Speech outline!

Begins – Fermented foods

Dr. Joseph Mercola – World’s #1 Health Website say fermented foods heal and seal your gut and can optimize health and reverse disease

100x more probiotics than supplements – support intestinal and overall health. After all, your gut is around 80% of your immunity

Probiotics in Fermented Foods play a crucial role in providing your gut with healthy microflora which fuel production of antibodies that fight pathogens

There are many types of popular fermented foods on the market today…

There is a Fermented drink, however, that has flown under the radar for some time and is now beginning to trend in NZ: Water Kefir

Active ingredients: Scoby includes many healthy strains of bacteria, incl. that of lactobacillus

Like any other Fermented food, water kefir contains probiotics, B vitamins, amino acids

In light of this we have developed a DIY kit for female baby boomers – high disposable income due to empty nesters

independent lifestyles and nutritious products

Study conducted by the ministry of health found that Baby Boomers in NZ will be healthier than any other generation.

Furthermore, Stats NZ states one of the top 3 leading causes of death is liver cirrhosis, which has been directly linked to intestinal bacteria overgrowth by the university of San Diego department of medicine.

Nature’s Nurture WKK addresses each of these problems, making our product a perfect solution.

Our kit is also very appealing from a business perspective

Ronnie here will share the good news.

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History, Benefits, & Dosage

History of water kefir

Water kefir has been used by numerous cultures dating as far back as the 1800s. Kefir grains, the key component of making water kefir, are a form of SCOBY (symbiotic culture of bacteria and yeast). The grains eat sugars and produce “… pre-digested nutrients, amino acids, vitamins, minerals, calories/energy and billions of probiotics” (http://www.yemoos.com/faqwahealth.html). Kefir is known for it’s numerous health benefits, especially those in the gut.

4 Benefits of Water Kefir

  1. Increases the beneficial bacteria in the gut, promoting a healthy micro flora which kills harmful bacteria and viruses that enter the gut.
  2. Builds a stronger digestive tract lining preventing toxins from seeping through into the bloodstream and causing health issues.
  3. Improves digestion of food through increased levels of healthy micro flora.
  4. Liver Cirrhosis is one of the top 3 health problems in NZ. It has been linked to increased harmful bacteria growth in the gut. Kefir helps to regulate and supply good bacteria in the gut, possibly preventing from harmful bacteria from reproducing. (http://www.cmghjournal.org/article/S2352-345X(15)00064-8/pdfhttp://www2.stats.govt.nz/domino/external/web/nzstories.nsf/092edeb76ed5aa6bcc256afe0081d84e/11caee935d8de67ccc256b180004d765?OpenDocument)

Water Kefir Dosage

Kefir can sometimes have a laxative effect if too much is drunk too quickly. We recommend that dosage starts small, around 50-100 ml, and increases overtime. When your body adapts to

Lean Start up and Story Mapping

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Thanks Adrian for introducing our team to the Lean Canvas. What an idea! We are going to try to fill in the above grid and see what we learn out of this for our start up. As evident from the above picture, we need to focus on 8 components to solve this mystery and this can be done under two broad headlines: the product and the market.

Product

Top 3 existing problems:

  1. Digestive health, a challenge and concern for baby boomers.
  2. Fermented products with proven positive claims on healthier digestive system trending in America and New Zealand
  3. Kefir, a well established product in America not available in Dunedin market freely.

Target Customers

The selected target market belongs to baby boomer generation, predominantly female with good disposable income. An educated segment of the market which is willing to invest time to learn about new things that are going to help them live healthier and longer. Since this population is aging and there are many studies done to suggest a declining digestive health linking to several health issues with them.

Unique Value Proposition

Water kefir is a big trend and Nature’s Nurture would be the first company in the South Island to provide the target market with an easy to use health and wellness product.

Solution: Nature’s Nuture Water Kefir

The top three features of Nature’s Nurture Kefir are:

  1. Kefir grains kit packed with everything a customer needs to make their own fresh kefir at home.
  2. A dedicated education blog answering all questions relating to the product .
  3. A Facebook page to get live feedback and encouraging customers to share pictures of their brew to win free product.

Chanels

The path to the customers are:

Store at:

  1. Health 2000 stores. Our initial discussion suggests that at a 50% mark up for retail, they might be interested in stocking the product.
  2. Antidote owns 7 pharmacies in Dunedin and its director Chin Nah Loh has shown a lot of interest and is willing to stock it on “pay us once it sells basis”.
  3. Mark Dickson and Sam, owner and store manager, Taste Nature, have shown interest in stocking the product as well.
  4. A subscription based business model selling kits and or ready to drink kefir on a weekly basis through the website.

Revenue Streams and Profits

Lets look at some calculations to determine the product and production costs.

We bought a quarter of a cup of Kefir Grains for $10. These weighed 44.5 Gm and on dehydrating for 24 hours under 30’C,we  had 9 Gm of Dehydrated Kefir Grains(DKG). For making water kefir these grains are rehydrated in non chlorinated water for 2-3 days and then fermented with a quarter of a cup of organic free trade sugar and a litre of non chlorinated water for 48 hours at temperatures below 30’C.

