Krave Jerky lessons learned

Advanced Entrepreneurship – Lean LaunchPad2011

THE TEAM

PhD Engineering

Technology Specialist

Previous Entrepreneur

Alternative Prospect

Food & Beverage Domain Experience

Previous Entrepreneur

Manufacturing Experience

CPG Marketing Background

J o n S e b a s t i a n i

Ka m i l A g i

An On Trend SnackA Category Disruptor Brand

Premium Quality

All-Natural

50%+ Less Salt/Fat

Foodie Flavors

Softer/Moist Texture

Contemporary Branding

Better Margins

( J E R K Y 2 . 0)

TEAM KRAVE

MARKET SIZE

Giant Markets

> Meat: $160B / Snacks: $70B

> Meat Snacks: $4B

Varying Growth Rates

> Meat: + 5%

> Snacks: + 15%

> Jerky: + 5%

Mega Consumer Trends Converging> Healthy, More Flavorful, Higher Quality

Snacks Driven by Innovation / News

Meat Snacks / Jerky Generally Sleepy> Limited Innovation

> “Gut Stuffer” Image

Change Underway Driven by New Entrants> All-Natural

> 10% Growth Latest 52 Weeks Nielsen F/D/M

2009 US Snack Food

A me r ica ns L ov e to Ea t M e a t a nd S na ck

Retail Sales

Source: US Package Facts

Sweet

$35B

Salty

$30B

Meat

$4B

Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, Flash sale sites (Woot, Joss & Main, Fab)-Public Relations Firm - Glodow Nead

Key Activities-New distribution channels-In-store demos-Formal customer supportservice

Value Prop-Unique package-Quality of meat-Health benefits of jerky-Snack taste

Cust. Relations-Branding-Customer education-In-store demo-Frequent buyer program

Cust. Segments- Athletes- Gourmet food enthusiasts- Purposeful eaters - Vegetarian Jerky- Female segment

Key Resources- Jon Sebastiani- Direct to store delivery- National distribution

Channels-Direct to consumer – web-Vending machines-Specialty stores (Cost Plus)-Supermarkets-Krave Jerky Stores

KRAVE CANVAS SUMMARY WEEK 1

Cost Structure-Slotting Fees-Temporary price reduction,Scan based discount-In-store demo-$19m target market

Revenue Stream-$5.95

Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, Flash sale sites (Woot, Joss & Main, Fab)-Public Relations Firm - Glodow Nead




Cust. Segments- Athletes- Gourmet food enthusiasts- Purposeful eaters - Vegetarian Jerky- Female segment


Channels-Direct to consumer – web-Vending machines-Specialty stores (Cost Plus)-Supermarkets (✔)-Krave Jerky Stores




Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, Flash sale sites (Woot, Joss & Main, Fab) -Public Relations Firm - Glodow Nead




Cust. Segments- Athletes - Gourmet food enthusiasts- Purposeful eaters - Vegetarian Jerky- Female segment (✔)


Channels-Direct to consumer – web-Vending machines-Specialty stores (Cost Plus)-Supermarkets (✔)-Krave Jerky Stores




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Click to edit Master title styleCHANNEL STRATEGY


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Click to edit Master title styleAND NOT

THE ART OF MARKET RE-SEGMENTATION


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Click to edit Master title styleWhat’s Next?

DEN Kiosk OAK Kiosk

Ferry Building Retail Concept

Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, Flash sale sites (Woot, Joss & Main, Fab) -Public Relations Firm - Glodow Nead

Key Activities-New distribution channels-In-store demos-Formal customer supportService- Social media leverage

Value Prop-Unique package-Quality of meat-Health benefits of jerky-Snack taste (✔)


Cust. Segments- Athletes (✔)- Gourmet food enthusiasts- Purposeful eaters (✔)- Vegetarian Jerky- Female segment (✔)


Channels-Direct to consumer – web-Vending machines-Specialty stores (Cost Plus)-Supermarkets (✔)-Krave Jerky Stores-Kiosks




Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, Flash sale sites (Woot, Joss & Main, Fab) (✔)-Public Relations Firm - Glodow Nead


Value Prop-Unique package-Quality of meat-Health benefits of jerky-Snack taste (✔)




Channels-Direct to consumer – web-Vending machines-Specialty stores (Cost Plus)-Supermarkets (✔)-Krave Jerky Stores-Airport kiosks-South Beach diet-Jerky store in Vegas





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Click to edit Master title styleWhat we did, cont.

