugary sweet celebrations.
While the collaboration ran smoothly, in hindsight, Kyrö Distillery realised that bitters was an unclear product category to end consumers. They learned that running a parallel group of consumers would be a good addition to collaborating with experts.
Within 72 entrepreneur interviews, 37 DesignBites case companies reported 606 interactions with stakeholders outside of their company when describing their development efforts – we’ve analyzed what these reflect on during-crisis collaboration.
CREATIVE RESPONSES OF FINNISH FOOD VENTURES AMIDST THE CRISIS
Based on interviews from 24 Finnish food ventures and 844 Covid-19 related Instagram posts in March-May 2020 from 66 Finnish food ventures, we found that many companies were active experimenters right away when the pandemic hit. While the social media posts consisted mostly of communications and marketing content, 152 posts from 40 ventures showcased new products, services, sales channels and actions. The 24 interviews revealed 86 further experiments, in all arenas of the companies’ business models.
The entrepreneurs described the crisis lowering the threshold for experimentation through need to compensate for lost revenue, sense of urgency or simply more time to experiment due to the cancelled events and commitments. Furthermore, many of the experiments would result in new skills, relationships and build brand recognition through increased publicity. Some would even end up becoming permanent additions to the solutions portfolio of the ventures.
“The hand sanitizer is still a part of our product portfolio and probably will be also in the future. […] However, compared to now, it probably will be more important in the hotels, restaurants and catering sector than in the retail stores.”
– Mikko Mykkänen / Helsinki Distilling Company
ACTIONS IN THE BACKSTAGE – NEW WAYS OF CREATING VALUE AND REVENUE
Experiments with the value creation architecture or revenue model were not necessarily visible to the outside eye but were prevalent with the ventures. All interviewed ventures had tried out some changes in their core competences and resources, pulling from example employees hobby skills or leveraging the pandemic to initiate remote collaboration. Some made also changes to their production process, increasing hygiene standards or streamlining processes. Trying out new solutions in capabilities, production and partnerships were often sparked by the desire to launch new offerings, but also functioned in the opposite direction of entrepreneurs finding creative new uses for the resources at hand.
Experiments in distribution processes and partners were mostly incremental, whereas experiments in internal value creation processes included more radical shifts from pre-crisis operations. For example, Arctic Kombucha had to transfer its business focus from the initially planned restaurant sector to consumers, basically rebuilding its whole value creation process. For Palms & Berries, the pandemic acted to speed up experimentation towards a subscription model.
BUNDLING PRODUCTS AND EXPERIMENTING WITH NEW TYPES OF OFFERING
Most of the experiments done by the food ventures were product-related. In addition to more incremental changes such as modifying existing products or bundling products together, many ventures would introduce new products or even enter completely new product categories. Examples of radical changes in product portfolios included Kyrö Distillery and Helsinki Distilling Company both entering the market of hand sanitizers. Also, Helsieni introduced new non-food products of mushrooming knives. Collaborative product experiments like collaborative bundles or co-created products were almost as frequent as experiments done within the companies. For example, Mettä Nordic and Sugar Daddies joined their forces to create an immunity boosting product package, and Kaffa Roastery bundled up its coffees with sweets and treats from other local food ventures.
GOING ONLINE AND TO HOME DOORS
In addition to products, many experimented with new services, often online. For example, Warrior Coffee launched a virtual coffee break and Mö Foods moved the launch of its oat-based drinks online. Many also tried out new delivery services, with for example Baba Foods bundling up products originally meant for business-to-business sales and delivering these to customers’ homes, and frozen-dough company Caccu delivering freshly baked cookies to its customers every Friday during the first few months of the pandemic.
EXPERIMENTING WITH NEW SALES CHANNELS
The closing of restaurants, cafes and bars, as well as restrictions in in-person meetings, resulted in cancelled events and sales, driving companies to experiment with sales channels. These experiments included launching webstores, establishing new physical sales points, such as kiosks and windows on the walls, as well as collaborating with other to expand distribution. For example, Helsinki Distilling Company opened a corona kiosk in front of its production facility where it would sell its hand sanitizers, long drinks and masks from a partner, and Espoon Oma Panimo introduced a beer delivery truck that would drive around Espoo to reach homebound customers. Knehtilän Pieni Puro, on the other hand, added both lifestyle brand Minska and food hub Uudenmaan Ruoka as new sales channels.
“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.”
– Topi Kairenius / Fat Lizard Brewery
EXPERIMENTING BEYOND BUSINESS MODELS
Not all experimentation was directed towards creating revenue or brand visibility. The 9 identified prosocial experiments ranged from helping out critical and at-risk groups, such as donating products to health care professionals, to supporting fellow entrepreneurs. For example, Caccu would, inspired by an idea from one of its customers, deliver freshly baked cookies to the Meilahti Hospital staff treating corona patients. They got the inspiration when some people participating in their cookie delivery raffle suggested they’d donate the prize if they won – the founder loved the idea, got in touch with the corona department of Meilahti hospital and set up the delivery.
Many ventures also took part in the #supportyourlocal movement. Beyond social media, ventures joined forces to simultaneously help themselves as well as their communities. For example, Record Coffee supported struggling restaurants and cafes through its #coffeeaid campaign. The crisis could give both ventures and their customers a pause to think about how they wanted to use their energy and resources.
“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.”
– Ville Rinta / Sugar Daddies Honey Co.
