Running a small condiment brand independently can often feel like pouring money into a bottomless pit. Without outside investors, I have been funding my business with earnings from my day job, leading to a gradual and steady growth trajectory. With some positive media coverage and a sense of accomplishment with my Poi Dog products, I am frequently sought after for advice by aspiring entrepreneurs. My advice to those just starting out in the sauce-making industry is to factor in various costs such as retailer fees, distributor margins, marketing expenses, and other overheads when pricing their products.
When a customer pays $16 for a bottle that costs me $4 to produce, ideally I should have some profit left from the $12 difference to reinvest in making more batches. However, it is not uncommon to end up losing money on each bottle sold. As these newcomers expand their operations, they can benefit from economies of scale and negotiate better deals with suppliers. Meanwhile, prices may need to be adjusted due to fluctuating costs of ingredients, packaging materials, and labeling.
While discussing the financial aspects of running a condiment business, the topic of trademarking and ownership rights in the industry has become a hot issue recently. The controversy surrounding David Chang’s attempt to trademark terms like “chile crunch” sparked debates about cultural appropriation and intellectual property. Small producers and consumers alike have expressed concerns about protecting the authenticity and heritage of food products.
In addition to trademark disputes, there have been other instances of cultural appropriation in the consumer packaged goods sector, such as the controversy over Bobba tea’s representation on a TV show. These incidents highlight the importance of respecting cultural origins and the impact of such actions on small businesses. Amidst the challenges and competition in the industry, success stories like Twrl Milk Tea’s increased visibility and growth serve as inspirations for other entrepreneurs.
Despite the opportunities presented by platforms like Dragons’ Den and Shark Tank, some entrepreneurs feel disillusioned by the pressures and uncertainties in the industry. Kristen Kapoor, co-founder of Flouwer Co., reflects a common sentiment among small business owners about navigating the complexities of the market and the challenges they face.
Recently, there has been a prevailing narrative of intense competition among emerging brands, which has led many to conform to outdated distribution models involving practices like offering free samples, paying slotting fees, running aggressive brand promotions, and agreeing to net 60 payment terms. While discussing these challenges with fellow entrepreneurs, it became clear that trademarking is just one aspect of the uphill battle we face. Focusing solely on trademark issues when advocating for small producers from diverse backgrounds is unfair when there are numerous other obstacles posed by larger competitors in the industry.
The landscape of the grocery game has evolved significantly over the past five years, with the pandemic prompting many small producers to venture into commercial kitchens and embark on meaningful projects rooted in their culinary heritage. The rise of curated and visually appealing “shoppy shops” has expedited the journey of some small producers onto grocery shelves, catering to consumers seeking high-quality ingredients and unique condiments that offer a taste of global flavors. As I transitioned from running a restaurant to bottling traditional Hawaiian condiments and barbecue sauces, I faced the challenges of breaking into the market slowly but steadily. While my products are now available in numerous stores, profitability remains a distant goal.
Interviewing my peers in the small producer community, I observed shared hurdles that go beyond trademarking in their significance. Many of us find ourselves pigeonholed in the “ethnic” aisle of grocery stores, competing with quick-prep Asian products and struggling to educate consumers and retailers about our unique offerings. The lack of widespread recognition for categories like Sichuan peppercorn-based foods further complicates our efforts to stand out in a crowded market. Limited resources and the complexities of navigating distribution channels hinder our growth potential and make it challenging to expand independently.
Despite our shared struggles, we continue to persevere, striving to carve out our own space in the competitive grocery landscape.
“Scaling in the grocery industry requires caution with free fills and slotting fees, especially when dealing with large chains of 500 stores or more,” says the founder of Side Project Jerky. Free fills involve giving retailers a free case of products to secure shelf space without receiving a share of sales. Hyunjoo Abrecht, owner of Sinto Gourmet, notes the rising costs of trade shows and social media marketing. Distributors and retailers are increasing fees, impacting producers’ profits. Palita Sriratana of Pink Salt Kitchens highlights challenges like free fills and chargebacks faced by small businesses. Cash flow issues and delayed payments further strain brands like jerky maker Espinoza and others. Andrea Hernández of Snaxshot observes a trend towards visual uniformity on grocery shelves, which may hinder smaller brands. Trademarking remains a contentious issue for American businesses.
“I have not made the trademark registration a concern or challenge so far, and it’s lower than other priorities,” says Albrecht. However, he follows up by adding, “I’m aware it’s a very important issue and can create big headaches and conflicts.” Sriratana clarifies her attempt to trademark Nam Prik Pao was not for enforcement purposes but to protect its cultural identity. “My intention was never to monopolize the name but to ensure it wouldn’t fall into the hands of people disconnected from Thai heritage.”
Various producers, including those I mentioned and many others I conversed with, have faced difficulties in balancing their own growth without overshadowing fellow producers. “Competitors” doesn’t fully capture the sentiment; I aspire to see more Chili Peppah Water in the world. Sriratana desires more Nam Prik Pao, and Zhao strives for an increased presence of Sichuan pepper products. Our route to achieving this involves creating these products ourselves.
“Balancing innovation and growth while honoring cultural roots is an ongoing challenge without a straightforward solution,” shares Sriratana. “It mirrors a broader conflict many of us encounter: the urge to safeguard cultural creations amidst navigating a system that commodifies everything.”
The challenge lies in not marketing Chili Peppah Water, Sichuan peppers, or Nam Prik Pao to ourselves, but to an unfamiliar audience within a system that seemingly works against us. Sriratana views the Momofuku chile crunch controversy as stemming from “crab mentality—a desire to monopolize a market segment rather than appreciating or sharing its cultural significance. Is this a case of minority groups contending for scraps within a system designed to restrict access?”
Yet, almost defiantly, she opts to “operate in abundance.” I echo this sentiment. Nevertheless, it doesn’t erase the apprehension or unease I harbor regarding the potential disappearance of my brand Poi Dog, my modest assortment of sauces, drowned out by expenses, unjust profit margins, and the anticipation of success.
(Source: Food & Wine)