Who is our KRAVE Customer?

1. Jon and team tasted and surveyed 50 people.


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Click to edit Master title styleThe Results

Who is our Customer


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Click to edit Master title styleThe Results


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Click to edit Master title styleValidation of Value Proposition

Does the customer agree with our Value Proposition?

Krave surveyed 100 jerky buyers who have tasted Krave Jerky

to test our value proposition hypothesis.


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Click to edit Master title styleWhat about our Value Proposition?


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Click to edit Master title styleKey Learning's & Takeaways

1. Most people surveyed are not regular jerky eaters – yet after tastingKrave will consider becoming regular users. Therefore figuring outhow to get the product into the mouths of new customers is KEY.

2. Some/most people believe jerky is healthy - doesn't seem to be a hot button.

3. Nutritional ingredients a key differentiator.

3. Taste and texture seem to be a driver of quality perception and consumption.

4. Flavor is the main driver.

5. Focus channel roll-out to support these customer drivers.

WHY A DISRUPTION

The O p p ortun i ty +M a rket C ond i t ions

Limited Market Segmentation

Lethargic Competitors

Favorable Consumer + Trade Dynamics

Entrepreneurial Entrant with New

Approach and Fewer Constraints

Clear / Meaningful Differentiation vs.

Mainstream Competitors

The E xa mp le s

Industry

Airlines Virgin America

Ice Cream Ben & Jerry’s

Beer Samuel Adams

Potato Chips Kettle / Terra Chips

Coffee Starbucks

Chocolate Scharffenberger

Water Vitamin Water

Cereal Kashi / Bear Naked

Energy Bar Cliff Bar

Meat Snacks / Jerky KRAVE

Convention Buster Brand


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• Traditional – Conventional: Large Meat Packers– Top 4 Brands = 85% Market Share

– Manufacturing vs. Marketing Orientation• Jerky As A Waste Reducer – Mfg “Capacity Utilizer”• Same Flavors, Form Factors, Pricing, Quality, Limited Innovation

KRAVE Advantages KRAVE Challenges+ Flavors/Natural Ingredients/Low Sodium - Scale/Resources+ Meat Cuts/Quality - Distribution Power+ Traceability - Longevity/Heritage+ Singular Focus/Small Guy Flexibility - Fighting Category “Gut Stuffer”

Image

COMPETITION

WHAT WE LEARNED

KRAVE vs . Compet i t ion

Fitness Enthusiasts

Healthy Snackers, Foodies

Targeted to Men and Women

All Natural Ingredients

Gourmet / Premium / Modern Image

US Sourced Meat

Higher Quality Meat Cuts

50% Less Salt and Fat

Moist and Tender Texture

Grocery and Specialty Channel Focus

Manufacturers vs. Marketers

> Jerky = Waste Reducer / Capacity Filler

> All Similar Offerings – Compete on Price

All Targeted to Men

Artificial Ingredients

“Gut-Stuffer” / Traditional Image

South American Sourced Meat

Unknown Quality of Meat Cut

High Fat / Sodium Content

Dry and Tough Texture

Limited and Conventional Flavors

Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, Flash sale sites (Woot, Joss & Main, Fab) (✔)-Public Relations Firm - Glodow Nead-Manufacturing


Value Prop-Unique package-Quality of meat-Health benefits of jerky (✔)-Snack taste (✔)

Cust. Relations-Branding (✔)-Customer education-In-store demo-Frequent buyer program



Channels-Direct to consumer – web-Vending machines-Specialty stores (Cost Plus) (✔)-Supermarkets (✔)-Krave Jerky Stores-Airport kiosks (✔)-South Beach diet-Jerky store in Vegas




Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, KeHeFlash sale sites (Woot, Joss & Main, Fab) (✔)-Public Relations Firm - Glodow Nead (✔)-Manufacturing (✔)

Key Activities-New distribution channels (✔)-In-store demos-Formal customer supportServiceSocial Media LeverageManufacturingVertical Horizontal Integration

Value Prop-Unique package (✔)-Quality of meat (✔)-Health benefits of jerky (✔)-Snack taste (✔)

Cust. Relations-Branding (✔)-Customer education-In-store demo-Frequent buyer program (✔)