BEYOND THE PANDEMIC: KEEPING UP THE SPIRIT OF EXPERIMENTATION
Although, action lies in the heart of entrepreneurships even beyond times of crisis, the Covid-19 pandemic acted as a catalyst for many food entrepreneurs to step up to experiment, innovate, co-create and generate a positive impact on the food ecosystem. The entrepreneurs not only expanded their offering with new products and services created either in-house or collaboratively, but also transformed their whole business models and increased their capabilities for subsequent value creation and experimentation. Time will yet show the eventual effects of the experiments done amidst the crisis, but it is for sure that you will learn more from action rather than inaction.
You don’t have to wait for the next crisis to give you “permission to hustle” but can start experimenting already today with the tools and tips in our experimentation toolkit!
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INGREDIENTS OF THE FINNISH FOOD INDUSTRY
Interviewing 16 different types of food industry players, including suppliers, investors, cafes, restaurants, and retail chains, draws a picture of an industry with long traditions yet undergoing large transformation resulting from innovations in how we design, produce, choose, deliver and enjoy food. The industry players brought up a large variety of both challenges and rising opportunities, with four common themes emerging.
CHALLENGES IN BRANDING
Many stakeholders in the food industry saw that the companies were failing with the marketing and selling of their products. Marketing was seen to lack a clear and compelling focus, and often cut corners. While the number of encouraging examples like Kyrö Distilling Company and 3 Kaveria ice cream was seen to be on the rise, many felt than most Finnish food companies had not yet managed to build brands that would truly speak to the customers.
“We have never understood the importance of unique, long-term and inimitable brands. That is our biggest challenge. No crop anywhere in the world, except north of Helsinki, get as many hours in the sun between the months of June to August than in Finland.”
– Jyrki Sukula
Less mentioned challenges included a lack of financing and recourses, as well as strict regulation and legislation that could slow down development.
COLLABORATION ACROSS THE INDUSTRY
A lack of communication and connection between industry players from different fields and of different sizes was seen as another common challenge. With better collaboration, stakeholders could complement each other to help novelties all the way to the grocery aisles, such as large companies having better resources and small companies offering many food innovations.
“If we compare our startup ecosystem to let’s say California, they have more foodtech-focused startups. And surprisingly, many of them are located within close proximity to one another. In Berkeley, there is this one block where a bunch of them are located. So, many of the world’s top foodtech startups are based in the same block. They are constantly going to eat lunch together, sharing their experience, lending their resources. Here in Finland, we live more dispersed, but in the same way as in the States, we should be able to build close relationships between the foodtech players.”
– Lauri Reuter / Nordic Food Tech VC
Yet, many interviewees reported that recent years have seen rapid and even disruptive changes within the food ecosystem, as new players have emerged, and old ones have shifted their roles. Especially startups were seen as flexible changemakers, forcing established players to reinvent themselves as well. Increased interconnectedness across the ecosystem has been a fertile ground to build new collaborations on.
SCALABLE SUSTAINABILITY
Industry-wide collaboration was called for to advance environmental and sustainability issues. There was a clear call for the industry to focus on quality over quantity to minimize food waste. Environmental issues were seen to concern the whole food supply chain, from the ways we grow our food to the material we package it in. Concerns ranged from ensuring the security of food supply and the viability of food producers without ruining the environment, to the future outlook of two of our significant industries, meat and dairy.
Despite, or maybe because of, sustainability is a serious challenge for the food industry, many positive recent developments within the food industry have tackled sustainability challenges or, at least, increased awareness about the urgency of the issues. The safety of the Finnish food due to trustworthy processes and surveillance was listed as a core strength of the Finnish food ecosystem and was seen as beneficial for new sustainable innovations. The growing number of vegan and vegetarian products was highlighted as one example of increased sustainability and health awareness. In the future, these product categories were seen to only increase more. For example, vegan craft chocolatiers reflected that sustainability and business go hand in hand for them.
“Of course, if our sales increase, we have more resources at hand to create an impact. Therefore, the more we sell, the wider impact we’re able to create.”
– Jukka Peltola / Goodio
NEW THINGS COOKING
New innovations by food ventures were seen as a key opportunity and increasing ability of the Finnish food industry. Gold & Green with their Nyhtökaura, Pouttu with their Muu product range and Solar Foods with their protein derived out of air were frequently mentioned as examples of promising recent innovations by Finnish food companies. Although startups were seen to be at the forefront of disrupting the industry with their novel foods, also larger and more established players were seen to have woken up to the need to renew themselves and have added fire to their flames of innovation.
Within 72 entrepreneur interviews, 37 DesignBites case companies reported 606 interactions with stakeholders outside of their company when describing their development efforts – we’ve analyzed what these reflect on during-crisis collaboration.
In this episode our DesignBites researcher Erika Perttunen discusses with Milla Westerling from Green Planet Astronauts and Sofia Laurell from Tiny Organics about developing healthy and plant-based children’s foods. How to develop and market them ethically? What experimentations and collaboration have they done and why are they motivated to change the world through children’s foods? Have a listen and learn!
Listen in on Spotify or Apple Podcasts!
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Introducing new food products is always challenging let alone when the new food has no ready market and is still considered illegal by legislation. Our fifth episode explores markets which are at the moment considered illegal in some parts of the world and how product development can still take place in these circumstances. Ysub is a fresh Finnish company creating new Zen-drinks from hemp (CBD). Check out what Petri Nylander and our researchers Hanna Huhtonen and Erika Perttunen have to say about illegal foods and on their positioning on the market. Learn thoughts on how to make illegal foods legal!
Listen in on Spotify or Apple Podcasts!
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Aalto DF