After My Food Bag recently moved into shiny new premises in Parnell, Sarah Dunn dropped by to talk disrupting the grocery industry and lessons from short-lived international growth with founder and group co-chief executive Cecilia “Chilli” Robinson.
Four years ago, Cecilia Robinson and her husband James were parenting a newborn baby and running a childcare agency called Au Pair Link. Now, their family has grown to two children, and they’re co-chief executives of a $100 million start-up food retailer that’s challenging New Zealand’s grocery duopoly.
My Food Bag was founded in 2013 by the Robinsons; former Telecom CEO Theresa Gattung and dietician/celebrity chef Nadia Lim, together with Lim’s husband Carlos Bagrie. It delivers bags full of portioned-out ingredients together with recipes for subscribers to cook at home. The pace of its growth so far has exceeded that of market darlings Xero and Trade Me.
Despite My Food Bag now having more than 50,000 customers, Cecilia Robinson believes there’s plenty of growth left in New Zealand. She agrees that Kiwi consumers are hungry for more options in the grocery sector.
New Zealand’s grocery market is one of the most concentrated in the world, with just two large companies dominating the mainstream options.
In the red corner is Australian-owned Progressive Enterprises, which owns and operates more than 184 Countdown supermarkets, and is the franchisor of a further 62 Fresh Choice and Super Value stores.
Facing it in the blue corner is the pair of regional cooperatives commonly referred to as Foodstuffs - Foodstuffs North Island, and Foodstuffs South Island. These own wholesale businesses Gilmours and Trents, and support more than 700 owner-operated businesses under a variety of food and liquor brands. Their grocery and convenience brands are flagship companies New World (139 stores), Pak’n Save (53 stores), and smaller brands Write Price, Shoprite, Raeward Fresh, On the Spot and Four Square.
The two cooperatives are 100 percent New Zealand owned and operated, and also jointly own Foodstuffs (NZ) Limited, a small non-trading entity.
Foodstuffs and Progressive are supported by a number of independent retailers and smaller companies – notable players include struggling gourmet supermarket Nosh, which sold in February for $3.98m, and its direct competitor Farro Fresh; and organic or specialty foods chains like Commonsense Organics and Huckleberry.
However, these other competitors are a long way down the chain. According to Stats NZ’s latest available Annual Enterprise Survey, New Zealand’s ‘Supermarket, Grocery Stores and Specialised Food Retailing’ trade had a total income of more than $20.2 billion in the 2015 financial year.
In its last annual report, Foodstuffs North Island reported group revenue for the 2016 financial year of $6.439b and Foodstuffs South Island revenue of $2.874b. Countdown’s annual sales in New Zealand for FY16 were $6.1b. Combining these earnings brings us to $15.413b – a big chunk of the total market.
Asked if she believes customers think of My Food Bag as retail in the same way as other food retailers, Robinson says: “No, and I’m not sure that we want them to.”
“We’re not the supermarkets, and we never want to be, and we don’t want to be perceived the way that they are because we work really differently with our suppliers and with our foodies, and so we don’t want to be categorised in the same way.”
She says My Food Bag has cultivated a different relationship with its customers to that of mainstream supermarkets. It does things like assigning shoppers silly food-based middle names when it engages with them – Robinson’s is ‘Chilli’ – and referring to them by that name throughout its customer services process.
“From the start, we never called our customers customers, we called them foodies, because we love them,” Robinson says. “We look at our consumers differently, and we look at our foodies differently, and so, you know, we’re kind of with people that are part of our family.”
My Food Bag works with around 300 suppliers. Many of the company’s suppliers started out as small businesses which have scaled up with it, growing their businesses as My Food Bag grows, and benefiting from customers who go on to buy independently as they seek to remake My Food Bag meals.
Robinson takes pride in their success: “That’s probably one of the most rewarding things as a retailer, seeing other businesses grow with you.”
My Food Bag has been quick to introduce new innovations, rolling out budget meal-kit brand Bargain Box in mid-2016, followed by weight-loss-focused brand extension Fresh Start. Fresh Start was introduced in April 2017 with the aim of providing dieters with portion control, healthy eating and cooking techniques. Each meal is calculated to be 450 calories or less.
Robinson acknowledges that the weight loss product market is a deep, shark-infested pool. She says My Food Bag is approaching this highly competitive, fad-filled field with scientific rigour and a focus on helping customers achieve sustainable long-term change: “We don’t want to talk about fads and diets and these types of things, we’re just not that, it’s not our brand.”
“Fresh Start is about healthy living, and being able to make real sustainable change in your life,” Robinson says. “I think a lot of weight loss brands are just not around that.”
She says My Food Bag plans to keep rolling out new propositions into 2017 and 2018, confirming that the next project is already in development. Robinson says these ideas come from My Food Bag’s customers – she reads My Food Bag’s Facebook page, its Twitter mentions and its formal customer feedback channels as well. Robinson is unwilling to release any detail about the upcoming project, but drops some tantalising hints: “The biggest change is yet to come, and the new initiatives that we have are the most exciting that we’ve ever had since launch. It’s pretty exciting.”