Cust. Segments- Athletes (✔)- Gourmet food enthusiasts (✔)- Purposeful eaters (✔)- Vegetarian Jerky- Female segment (✔)

Key Resources- Jon Sebastiani- Direct to store delivery- National distribution-National Media (AP, WSJ, etc.)-Gross margins versus top line revenues

Channels-Direct to consumer – web (✔)-Vending machines-Specialty stores (Cost Plus) (✔)-Supermarkets (✔)-Krave Jerky Stores-Airport kiosks (✔)-South Beach diet-Jerky store in Vegas


Cost Structure-Slotting Fees-Temporary price reduction,Scan based discount-In-store demo-$19m target market-Gross margin vs. Revenue

Revenue Stream-$5.95(✔)-KeHe/Tree of Life-Direct Sales(✔)-Flash sites(✔)-QVC(✔)

Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway, KeHeFlash sale sites (Woot, Joss & Main, Fab) (✔)-Public Relations Firm - Glodow Nead (✔)-Manufacturing (✔)-Order Fulfillment (✔)

Key Activities-New distribution channels (✔)-In-store demos-Formal customer supportServiceSocial Media Leverage (✔)ManufacturingVertical/Horizontal Integration(✔)

Value Prop-Unique package (✔)-Quality of meat (✔)-Health benefits of jerky (✔)-Snack taste (✔)

Cust. Relations-Branding (✔)-Customer education-In-store demo-Frequent buyer program

Cust. Segments- Athletes (✔)- Gourmet food enthusiasts (✔)- Purposeful eaters (✔)- Vegetarian Jerky- Female segment (✔)

Key Resources- Jon Sebastiani- Direct to store delivery- National distribution (✔)-National Media (AP, WSJ, etc.) (✔)

Channels-Direct to consumer – web (✔)-Vending machines-Specialty stores (Cost Plus) (✔)-Supermarkets (✔)-Krave Jerky Stores-Airport kiosks (✔)-South Beach diet-Jerky store in Vegas


Cost Structure-Slotting Fees-Temporary price reduction,Scan based discount-In-store demo-$19m target market (specialty jerky)-Gross margin vs. Revenue(✔)

Revenue Stream-$5.95 (✔)-KeHe/Tree of Life-Direct Sales (✔)-Flash sites (✔)-QVC (✔)-Cash flow-2012 Projections

Key Partners-Transactions: Paypal, Visa, Mastercard-Channel to Consumer: HSN, Safeway,QVC. KeHE)Flash sale sites (Woot, Joss & Main, Fab)-Public Relations Firm - Glodow Nead-Manufacturer-Order Fulfillment

Key Activities-New distribution channels-In-store demos-Formal customer supportservice-Social media leverage-Manufacturing-Vertical/Horizontal integration

Value Prop- Unique package- Quality of meat- Health benefits of jerky- Snack taste

Cust. Relations-Branding-Customer education-Public relations-In-store demo-Frequent buyer program

Cust. Segments-Athletes

-Gourmet food enthusiasts

-Purposeful eaters

-Vegetarian Jerky

- Female segment

Key Resources- Direct to store delivery- National distribution- National media (e.g. AP, WSJ articles)

Channels-Direct to consumer – web-Vending machines-Specialty stores (Cost Plus)-Supermarkets/retail-Krave Jerky Stores-Kiosks

KRAVE CANVAS FINAL

Cost Structure-Slotting Fees-Temporary price reduction,Scan based discount-In-store demo-$19m target market (specialty)-$500m jerky market (niche)-Gross margins or revenues

Revenue Stream-$5.95 (retail)- QVC- KeHE/Tree of life- Flash sites- Direct sales

WHAT’S COMING DOWN THE PIKE?

Roll-out of KRAVE 2.0 in Q1 2012

New Branding

Better Product

New Size (3.25 oz)

Formal Marketing / PR Drive

Launching with Safeway on National Basis in Jan 2012

5 Flavors

$5.99 / unit price to Consumer

Addition of Other Major Distributors in Q4 ‘11 / Q1 ‘12

BUSINESS PERSPECTIVE

2011 – 2012 YOY Growth2 0 1 1 - $ 1 , 6 0 0 , 0 0 0

2 0 1 2 - $ 7 , 0 0 0 , 0 0 0 + 4 5 0 %

Krave – on!

Krave Jerky lessons learned

Education

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