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LETS GET DOWN TO BUSINESS.

Question :
Hi Manaaki team,Thanks for this amazing help you provide!I’m working on introducing an innovative sustainable FMCG product to the NZ market. NZ does currently not have this product but they are available in several European markets but still fairly early stage (some facing supply issues due to high demand and not being able to scale fast enough). There are 3 options for me to get this product into the NZ market as far as I can see.1. Formulate and manufacture with a local contract manufacturer. Pros: NZ made, supporting local, potentially higher profitability. Cons: NZ manufacturers retain the IP on the formulation, NZ manufacturers currently don’t have the capability required to complete the entire product (although they are very keen but it will be at least 6 months from now before they will even start looking into it). according to manufacturers they have existing clients who are also interested to produce these products and i get the sense they will likely be prioritised once the capability is there.2. Partner with one of the European companies in some way be it via licensing or even purchasing their product at the beginning and rebrand to enter the NZ market fast before competitors do. Later potentially changing to local production if possible. Pro: first mover/early to market, ease and speed, tried and tested product, potential to benefit from higher order quantities/larger scale of European company. Cons: potentially less revenue per unit through fees, transport, import etc.; not clear if Europeans interested in partnering, existing supply constraints on their end.3. Lastly, there could be the option of working with a formulation scientist to create the formulation (retain the IP) and purchase the ingredients (easily sourced ingredients) and either self-produce or work with local manufacturer.Any thoughts, advice or potential contacts/networks to get in touch with would be much appreciated!Many thanks!

Question submitted 10/11/20 @ 05:30am
Industry: Start-ups
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    Hi There,

    There is a number of questions I have before I could provide some guidance on this sorry.

    I do have contacts from the FMCG space who have successfully grown and exited as-well-as some recent transactions I have looked at from an investment perspective.

    From my understanding in these industries, the scientists retain the IP typically and you would pay royalties but have a contractual agreement to manufacture and produce.

    Happy to jump on a call to discuss in more depth to see if I can point you in the right direction.

    Dave@vegalend.co.nz

    Cheers

    Dave

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    Morena. Sounds like an interesting proposition!
    My view is pretty simple – get to market first, even if you make less margin. Win with the retailer by deliver the solution for their shoppers first, win with the shopper and sort your better margin/closer to home supply chain out later.

    First mover advantage is so powerful in terms of establishing yourself in the market and has been proven time and time again across different categories.

    However the caveat: in two parts. If you decide to import be wary of supply chain challenges around freight at the present moment. It’s expensive and slow – make sure that is factored into plans. Second, start working on your move to local production as soon as possible to create a sustainable margin scenario. It’s only worth being first with a business you want to grow and provides sustainable returns.

    Good luck! Vicky

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