My Food Bag's new Parnell headquarters
Not everything My Food Bag does is an instant success, however. The company entered the Australian market in 2014 and exited in October 2016. Robinson says the rapid reversal wasn’t down to business failure, however, but was executed for personal and strategic reasons after private equity firm Waterman Capital joined My Food Bag as an investor.
“[Waterman Capital’s] clear intention for us is to have us focusing on the New Zealand market,” she says. “There’s more than enough scope for us to continue growing at a fabulous rate over here.”
Besides this, Robinson says that operating a trans-Tasman business with two children under five was not sustainable for her family. The business was meeting its growth targets in Australia, but on a personal level, Robinson wasn’t happy with the level of travel that was required to support its success there. She and her husband decided to prioritise their family instead.
“I think it’s harder as an entrepreneurial person, you tend to want to do everything at the same time,” Robinson says. “There are lots of people who absolutely can do it, and who don’t mind traveling three days a week or four days a week. Neither my husband nor I are those people.”
My Food Bag’s exit from Australia doesn’t mean the company will never return there, Robinson says, but its focus is solidly on New Zealand for the time being. The company is working towards an IPO within the next three years.
Robinson reiterates that there’s plenty of growth left in the New Zealand market, saying that if My Food Bag still looks the same way it does now in two to three years’ time, she’ll be disappointed.
“Look, New Zealand’s a fantastic market. It really is. And people sometimes underestimate the scale of this market as well, and how much impact you can have in a category. We have got a lot of growing to do.”
Robinson feels New Zealand has been relatively slow to transfer purchasing of grocery items online. According to Nielsen’s 2015 report, Trends shaping the future of grocery in New Zealand, fewer than one in 10 shoppers regularly access grocery retail websites.
“The consumer mindset is changing as well, and how they want to purchase is changing,” Robinson says. “Travel has gone online, and 50 percent I think of all travel purchases are made online. But food is just nominal, so we’re really just scratching the surface in that space now.”
At the beginning of May 2017, My Food Bag moved into spacious new Parnell premises intended to take the company through to the next phase of its expansion. The space is fully two thirds bigger than its previous home, with more than 500 square metres available downstairs for a development kitchen with 10 cooking stations and a photography kitchen; and 1300 square metres of office space upstairs.
Moving into the new premises, and finally uniting her 130 staff after spending years spread across three different locations, has given Robinson an opportunity to reflect on how far My Food Bag has come.
“You know, it’s funny, we started My Food Bag four years ago with a young baby, no idea about anything. Naïve about everything but with good business grounding out of Au Pair Link. And when you start a business there’s six of you or five of you, and you do everything within the business.
“You’re the accountant, you’re the one responding to the customer emails, you’re the one dealing with the web developers, you’re the one dealing with every single part of it. And as your business grows… the view of yourself is changed by your team because they look at you and you’re this big business, but they forget where you were four years ago. But you haven’t forgotten."
The sincerest form of flattery
The popularity of My Food Bag’s meal kits, and the success of similar services overseas, has inspired competing offers from other players. Gourmet supermarket Farro Fresh got in early with ‘Farro Foodkits’ in 2015 - the kits are now only available in-store.
In May 2017, Foodstuffs began trialling a similar range of packaged ‘Just Cook It’ meal kits in New World Eastridge, Stonefields and Howick, in Auckland, and Wellington’s Thorndon store. The meal kits are prepared fresh in-store daily with pre-measured ingredients, and are sold in the chilled foods section. The options available change every week.
Sample meals include ‘hot smoked salmon spaghetti with capers and rocket’ and ‘barbecue lamb rump with rustic Greek salad’. The prices start at $22.99 for two serves.
Steve Bayliss, group general manager marketing, Foodstuffs (NZ) Ltd, says the launch of Just Cook It was about catering for time-poor customers who nevertheless craved creative cusine. He highlighted that its point of difference over competing services was that each meal kit was purchased separately, requiring less commitment from shoppers.
“We’re all much busier these days – cramming work, exercise and a bit of life-balance into our day,” Bayliss says. “Whether you are a couple or a family with two working parents and ravenous kids, our New World meal kits have been designed to be quick to prepare, tasty, nutritious and a little bit different. We think customers will love the convenience of slipping a meal kit or two into their trolley without having to have a whole week’s worth of meals like other offers in the market.”
Bayliss says the trial is proving so successful that Foodstuffs is hoping to take the project further over the coming months.
While New World customers in Auckland and Wellington are generally urban types who can save a bit of time with a kit as part of their shop, we know they’ll appeal equally to households in other towns and cities. We’re all busy, everywhere, and we’re all looking for ways to save time and make life a bit more delicious.”
There’s also some independent alternatives:
- World On Our Plate (WOOP) prioritises preparing ingredients as much as possible. It launched in 2015 following an equity crowdfunding campaign on the Snowball Effect website.
- Emma’s Food Bag services the Waikato and Bay of Plenty area, as well as parts of Auckland. The business was launched in 2013 by nutritionist Emma Sinclair who runs it from Cambridge with her husband Harland.
This story was republished from The Register.