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.
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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.

Food (kefir) for thought

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Kefir grain definitely has health benefits.

 

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Gut health is important, a very compelling evidence.

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Well how good is this kefir guys!

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Well a good comparison. We are not selling capsules, however, still good to know kefir drink is good for gut health.

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Water kefir is right up there.

Some good info graphics too for our product fact sheet.

 

 

Kefir kits, a better match

Last week was fairly intense trying to come up with a product that our persona would want. We tried water and coconut water kefir drinks with cherry juice. Although water kefir tasted good and was even better with the juice, it posed another challenge. How do we stop the fermentation and what would be the shelf life of the product?

Water kefir was an anrobic fermentation hence ever when the bottles were sealed it would practically keep fermenting and would become alcoholic and fizzy and sour. The second challenge were the blogs and articles suggesting commercial kefir was less healthier than home made ones as it had considerably fewer probiotics.

We hit the hub with our survey to find out about the awareness of fermented products and healthy drinks. Sara would post a detailed version of the outcome however few highlights are listed here. Firstly, out of 24 surveyed, 14 would consume fermented products for health benefits. Only 3 people heard about kefir. Since our persona was educated and was willing to acquire knowledge for health benefits hence the findings were not totally discouraging.

Sitting at the hub drinking coffee and scratching our heads, we did have a Eureka moment! Thanks to our Masters’ student Penny and our dear lecturer Richard. Penny, a naturopath,ntold us that there was a shortage and a wait list to get kefir grains in Dunedin. Cool. Richard forced us to look harder at our business model. Challenging. The team came up with the idea of selling kefir grains.

Now it all makes sense. Kefir grains was a much better design solution for our persona than the bottled kefir water. We possibly need to start a subscription based business selling kefir grains and cherry juice. A lean business model suggesting to sell the business in the top end of the growth phase or offering a wider range of fermented products kits.

The task ahead is to come up with a brand, branding story, logo, packaging and visually simple reinforcing imagery. We also need to finalise our strategy for the coming Saturday farmers’ market survey.

Tell me team, who is doing what in next two days till we meet on Wednesday ❓

See ya🍒

Water Kefir, the way to go

Good to see the whole team together trying to solve this design problem! Obviously, Kanji was a stink bomb and kombucha was ordinary too. It will also take a long time to prototype kombucha as the fermentation takes more than a week.

Thanks Sara for bringing the fermented kefir for all of us to try.We concluded after tasting that coconut water based kefir was too pungent and a bit obnoxious to drink. On the other hand water kefir was fairly good. Although it tasted very sweet the sugar content was around 5%.The sugar content of the cherry juice was 7%. We mixed equal portions of cherry juice and kefir and the taste was still a bit sweet. The sugar content of the mix was 12% which is fantastic as compared to other drinks in the market.We are not sure of the shelf life of the finished product at this stage. We could add some malic acid to bring the acidity of the product down to 4 or 4.5 and then if we add sodium benzoate in it then it can act as an preservative.

Another important aspect is to check with the target audience if they are willing to incorporate a product like that in their life style. We will design a questionnaire and make another batch of the product and ask the guys at the hub tomorrow. We are aiming to find out if they use fermented products, buy or make healthy drinks and why do they do that. We also aim to find as to how and when they use these drinks at home. We would also give them a taste of the kefir and see what they think and if they have tried this product before. See you tomorrow with the findings.

http://www.yemoos.com/waterkefirrecipes.html

This is an interesting place to learn about water kefir.