I am starting a business in the direct-to-consumer online food space where members are subscribing to a weekly box of plant-based pantry products. I need business plans and pro-formas and on this industry. Start taking a look at companies like Naturebox and Mantry for context.
Hello! Thanks for your question about the direct-to-consumer online food industry and associated business plans. In addition to individual company websites, the most useful sources I found to answer your question are from the New York Institute of Technology and Forbes. The short version is that, because of trends toward adopting healthier lifestyles, the online food space is a growing industry that is particularly strong in the vegetarian and vegan segments. The New York Institute of Technology has produced a publicly available business plan used by an online grocer, a copy of which is attached. Below you will find a deep dive of my findings.
METHODOLOGY AND FINDINGS
In researching this issue, we looked at various sources, such as academic databases, corporate websites, industry reports, government reports/databases, regulatory filings, trusted media sites, user forums and review sites. We initially focused our research on market research centered around businesses that are similar to My Plantry. This is information that would be needed for future business plans. From there we researched business plans for businesses that are as similar to My Plantry as we could find.
THE ORGANIC/WELLNESS MARKET
1. THE HEALTH FOOD MARKET AS A WHOLE
Studies have shown that the market for healthy foods is one that is increasing, due to consumer demand. By 2017, the industry is expected to realize sales of $1 trillion. The Global Health and Wellness survey (referenced by Forbes) concluded that 88% of consumers are shopping for healthy foods and will pay more for them. The highest demand is for "functional foods" that are expected to promote good health. Giant corporations, such as General Mills, are investing in gluten-free products, because the U.S. market for them was expected to exceed $10 billion in 2015. The demand for these products spans all demographics. A word of caution, however, is that consumers are known to want more than just healthy foods. They also want foods that are less healthy, but that cater to their less-healthy appetites, e.g. fast food.
The current trends within the health food industry appear to be directly in line with the products sold by My Plantry. The organic food market is expected to "grow 14% between 2013 and 2018." While organic products are often purchased by American families (81% of said families purchase these products), the problem with growth is in their overall costs. As noted above, gluten-free products are currently trending as well. Consumers want healthier beverages and snacks. Sales of healthy snacks alone exceeded the remaining "food and beverage market by 4.7%" in 2015. In addition, consumers are also looking for meatless alternatives as a means of supplying their protein.
Studies are finding that vegan diets are appealing to people at increasing rates. In 2008, 7.3 million U.S. adults (3.2% of the total population) were reportedly vegetarians. This had grown to 3.4% of the market by 2015. Businesses that advertise as vegan establishments are rapidly growing. 4.3 percent of new startups in 2015 were vegan, an increase of 1.5 percent over the previous year. Vegan recipes are currently one of the most often searched-for recipe types. Millennials are leading the way in vegetarian dieting, a significant finding, because 25% of the U.S. population are now millennials.
Overall, the results are shown in hard data. As reported in Latest Vegan News, "This change in culinary preferences is revealing itself through data — the market for non-dairy products is skyrocketing; meat alternatives sales are expected to reach $5 Billion by 2020; and more than 1/3 of consumers are open to plant-based products." In 2017, the Hartman Group reached the same conclusion, finding that organic products grew 11% between 2014 and 2015. They also found that meat-alternative products are expected to continue to grow. Food Navigator has reported that 7% of Americans consider themselves to be "flexitarians" who eat less meat, but nevertheless still eat it. Vegan products are an alternative that allow people to now maintain what is seen as the socially responsible diet.
2. MONTHLY PACKAGE PROVIDERS
As you indicated in your request, companies such as NatureBox are providing consumers with monthly packages oriented towards a healthier lifestyle. Consequently, we thought it would be appropriate to provide you with an overview of similar companies, so that you have an idea of the online competition. In 2015, NatureBox raised $30 million in investments, for a total of almost $12 million in 3 years. Sales growth has exceeded 300% during that same three-year period. Door-to-Door Organics, another online grocery retailer selling organics, raised $25.7 million during the same period.
Other online retailers that are more nutritionally-cognizant of dietary offerings are also marketing plans to consumers. A sampling of them follows:
A. THE PURPLE CARROT
The Purple Carrot offers strict vegan diets via weekly plans. The Purple Carrot was founded in 2016 and is headquartered in Needham, Massachusetts. It's funding is currently undisclosed.
B. THE GREEN CHEF
The Green Chef, offers vegetarian-based entrees for two people or families. Headquartered in Denver, Colorado, this company was founded in 2015 and currently has $15.5 million in funding from 3 investors.
PeachDish likewise offers dishes that are vegetarian in nature. The company is 4 years old and is headquartered in Atlanta, Georgia. It's funding is unknown.
D. THE GATHEREDTABLE
The Gatheredtable specializes in vegan meal plans that are provided as a weekly offering. The company is headquartered in Seattle, Washington. It was founded in 2013 and has a total of $3.7 million in equity funding from 2 investors.
E. FRESH CITY
Fresh City, a company in Toronto, has taken a different approach and offers meal bags for meals or as groceries designed for distinct diets, vegan and vegetarian included. Founded in 2010, this company's funding is currently not publicly available.
F. THRIVE MARKET
Along the same vein, Los Angeles-based, Thrive Market provides online grocer services (concentrating on organic offerings) to customers who pay a $60 annual membership fee that entitles them to wholesale prices. Thrive Market was realizing revenue of approximately $10 million/month in 2016, despite being only 17 months old. This company has a total of $161.88 million in equity funding from 27 investors. It was founded in 2013.
Finally, there are also multiple online retailers that are offering monthly plans for snack services, each of which appears to be designed to cater to health-conscious consumers.
A review of the above companies indicates that they typically market themselves as providing fresh ingredients in a socially responsible way, i.e. ingredients supplied by farms that are dedicated to environmentally-friendly farming.
3. BUSINESS PLANS
While we were unable to find publicly available business plans directed specifically to vegetarian/vegan online subscription companies, we did find a model business plan for online grocery retailers. This plan was produced for Freshfoods by the New York Institute of Technology. The business plan is fully reproduced on the NYIT website. You will note that it begins with a company summary that describes the company's objectives. It then moves to the products that it will provide, together with a revenue model. There is a full marketing analysis that describes its competitors (including a SWOT analysis), as well as a segment discussing the steps that it will take to compete in the marketplace. It's value proposition is also clearly stated, as are objective milestones that it expects to obtain.
There are multiple articles that discuss business plans. We found the article in Bplans.com to be most useful. This article discusses each issue that needs to be addressed. Specifically, the article notes the need for segments that discuss the following topics: the value proposition, the market need, your solution to that need, the competition, the target market, how you plan to sell the product, your budget goals, your sales goals, milestones that you expect to reach, your business team, your partners and the necessary financial resources.
Bplans also suggests beginning with a business pitch before actually writing the business plan so that you get much needed feedback early in the process. The business pitch essentially provides the overview of the business plan that is to be later developed. Bplan provides a free template for a business pitch.
To wrap it up, the consumer online food space is a rapidly growing industry that is showing particular growth in the vegetarian and vegan segments. A sample business plan is available from the New York Institute of Technology, along with suggestions by Bplan.com on what to include in such plans.
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