This is the base formula. After a successful fermentation for 48 hours, the grains double in weight. At a fourteen day period, where we kept fermenting for 48 hours, filtered and stored the kefir and started fermentation for another batch, the following yields would be recovered.

5740 Gm of water kefir grains which on dehydration would yield 1148 Gm of DKG.

We would have made 63 litres of water kefir in 14 days.

We would have consumed 16 kgs of organic sugar.

Since each recipe for a kit would need 5Gm DKG, we would have 1148/5= 229.6 kits worth of DKG.

63 litres of kefir would be filled in to 330 ml bottles with half kefir and half cherry juice.. This would fill 381.82 bottles of water kefir. We also calculated that 2kg of cherries yielded 1 lit of juice. That shows that in order to fill 381.82 bottles of water kefir we would need 126 kgs of cherries to produce 63 litres of juice. Since water kefir is just a by product of producing water kefir crystals, it’s cost for this exercise is virtually nil. The juice would cost us $126. We have to look at price of 330 ml bottles and cost of a label on it before we can calculate complete cost of goods. Assuming we keep the production at polytech kitchen, the only other cost would be labor cost. We estimate that only 1 hour of labor is required each day to carry on the production.

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This filling machine on eBay retails for $346 delivered. This is numerical digital control pump liquid filling machine. It has a capacity to fill around 3.2 litres a minute which is approximately 10 bottles a minute. It is safe to assume that we can fill up to 300 bottles in an hour.

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This semi automatic round bottle labelling machine can be purchased for $875 from eBay as well. This also has a capacity to label 10 bottles per minute hence we can safely assume that 300 bottles can be labelled in an hour.

Two semi trained workers on a shift of 2 hours can fill and label and pack 300 bottles ready for dispatch. One semi trained worker  can work on juicing cherries and changing water for kefir each day for 2 hours a day for a period of 15 days to produce 63 litres of water kefir and  enough grains to do 229 kits of DKG.

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This quantitative automatic powder filling machine can be bought for $500 to fill in dehydrated kefir grains and dehydrated cherry powder and sugar if we were to run large production runs. We might have to control the environment so these dried powders don’t absorb moisture. We also have to ensure that the powders stay free flowing otherwise glidants need to be added to these powders to make them free flowing. At this stage we have  not tasted the possible interactions with the powders so a hand filled option is most viable.

Lets look at the costs involved in putting water kefir kits together. Since we have enough DKG to do 229 kits on the 14th day of production, we would calculate the price for putting 229 kits together.

Organic sugar to produce grains……. $32

1 litre glass jars to pack the kit……….$1.88×229= $430.52

3 zip lock bags per kit for dried powders….@2c each X 3×229= $13.80

Label for glass jar DL size 4 color……….50c X 229= $ 114.50

Instruction leaflets A4 size 4 color………50c X 229= $ 114.50

Labels for dried powder bags @2c each X3 X 229= $ 13.80

Rubber band for the glass jar….@ 2c X 229= $ 4.58

Muslin cloth for the glass jar @ 30c X 229= $ 68.70

TOTAL COST = $ 792.40 for 229 kits

COST PER KIT = $3.46

Cost Structure, Customer Acquisition and Distribution

Currently there is only one commercial brand in the country and they sell two packs of kefir ready to drink and a DIY Kit. These are priced $19.50, $29.50 and $110.00 respectively. There is no competition in the South Island as this is based in Auckland. This product from kefir company is only available in Taste Nature store. As we already know that our target market is not price conscious hence it would make sense to price it accordingly. We are still looking for a suitable 150 ml bottle for ready to drink product.

The kit that cost us $3.46 to make would be retailed for $39.95. It will be wholesaled for $19.95. This would leave a good margin for the retailer and would set a benchmark price of $39.90. Customers buying direct from us on subscription basis would leave company a healthy gross margin of $30 per kit.

One of the core component of a successful business is customer service and support. We would support them through our website, blog and the Facebook page. This is how we intend to acquire customers by doing targeted psychographic marketing through Facebook. We would also have a stall at the farmers’ market to get first hand feedback. From time to time, we would set up demo stall at marbecks, antidote pharmacies and health 2000 stores to do product tasting and generating customer data base.

Key Metrics

Key areas to keep in mind and keep a tab of are:

  1. Sales: Which pack is selling more and in relation to which site. How many products are being sold direct through subscription and how many through retail outlet.
  2. Feedback: Actively engage with target customers at the market and seek feedback through product tastings. Keep updating the data base through taking email contacts. Reward people through free bottles and encourage them to introduce new customers through incentive on the subscription. Do not discount the product but offer free samples for tasting.
  3. Process: Producion is a key and a lot of emphasis will be laid on maintaining highest quality and complete hygiene practices.
  4. Growth: Kefir market might grow or may flatten in a few months time. It is vital to keep looking at the trends and keep analysing customers needs. We should either proactively sell the business at the top end of the growth phase or start rolling out franchises in other regions of the country. It is also worth considering if it was appropriate to launch other health and wellness products like Kombucha, sour kraut etc.
  5. Promotion through Opinion Leaders: Free samples for naturopaths, food bloggers and people at gut health Otago. Encouraging them to put feedback on our blog and Facebook page.

