5 Ways The Founders Of Zang Chocolate Launched a New Product In a Highly Competitive Market Bringing a new product to the FMCG market is tough. You need the right product, partners and mindset. Here's how the founders of Zang are getting it right.
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- Players: Jethro Braun and Brett Horwitz
- Company: Zang Chocolate
- Launched: 2015
- Visit: www.zangchocolate.com
1. Find the right product
Friends and part-time entrepreneurs since varsity, chocolate wasn't the initial grand plan for Brett and Jethro. "We started a printing business together while we were still at UCT," says Brett. "We even had a few good clients, including Truworths and Hello Kitty, but it was a saturated market, and we realised we didn't have a passion for it."
Neither of them was a chocoholic either, so how did the idea for Zang develop? "We were exposed to an international caffeinated chocolate brand," explains Jethro.
"We really took to the idea. We didn't look at it as a new chocolate that we wanted to bring to the market, but as an exciting new energy product. We're a caffeine and energy company, delivered in a chocolate and not a drink."
In fact, in chocolate form the caffeine has a slow release, and the cocoa fat means it's a consistent release. "One small chocolate has the equivalent of half a cup of coffee's worth of caffeine," adds Jethro.
"We'd found something that we were excited about, and that we really believed the market would get behind as well." It was time to find partners.
2. Find a great partner
Zang's success is based on a number of important partnerships that Brett and Jethro have developed. First, the entrepreneurs needed a chocolatier to help them produce the product.
"We spent eight months searching for the right chocolatier," says Jethro. "We kept reaching out to companies and they'd say, "no, we can't do what you want'." Eventually, they found Cocoa Fair, an entrepreneurial chocolatier in Cape Town.
"They were interested in the idea and willing to work with us to develop it," explains Brett. "We spent months working on the right recipe and developing the process of combining chocolate and caffeine. "We went there after hours, working together and mixing batch after batch of chocolate."
Today, Cocoa Fair is the sole supplier of Zang, and the successful partnership is based on the fact that two entrepreneurial businesses were willing to work together to create something new and exciting.
Product in hand, Jethro and Brett now needed to find an investor.
"FMCG products are extremely expensive to launch; you can't bootstrap this kind of business if you want to target mainstream retail."
Armed with research and a great pitch, the partners attracted the attention of Ian and Garth Solomon from Evolve Capital, but they wouldn't commit to an investment until they'd run the idea past a friend, Grant Rushmere, the founder of Bos Ice Tea. "Ian wanted to hear whether Grant thought the product would find a market in South Africa," explains Brett.
In fact, not only would Grant love the idea, but he wanted to partner with the start-up as well. "Grant had been working on a brand for a relaxation drink. He had the concept design, branding and name developed, but he thought our chocolate was a better fit for it than the relaxation drink he had been working on."
The young entrepreneurs jumped on the idea. Not only were they receiving capital from Evolve, but an industry expert whose advice would be invaluable, not to mention the brand that he had developed. And so Zang caffeinated chocolate was born.
Finally, the partners contacted Pick n Pay's incubation programme, which supports entrepreneurial businesses, and were placed on the national retailer's listings for head office and family-owned stores. "Without these partners our business wouldn't be where it is today," says Jethro.
"Developing good relationships is key to success, but you need to find the right people with whom you can work and share a vision."
3. Get noticed
Zang had a soft launch at the end of 2014, with Jethro securing shelf and counter space in a few coffee shops, delis and forecourts in Cape Town. "We were looking specifically for places where we would be the only product on the counter or at the till, so that we'd get noticed," says Jethro.
"You want people to feel like they're seeing you everywhere. Bold packaging helps this, and so does placement."
By April 2015, the business was ready for its official launch. "We needed to make a splash," says Jethro. "Something that would get people talking."
The activation was staged on First Thursday, and was based on massive nacho libre wrestlers giving people "pick me ups' as the world's first human taxi service. "We videoed it and put it on YouTube, but we received incredible local and international media coverage as well. It was fun, different and people wanted to talk about it and share it — the fact that we'd managed to come up with a concept that was a "world first' meant we received international attention as well."
At the final tally, R100 000 was spent on the activation, resulting in R300 000 worth of earned media. "Because it was editorial coverage, the earned media can be doubled as well," says Brett. "That activation was worth R600 000."
And it did its job. People started talking about Zang. "Consumers wanted to try us, but more importantly, store buyers had heard of us," says Jethro. "Even though we had a Pick n Pay listing, you still have to convince individual stores to stock you. For garage forecourts that can buy outside of head office listings, this makes even more of a difference."
The business is being strategic about its messaging though. "Successful branding offers a simple but powerful message, and then builds on it," explains Jethro. "First, we wanted to develop the idea that we were a Cape Town-based company, and the new kids on the block.
"Next was our key differentiator: We're caffeinated chocolate. Once that message is entrenched, we can start working on the health benefits that we offer. We're made from 100% cocoa butter, and therefore contain no palm oil.
"You need to build that brand message slowly; there's no rush. You want people to understand and embrace your brand and message, and for that, you can't bombard them with too much information at once."
4. Focus on cash flow
Cash flow is essential for both start-ups and established businesses. "It's a balancing act," explains Brett. "Too much cash sitting in stock is dangerous. You need cash flow, and you want to maintain shelf life and freshness."
As a result, the business works on an inventory system that makes more frequent orders to avoid sitting on stock. "Cocoa Fair is also an entrepreneurial business that needs cash flow, so they want COD terms, but they've given us a favourable rate in exchange."
5. Build your market
Even though Zang is on Pick n Pay's main listing for head office and family-owned stores through the retailer's incubator programme, Brett and Jethro don't want to grow too quickly. "We don't want to move too fast," explains Brett.
"We need to learn the "Pick n Pay' way and build a strong foundation before we grow further. Currently we're on 600 listings. The system puts you on SAP, orders come through and you need to be able to deliver on them. If you don't, you get a negative strike rating. That's how products disappear off shelves and don't get ordered again."
"You need to be ready," adds Jethro. "They opened us up to a large amount of stores. We listed with Pick n Pay and 300 orders for 300 stores came through. You need to make sure you're ready for that kind of volume."
"You can really damage your business and your brand if you get a listing, and orders come through, and you aren't ready for it, either from a cash flow perspective, or because you can't fill the order," says Brett.
"The most important thing right now isn't to grow our listings, but focus on the ones that we have. We need to saturate those listings, and then grow. We need to get our merchandising correct, and grow our base so that we can produce more to fill bigger orders — without damaging our cash flow. We're in this for the long haul, and that takes strong foundations."