BBQ Sauce in Search of a Market

Q: I have formulated a delicious steak and barbecue sauce and have spent several months locating the best ingredient suppliers and making test batches with two co-packing manufacturers. I think I have a good idea of the cost of the product and the way it will be packaged. Should I contact specialty food stores, Internet companies such as HomeGrocer.com and Pink Dot Inc. or sell it to companies that would put their own label on it?

--Brad Turek,

Huntington Beach

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A: Unless you have the great deal of money ($500,000 and up) that it takes to launch a product nationally and years of experience and credibility in the food industry, you will need to substitute guerrilla marketing and sweat equity if you are committed to your product’s success.

Here are a few ideas that may help you gain credibility and pique the interest of the buyers at specialty food stores:

Pack your sauce in gallon-size containers and offer to supply it to some local restaurants free if they will test it. Barbecue restaurants probably already have their own proprietary sauces, but perhaps some other kinds of local restaurants would use your sauce and report back to you on how well it is received. If it becomes a popular item, you might sell it to them in the future and thereby establish both cash flow and credibility.

Another inexpensive way to get some feedback on your product is to hold testing panels. You can go to several organizations that you belong to and offer to prepare dinner for group meetings, using your own sauce and a popular packaged sauce that’s already on the market. Do a blind taste test and record people’s reactions. Do they prefer your sauce? If so, would they buy it? Would they be willing to pay more for it than the product they now buy? Keep track of your data, and you may be able to use it to persuade a buyer for a specialty food shop to carry your product on a trial basis.

If you can’t get a specialty food chain interested, you can try schmoozing your corner grocery store owner and see if he or she will agree to carry your sauce for a few months. Be prepared to put it in the store on consignment, if need be.

When it comes to Internet companies, most of them weigh heavily on the side of brand-name products. They are still not well-known to most consumers, so their strategy is to rely on the aura of integrity and respectability that comes from popular products. Also, the breadth of their offerings is limited because of the logistics of inventory and product delivery that they face.

As for your final question about getting another company to purchase your product or your recipe and put the company’s own label on it, the chances of that happening are slim until you have convincing proof that your product is widely popular and successful and already in high demand. There are always exceptions, but generally you need to bring a product to the table that can demonstrate proven superiority and uniqueness before it will be purchased by a company that wants to carry it under its own label.

--Mike Gilles, food consultant

and president, Growth Group,

Dana Point

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A: You seem to be further ahead than a lot of people who think they have a great recipe, but at this point you haven’t gone far enough. In addition to having a great product, you must capture the consumers’ interest, which is very difficult to do. Having a realistic view and tempering your expectations will save you a lot of frustration and heartbreak in the long run.

You can approach traditional supermarkets, but be prepared to convincingly answer questions such as, “Why do we need it?” and “What advertising funds do you have?” If you get past those two, the third question will be, “Can you afford slotting?” (Slotting fees are paid by companies to give stores incentive to stock and promote untested products.)

If the sauce hits supermarket shelves, you’ll need to give the consumer a reason to take it off those shelves. Gourmet shops work differently, but you will still need to answer the question, “Why?” The other key to gourmet shops is distribution.

A great idea would be for you to attend the next National Assn. for the Specialty Food Trade’s Fancy Food Show, July 9-11 in New York City. For more information, see the group’s Web site at https://www.fancyfoodshows.com. Walking around the show floor will give you an excellent idea of what this market is like and what kind of competition you are facing.

One conceivable opportunity is Trader Joe’s, which is a dream for selling a good product. They buy by committee, have a great taste panel, are great merchandisers and handle all the marketing if they take a product. To go under the Trader Joe’s label, the product must be preservative-free and have excellent pricing. But remember, the customer still calls the shots here, and an item in Trader Joe’s has to have sales momentum or it doesn’t stay there long.

--Vicky Huxtable, food industry

consultant and founder,

Huxtable’s, Los Angeles

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Q: I am a grant proposal writer and also prepare nonprofit 501(c)(3) applications and business plans. I need at least five contracts but so far have only two steady customers. I am not exactly sure how to market my services because major nonprofit organizations have in-house grant writers and fund-raisers and small organizations can’t afford my $5,000-per-contract fee. Can you help?

--Sheila L. Gray,

Scribe Technical, Los Angeles

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A: You’ve got to be very focused in your marketing efforts and do some specific research to determine whether there is really enough need for your services to sustain your business. I suggest that you target organizations that have under $3 million in annual revenue, such as small, community-based organizations, small faith-based and secular groups, and local chapters of health charities. Become familiar with the small agencies in your area and contact their development or executive directors. Most nonprofit agencies have Web sites that give their budget and show how they are funded. If they are 100% grant-funded, you may have an opening because it is likely that the development director writes many grants annually and would be interested in outsourcing.

Very small organizations that rely on just two or three grants annually may also be potential customers because they may not have an in-house development director and they may rely on freelance grant writers for all their needs.

Be proactive and search for grant-writing opportunities on the Web. Philanthropy portals abound, as do Web sites targeted to nonprofit management, and many of them list classified advertisements in which you might find new clients. A couple of places to get started: Community Career Center (https://www.nonprofitjobs.org) and the Chronicle of Philanthropy (https://www.philanthropy.com).

If you have some capital or could barter with a client who has some technology expertise, think about setting up an informational Web site to market your company to agencies across the country.

Additional low-cost ways to get the word out about your service include leveraging personal relationships with people who might introduce you to potential clients; doing speaking engagements at a nonprofit training center in your area; writing articles for nonprofit trade magazines or newsletters; and teaching a class on grant writing to nonprofit administrators.

You might also think about your rather rigid price structure and see if it helps to make it more flexible. Do not work on a contingency basis, unless a small organization is so prestigious or well-connected that they are guaranteed to add to your client list. But for some smaller groups that are promising, you might lower your flat fee upfront and then add a percentage of the grant total on the back end of the contract.

--Stan L. Friedman, branding,

marketing and communications

consultant for public sector and

nonprofit agencies, WorldCom,

Oakland Hills, Calif.

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If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to kklein6349@aol.com. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.