Unfair Advantage

  1. We are the first one in the South Island to enter the market that is trending big time.
  2. The product doesn’t cost  much to produce in terms of food and labor cost.
  3. It is being distributed poorly in Dunedin.
  4. There is a wait list for kefir grains in Dunedin.

Water kefir survey results!

Hey guys! Here are the results from the farmers market survey. I think we are on the right track with the DIY kit as well 😀

42.42% of the participants said they would like a water kefir beverage available on the market, a big market! Also, this gives us good feedback for future development. 82.83% of participants said they would want a ready made water kefir beverage to be available! Woo! This is some good feedback.

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Tasks ahead

Hey guys thanks for yet another awesome day. We progressed heaps today. We have a company and brand name, product concept and pricing and we have a clear picture of what we are doing in the kitchen tomorrow. I have just posted on our blog and if you get time please have a read. Just want to make sure that even if we work separately we need to make sure we are all on the same page. Sara you are in charge of finding all answers for the product you are developing in the kitchen with Tom. Tom please assist or even take charge to develop the logo and labels for the product from there onwards. I would nail the pricing, sourcing packaging on Alibaba and fine tune marketing. Sara we also need to do a step by step guide for the customers and we will print a leaflet for the kit. Enjoy your evening and I will catch up with you guys at some stage in the kitchen.

Product concept and development

Well done team for putting heads together to move forward with kefir grains. We now have a clear product concept. We would be selling water kefir kits with dehydrated kefir grains and cherry juice packed in vacuum pack.

The market research this morning further confirmed the fact that kefir grains were in demand but not available readily in Dunedin. We were pitching a health and wellness product for gut health to a segment of the market that was predominantly female, baby boomer, well educated high involvement food customer that was willing to learn more to look after their health to improve and extend their lives. Our research has indicated that gut health is of a prime concerne and a well looked after gut has many health benefits.

We would continue to research at the farmers market on coming Saturday with an open mind should we bump into another segment of the market that might be interested in our product. We also need to look at our target market to learn how would they engage with our product in their lifestyle.

The tasks ahead are:

Product

  1. How much dehydrated grains per pack weigh wise.
  2. How long to dehydrate to obtain an ideal product.
  3. How much cheery juice per pack
  4. How much cherries by weight required to make juice per pack
  5. How much mallic acid to add to stabilise the juice.
  6. Ph of the finished cherry juice.

Pricing

  1. Price each component of the product excluding GST
  2. Wholesale price of 1 lit glass bottles from Alibaba.
  3. Pricing for the label on the bottle
  4. Pricing for the sugar pack and label
  5. Pricing for organic fair trade sugar, bulk wholesale
  6. Price for reproducing and dehydrating crystals.
  7. Price for crystals pack and label.
  8. Price for printing step but step instructions leaflet.
  9. Price for producing, packing and labelling cherry juice.
  10. Price for packaging the kit ready for couriers.
  11. Courier charges per kit for Otago region.
  12. Price for 2 pieces of muslin cloth 8×8 cm

Marketing

  1. Customer support and high level of knowledge exchange would be of utmost importance for the success of the product. Our company would engage customers through several social media avenues and would seek feedback to best understand their needs and possible new products.
  2. Facebook page to post product benefits. It is almost like launching a new product segment and product category education is a must along side brand promotions. Customers would be given incentives to post pictures and tips as they start using our kefir. Demographic focused Facebook marketing would also be done to explore if that was the cheapest and the best way to reach our target market.
  3. A dedicated blog to educate customers with researched and published data on the advantages of using kefir on a regular basis. It will tag high profile naturopaths and their blogs and they would be given free kits to try for themselves and to further put the advantages on their blogs.
  4. A dedicated website to not just have an online presence and product education but to also sell the product through subscription.
  5. An initial investigation suggests that the company might be stocking the kits at antidote pharmacies, taste nature and health 2000 stores besides selling it at the farmers market and online sales.

Future Prospects

  1. The company realises that this is a lean business model and a fairly lucrative business could be launched with very little starting capital. The core of the business, water kefir crystals, can be produced with minimal labour and less than 50 cents per pack. Almost a similar amount to produce cherry juice makes it a very low expense product in terms of ingredients and labour.
  2. There is no dilemma that the business proposed has a short life spam. The company would either be sold at the upper end of the growth phase or new products trending and satisfying the health and wellness needs would be considered. Company might start selling kits for other fermented products.
  3. Keeping an eye on the customers would definitely suggest the company if it needs to enter the market of ready to drink kefir.
  4. If kefir trend keeps growing then the company might consider selling franchises across the country.