What is the secret of start-up success in healthier foods and beverages?

27 September 2016

New ventures that launch an on-the-go snack or beverage with a “free-from” positioning have the best chance of success, a new research project by New Nutrition Business shows.

The analysis of 151 businesses founded between 2002 and 2013 in the UK, USA and Australia explores what makes a healthier food start-up fail – or prevail.

NNB’s main finding is that snack and beverage start-ups are the most resilient in the healthier foods market.  “Beverages and snacks are products that are easier to adapt to constant changes in demand and preferences,” says Joana Maricato, senior market analyst at New Nutrition Business.

Snacks are an entrepreneur’s best bet with a 64% success rate, and if they add a “free–from” message, the success rate rises to 88%. These results reflect the presence of two consumer trends –  “snackification” and “free-from” – which consistently feature in NNB’s annual10 Key Trends reports.

Although beverages come in at a modest second with 56% of the ventures still on the market, they are the category most successful at breaking into the mass-market. However, a look at the distribution of successful start-ups according to the benefit platforms is revealing: the kids’ beverages are bringing down the average. When these are stripped out, the beverage category in fact achieves higher success rates than snacks.

Dairy is a high-risk category, and the only group where failure exceeds success, with 57% of start-ups no longer present on the market.

Launching a kids’ product also faces particular obstacles according to Maricato: “Anyone venturing into the kids’ segment needs to bear in mind the double consumer challenge they face: to please the ‘consumption’ consumer, the children, as well as the ‘buying’ consumer, the parents.”

The results indicated that the combination of benefit and product category has an influence on the success rate. “For example, in beverages, energy was one of the benefits with the highest success rates, while for dairy this was the case for the high-protein platform,” Maricato says.

Certain benefits alone make a product stand out. “There seem to exist benefits that are related with success across categories, such as ‘free-from’, which was associated with high success in both snack and beverages,” Maricato adds.

Managing expectations regarding success is another important tip entrepreneurs can draw from the analysis. “Only 60% of successful start-ups made it to mass market. But mass market presence is not the only way to succeed. Start-ups can thrive while remaining in smaller, niche segments, where premium prices are often easier to obtain,” Maricato says.

Food and beverage start-ups with a focus on health have a reputation of having low success rate. The main purpose of the project was to verify such assumptions against good data, and provide a tool for developing data-driven business strategies. New Nutrition Business has been studying start-ups for almost 20 years, and now holds a vast database about them.

NOTES FOR EDITORS

1.      Food and beverage start-ups: Successes and failures is available on request from This email address is being protected from spambots. You need JavaScript enabled to view it.

2.      The attached graphics (which may be used for publication) illustrates the key findings of the research project. 

3.      Joana Maricato is a Senior Market Analyst at New Nutrition Business, a global company that since 1995 has specialised in primary research and analysis of developments in the health, food and nutrition industry. New Nutrition Business provides practical and useable insights for the global nutrition business and is used by more than 1,700 corporate subscribers in 42 countries. Joana’s focus is on identifying the best strategies for commercializing nutrition science and helping clients create new products with health benefits.

4.      New Nutrition Business is a research and consultancy company with an expert focus on the business of food and health since 1995. It has offices in the United States, Europe, and New Zealand and affiliates in Japan and South Korea.

5.      For more information about New Nutrition Business, or to arrange an interview with Joana Maricato, contact Marta Matvijev at This email address is being protected from spambots. You need JavaScript enabled to view it..